Mr. Ali Mahdavi reports

TREE ISLAND RECEIVES NOTICES OF REASSESSMENT FROM CRA

Tree Island Steel Ltd.'s wholly owned subsidiary, Tree Island Industries Ltd. (TII), has received notices of reassessment from the Canada Revenue Agency for its fiscal years ended Dec. 31, 2015, through 2018.

The CRA notices relate to certain writedowns in 2015 for bad debt and capital account losses related to intercompany loans provided by TII to its direct and indirect wholly owned subsidiaries, Tree Island Wire (USA) Inc. and Tree Island Wire Holdings (USA) Inc., over the span of approximately 15 years. Pursuant to the CRA notices dated Sept. 1, 2023, total taxes and interest of approximately $11.8-million are payable by TII.

The company believes that the CRA notices are unfounded and intends to vigorously contest the CRA notices by filing notices of objection to start the appeals process. However, there can be no assurance regarding the outcome of the appeals process or when a resolution may be reached.

In connection with the appeals process, the company, on behalf of TII, is currently in discussions with the CRA on the timing and form of a payment for 50 per cent of the CRA liability, or approximately $5.9-million, which is the amount of the CRA liability required to be remitted by TII while the appeals process is proceeding. If TII is ultimately successful in defending its position, then any taxes, interest and penalties paid to the CRA would be refunded, and if the CRA is successful, then any remaining taxes payable plus interest and any penalties would have to be remitted by TII. As the CRA liability relates to writedowns of intercompany debt taken in 2015, the company is evaluating the current accounting impact and recording of accruals relating to the CRA liability in the third quarter.

About Tree Island Steel Ltd.

Tree Island, headquartered in Richmond, B.C., since 1964, through its operating facilities in Canada and the United States, produces wire products for a diverse range of industrial, residential construction, commercial construction and agricultural applications. Its products include galvanized wire, bright wire, a broad array of fasteners, including packaged, collated and bulk nails, stucco reinforcing products, concrete reinforcing mesh, fencing, and other fabricated wire products. The company markets these products under the Tree Island, Halsteel, K-Lath, TI Wire, Tough Strand and ToughPanel brand names.

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