YEARS Financial Trust Proposes Fund Merger Into Dividend Growth Split Corp.
September 15 2008 - 5:54PM
Marketwired
Brompton Funds Management Limited (the "Manager") is proposing a
meeting of YEARS Financial Trust ("YTU") (TSX: YTU.UN) to consider
the merger of YTU into Dividend Growth Split Corp. ("DGS") (TSX:
DGS)(TSX: DGS.PR.A). The merger is being proposed to address the
economic inefficiencies of operating a small investment fund like
YTU and to provide investors with a high quality portfolio at a low
cost. Due to its smaller size, YTU's annual general and
administration costs currently represent 0.66% of its net asset
value and YTU is becoming too small to operate on its own.
DGS invests on an equally weighted basis in a portfolio of 20
large capitalization Canadian equities that have among the highest
dividend growth rates on the TSX and utilizes a split share
structure. Over 60% of DGS's portfolio is invested in Canadian
financial equities and it includes nine of the eleven equities
currently held in YTU. In addition, Highstreet Asset Management,
which acts as portfolio manager of YTU, invests DGS's assets,
rebalances its portfolio and selectively writes covered options to
generate additional income for DGS. As such, the Manager considers
DGS to be a similar investment to YTU. The proposed merger is
expected to provide unitholders of YEARS Financial Trust with the
following benefits:
- Lower General and Administration Costs per Unit: DGS currently
offers lower general and administration costs per unit than YTU and
these costs are expected to decrease further if the merger is
completed due to the larger combined fund size.
- Lower Management Fee: DGS offers a lower management fee of
0.60% per annum as compared to the current YTU management fee of
0.85% per annum.
- Enhanced Liquidity: Following the merger, DGS will have a
significantly larger market capitalization and a greater number of
securities and securityholders than YTU, which is expected to
provide enhanced liquidity. In addition, DGS offers quarterly
redemptions at net asset value less costs, whereas YTU only offers
redemptions at net asset value less costs on an annual basis.
- Diversified Portfolio: DGS's portfolio includes 20 blue-chip
Canadian equities and is invested in equities of financial, mining,
energy, telecommunication and energy issuers, providing greater
diversification by number of securities and by industry
sectors.
In addition, since its inception in December 2007, DGS Preferred
Shares and Class A Shares have traded at an average six percent
premium to net asset value on a combined basis, while YTU units
have typically traded at a discount to net asset value.
Details regarding the proposed merger will be contained in an
information circular which is expected to be mailed to YTU
unitholders in October. The circular will also be available on
www.sedar.com and posted on Brompton's website. In addition to the
approval of YTU unitholders, the merger is subject to applicable
regulatory approvals. Under the merger proposal, unitholders of YTU
will receive units of DGS (each unit consisting of one DGS
Preferred Share and one DGS Class A Share) and the number of DGS
units to be received will be based on the relative net asset values
per unit of each fund. The proposed merger is expected to be a
taxable transaction for YTU unitholders and they are encouraged to
read the circular in its entirety and consult with their advisors
regarding the proposed merger. The meeting date is expected to be
in early December with an effective merger date of December 31,
2008.
For additional information, please visit our website at
www.bromptongroup.com.
Forward-Looking Statements
Certain statements contained in this news release constitute
forward-looking information within the meaning of Canadian
securities laws. Forward-looking information may relate to matters
disclosed in this press release and to other matters identified in
public filings relating to the funds, to the future outlook of the
funds and anticipated events or results and may include statements
regarding the future financial performance of the funds. In some
cases, forward-looking information can be identified by terms such
as "may", "will", "should", "expect", "plan", "anticipate",
"believe", "intend", "estimate", "predict", "potential", "continue"
or other similar expressions concerning matters that are not
historical facts. Actual results may vary from such forward-looking
information for a variety of reasons, including those set forth
below.
Forward-looking statements in this press release include among
other things, the proposed timing of the merger and the expected
completion thereof; the expected benefits of the merger; and the
funds that are proposed to be merged. These statements are based on
certain factors and assumptions. In arriving at our conclusions
regarding the proposed timing of the reorganization, we have
assumed that unitholder approval will be obtained at the meeting or
adjournment thereof, and that any regulatory approvals and third
party consents and actions are given or carried out (as the case
may be) in a timely manner. Our expectations regarding the merger
are based on a single fund being more cost effective to operate and
a larger fund having greater trading volume and liquidity. While we
consider these assumptions to be reasonable based on information
currently available to us, they may prove to be incorrect. There
are no assurances that the actual outcomes will match the
forward-looking statements as a result of a number of risks and
uncertainties that could cause actual results to differ materially
from what we currently expect. These factors include changes in
market and competition, governmental or regulatory developments and
general economic conditions. Other than as required under
securities laws, we do not undertake to update this information at
any particular time.
Contacts: Brompton Funds Management Limited David E. Roode
Senior Vice President (416) 642-6008 Website:
www.bromptongroup.com
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