Cathedral Energy Services provides update on conversion to a growth-oriented
corporation

/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

CALGARY, Oct. 30 /CNW/ - Cathedral Energy Services Income Trust (the "Trust" - TSX: CET.UN) is pleased to announce that the Trust and SemBioSys Genetics Inc. ("SemBioSys" - TSX: SBS) have entered into an arrangement agreement (the "Arrangement Agreement") under which the Trust will convert from an income trust to a growth-oriented corporation (the "Conversion"). The Conversion will occur pursuant to a statutory plan of arrangement under Section 193 of the Business Corporations Act (Alberta) (the "Plan of Arrangement") and is expected to become effective on or before December 21, 2009.

The Trust previously announced its intention to convert to a growth-oriented corporation. Management and the trustees believe that its rationale and the anticipated benefits of a conversion to a growth-oriented corporation, as outlined in the Trust's news release dated August 19, 2009, continue to be applicable. In addition, the Conversion will result in a corporation ("New Cathedral") having estimated tax pools of $167 million.

    
    As a result of the Conversion, it is expected that:
    -   the Trust will become a dividend paying corporation;
    -   Canadian taxable shareholders should benefit from lower income taxes
        paid on dividends as compared to income taxes previously paid on
        the Trust's distributions; and
    -   New Cathedral will continue to operate the existing businesses of the
        Trust;
    

Under the Plan of Arrangement, the Trust's unitholders will receive one common share of New Cathedral in exchange for every trust unit of the Trust held on the effective date of the Conversion. Upon completion of the Conversion, New Cathedral will operate the existing businesses of the Trust and its subsidiaries and the existing trustees and management of the Trust will continue to act as the board and management of New Cathedral. As a consequence of the Conversion, New Cathedral will not be acquiring any additional business carried on by SemBioSys. The current business of SemBioSys will be carried on by a new entity, named SemBioSys Genetics Inc. ("New SemBioSys") which will be owned by the existing shareholders of SemBioSys. In accordance with the Plan of Arrangement, New SemBioSys will receive cash and common shares of New Cathedral of an aggregate value of approximately $3.3 million. Transaction costs associated with the Plan of Arrangement are estimated to be $1.1 million. StoneBridge Merchant Capital Corp. ("StoneBridge") acted as a special advisor to the Trust in respect to the Conversion and will be paid a fee which is included in the estimated transaction costs. A trustee of the Trust is an officer of Stonebridge.

The Conversion is subject to various customary commercial conditions, including the receipt of regulatory approvals which include the approval of The Toronto Stock Exchange and the continuance of SemBioSys into Alberta under the Business Corporations Act (Alberta). The Conversion is also subject to the approval of the Court of Queen's Bench of Alberta and of not less than 66 2/3% of the votes cast by Cathedral unitholders and the holders of securities of SemBioSys at their respective meetings called to approve, among other things, the Plan of Arrangement. Additional details of the Conversion will be in an information circular expected to be mailed to the Trust's unitholders in November 2009.

Complete details of the terms of the Plan of Arrangement are set out in the Arrangement Agreement that will be filed by Cathedral on SEDAR. (www.sedar.com).

Conversion Approvals

The Board of Trustees has established an independent committee (the "Special Committee") to consider the Conversion and provide a recommendation to the overall board. Blackmont Capital Inc. has been appointed financial advisor to the Special Committee and to advise in respect of the Conversion. Based upon the recommendation of the Special Committee, the Board of Trustees has unanimously determined that the proposed Conversion is in the best interests of the Trust and its unitholders. The board of directors of SemBioSys has also unanimously determined that the proposed Arrangement is in the best interests of SemBioSys and its security holders.

Distributions and Dividends

In light of the method of conversion to a corporation as described above including the cash requirements to complete the Conversion, the Trustees have, upon the recommendation of management, concluded to suspend the previously proposed dividend for the 4th quarter of 2009 and will review the proposed dividends for 2010 as part of its annual operating and capital budget process.

This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. In particular, this news release contains forward-looking statements relating to: the Arrangement and the expected benefits thereof; future financial position; results of operations; dividends; tax pools and the availability of such tax pools; taxes; plans and objectives; access to capital; liquidity and trading volumes; projected costs; business strategy and anticipated benefits of the Arrangement; capital expenditures; financial results; future cash flows; value and debt levels; future tax basis and the treatment of the Trust and the Trust Unitholders under tax laws. The Trust believes the expectations reflected in such forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Various assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those assumptions and factors are based on information currently available to the Trust, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and factors are presented elsewhere in this news release in connection with the forward-looking statements. You are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:

    
    -   the performance of the Trust's businesses, including current business
        and economic trends;
    -   the ability of the Trust to obtain products, raw materials,
        equipment, services and supplies in a timely manner to carry out its
        activities;
    -   the ability of the Trust to market its products and services
        successfully to existing and new customers;
    -   the ability of the Trust to obtain financing on acceptable terms;
    -   currency, exchange and interest rates;
    -   the completion of the Arrangement and utilization of the tax basis by
        New Cathedral;
    -   the passage of certain Canadian federal legislation respecting SIFTs;
    -   the timely receipt of required regulatory approvals; and
    -   a stable competitive environment.
    

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause the Trust's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include: inability to obtain required consents, permits or approvals, including the Final Order of the Court approving the Arrangement, approval of the Trust Unitholders or the SemBioSys Securityholders; the uncertainties associated with the availability and amount of the tax pools, third party credit risk relating to obligations of SemBioSys and the other risks identified in this news release and in the Trust's AIF under the heading "Risk Factors". Any forward-looking statements are made as of the date hereof and, except as required by law, the Trust assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

All forward-looking statements contained in this document are expressly qualified by this cautionary statement. Further information about the factors affecting forward-looking statements is available in the Trust's current Annual Information Form and Annual Report which have been filed with Canadian provincial securities commissions and are available on www.sedar.com.

%SEDAR: 00018316E

SOURCE Cathedral Energy Services Ltd.

For further information: For further information: Mark L. Bentsen, President and Chief Executive Officer or P. Scott MacFarlane, Chief Financial Officer, Cathedral Energy Services Ltd., 1700, 715 - 5th Avenue S.W., Calgary, Alberta, T2P 2X6, Telephone: (403) 265-2560, Fax: (403) 262-4682, www.cathedralenergyservices.com


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