TORONTO, June 12 /CNW/ - Home Equity Income Trust (TSX: HEQ.UN) ("HOMEQ"
or the "Trust") announced today that it will convert to a corporate structure
on June 30, 2009 (the "Conversion") in accordance with a final order issued by
the Ontario Superior Court of Justice on May 5, 2009. The Conversion will
result in the reorganization of HOMEQ's income trust structure to a
publicly-listed corporation ("HOMEQ Corporation") that will own all the units
of the Trust. Unitholders of the Trust will receive, for each unit held, one
common share of HOMEQ Corporation. The Conversion will be completed on a
tax-free rollover basis for Canadian residents.
The Trust previously announced the Conversion as part of its plan to
continue its operating subsidiary, Canadian Home Income Plan Corporation
("CHIP") as a federally-regulated, Schedule I Canadian bank. The new bank will
be called HomEquity Bank in English and Banque HomEquity in French. By
obtaining a bank charter HomEquity Bank will have access to retail deposits
sourced through deposit brokers. Continuing CHIP as a bank is subject to the
review and approval of an application to the Minister of Finance and is
anticipated to occur in the third quarter of 2009.
The Trust also announced today that on June 29, 2009 it will pay a final
cash distribution of $0.12 per unit to unitholders of record on June 23, 2009.
Unitholders who are non-residents of Canada will be required to pay all
withholding taxes payable in respect of any distributions by the Trust.
As previously announced, HOMEQ Corporation plans to begin paying a
quarterly dividend of $0.07 per share, with the first quarterly dividend
payable to holders of record on the last business day of the fiscal quarter in
which CHIP becomes a bank, expected to be September 30, 2009. The amount of
any dividends payable by HOMEQ Corporation will be at the discretion of its
board of directors and will be evaluated periodically and may be revised
subject to business circumstances and expected capital requirements depending
on, among other things, HOMEQ Corporation's earnings, financial requirements
for the HOMEQ Group's operations, the satisfaction of solvency tests imposed
by corporate law for the declaration and payment of dividends and other
conditions existing from time to time.
Forward Looking Statements
Home Equity Income Trust from time to time makes written and verbal
forward-looking statements about business objectives, operations, performance,
and financial condition, including, in particular the anticipated dividend
policy of HOMEQ Corporation, the establishment of HomEquity Bank, and the
likelihood of HOMEQ's success in developing and expanding its business. These
may be included in the Annual Reports, regulatory filings, reports to
unitholders, press releases, Trust presentations and other communications.
These forward-looking statements are based upon a number of assumptions and
estimates that are inherently subject to significant uncertainties and
contingencies as described in the Trust's Annual Information Form and the
Management Discussion and Analysis in its most recent financial statements,
many of which are beyond the control of HOMEQ. Actual results may differ
materially from those expressed or implied by such forward-looking statements.
HOMEQ does not undertake to update any forward-looking statement, whether
written or verbal, that may be made from time to time except as required by
applicable securities laws.
About Home Equity Income Trust
Home Equity Income Trust earns income from a portfolio of reverse
mortgages originated by its wholly owned subsidiary Canadian Home Income Plan
Corporation. As of March 31, 2009, the portfolio generating cash returns to
the Trust comprised approximately 7,000 reverse mortgages with an accrued
value of $826 million, secured by residential properties across Canada worth
approximately $2.3 billion. CHIP (www.chip.ca), has been the main underwriter
of reverse mortgages in Canada since pioneering the concept in 1986.
The Trust's units trade on the Toronto Stock Exchange under the symbol
HEQ.UN. Additional information on HOMEQ, including annual and quarterly
reports can be viewed at www.homeq.ca.
For further information:
For further information: Steven K. Ranson, President and Chief Executive
Officer, (416) 413-4663; Gary Krikler, Senior Vice President and Chief
Financial Officer, (416) 413-4679