TSX Symbol: CIX.UN
TORONTO, Oct. 15 /CNW/ - CI Financial Income Fund ("CI" or the "Fund")
(TSX: CIX.UN) today announced that its Board of Trustees has approved a
proposal to convert to a corporation in order to position CI to pursue the
growth opportunities that are available as a result of the current
extraordinary economic and market conditions.
"The unprecedented situation in today's markets has created attractive
opportunities for acquisitions in the asset management business," said William
T. Holland, Chief Executive Officer. "A corporate structure will allow us to
take full advantage of these unique circumstances and put us at the forefront
of industry consolidation."
The conversion of the Fund to a corporation is subject to unitholder,
court and other approvals and will be implemented pursuant to a statutory plan
of arrangement under applicable corporate legislation. Unitholders of record
on November 7, 2008 will be entitled to vote on the conversion at a special
meeting, which is to be held on December 19, 2008. The conversion will be
completed on a tax-free roll-over basis. The timing for conversion is ideal as
it permits CI to complete fiscal 2008 as a trust and start its new fiscal year
as a corporation.
CI also announced that the Board of Trustees has decided to adopt a
dividend policy for the new corporation that will have the corporation paying
quarterly cash dividends at rate of $0.12 per share. This dividend rate will
enable CI to apply available cash resources towards acquisitions and growth.
The Board of Trustees has determined that there will be no distribution
payable in December. However, it intends for CI to pay an additional $0.04 per
share for the quarter ended March 31, 2009, so that shareholders will receive
$0.16 per share.
The Board of Trustees and senior management believe that the conversion
of the Fund to a corporation is in the best interests of CI and its
stakeholders and will provide a number of strategic benefits.
"Conversion will position CI for continued growth and help to solidify
its position as one of the dominant firms in the Canadian asset management
business," said Mr. Holland. "This proposal removes CI from the uncertainty
gripping the income trust marketplace today."
Furthermore, Mr. Holland said, a corporate structure will provide for
better access to the capital markets, and make it easier for CI to explore
business and strategic opportunities outside of Canada.
"The environment that supported CI's decision to convert to a trust in
2006 no longer exists," Mr. Holland said. "With the impending taxation of
trusts and the severe limits to growth imposed by the government, the trust
structure has become disadvantageous, despite CI's subsequent success in
sales, asset growth and profitability."
Mr. Holland explained that CI had attempted to make several acquisitions
over the past year, but that these efforts were impeded by the uncertainty
over the trust structure. Moreover, the refusal of the Finance Department and
Canada Revenue Agency to provide clarity on the legislation and guidance on
whether CI's proposals would be acceptable within the imposed growth limits
frustrated CI's attempts to complete these attractive strategic acquisitions.
"CI cannot afford to miss any more of these opportunities," he said.
After conversion, CI intends to pursue the prudent dividend policy
described above and will seek to distribute its earnings to its owners in a
tax-efficient manner. This may include share buybacks as well as dividends.
Over the years, CI has established an exceptional record of payouts, even
before converting to an income trust.
"Since CI went public in June 1994, when it raised $25 million, the
company has returned over $3 billion to its owners in the form of dividends,
distributions and buybacks," Mr. Holland said.
CI Financial Income Fund (TSX: CIX.UN) is an independent, Canadian-owned
wealth management company. CI offers a broad range of investment products and
services, including an industry-leading selection of investment funds, and is
on the Web at www.ci.com/cix.
This press release contains forward-looking statements with respect to CI
and its products and services, including its business operations and strategy
and financial performance and condition. Although management believes that the
expectations reflected in such forward-looking statements are reasonable, such
statements involve risks and uncertainties. Actual results may differ
materially from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially from expectations
include, among other things, general economic and market factors, including
interest rates, business competition, changes in government regulations or in
tax laws, and other factors discussed in materials filed with applicable
securities regulatory authorities from time to time.
For further information:
For further information: William T. Holland, Chief Executive Officer,