Pembina to seek Unitholder approval for conversion to corporate entity

(All financial figures are approximate and in Canadian dollars unless otherwise noted.)

CALGARY, March 4 /CNW/ - The Board of Directors of Pembina Pipeline Corporation, a wholly-owned subsidiary of Pembina Pipeline Income Fund ("Pembina" or the "Fund") (TSX: PIF.UN, PIF.DB.B), announced today it has approved the conversion of the Fund into a corporation.

Pembina intends to seek Unitholder approval for the conversion at its annual general and special meeting to be held May 7, 2010. Subject to receipt of all required stock exchange, regulatory and Court of Queen's Bench approvals and receipt of the consent of Pembina's lenders, management expects the conversion could become effective as early as July 1, 2010, and not later than December 31, 2010.

Pembina's management believes that proceeding with the conversion to a corporation at this time will provide the following benefits:

    
    -   Completion of the conversion will remove the uncertainty that exists
        in the income trust marketplace today and will avoid the imposition
        of the specified investment flow-through (SIFT) tax applicable
        beginning in 2011.

    -   The removal of the restrictions on non-resident ownership applicable
        to income trusts may provide Pembina with greater access to capital
        markets and improved liquidity.

    -   Conversion will provide for a simplified corporate structure which is
        easier for market participants to understand and value.

    -   The "normal growth" and "undue expansion" restrictions generally
        applicable to income trusts under the SIFT rules will no longer
        apply, providing Pembina greater flexibility to pursue opportunities
        for growth and expansion.

    -   Cash distributions will be made as a dividend following completion of
        the conversion and this is expected to provide eligible Canadian
        investors with an enhanced dividend tax credit. Cash distributions
        paid to U.S. investors generally will be treated as dividends for
        U.S. federal income tax purposes. Pembina anticipates a dividend of
        $1.56 per share per year through 2013(1).

    -   The Fund anticipates efficiencies and cost savings from presenting
        the conversion for approval to Unitholders at its regularly scheduled
        annual meeting.
    

Under the conversion, Unitholders will exchange each Pembina trust unit they hold for one common share of Pembina Pipeline Corporation. Pembina has applied to have the common shares of Pembina Pipeline Corporation listed on the Toronto Stock Exchange following the completion of the corporate conversion. The listing of the shares on the Toronto Stock Exchange will be subject to the ability of the Fund and Pembina Pipeline Corporation to satisfy all of the listing conditions of the Toronto Stock Exchange.

Based on a preliminary assessment of tax implications, this is expected to be considered a tax deferred exchange for Canadian investors; for U.S. investors, the exchange may qualify as a tax-deferred reorganization and as such no gain or loss will be recognized. This information is not intended to be, and should not be construed as tax advice and investors in both Canada and the U.S. should consult with financial advisors, legal counsel or accountants regarding the tax consequences of the exchange and dividend payments.

A management information circular and proxy statement outlining the details of the conversion will be mailed to Unitholders in advance of the May 7, 2010 meeting date. To be implemented, the conversion must be approved by not less than two-thirds of the votes cast by Unitholders at the annual general and special meeting in May.

The decision to convert to a corporate entity results from a Government of Canada decision in 2006 that introduced legislation designed to change the taxation of certain SIFTs, more commonly referred to as income trusts. In response to this change, after detailed consideration of the various options available to the Fund, Pembina's Board determined conversion from an income trust to a corporate entity will best serve the interests of Pembina and its Unitholders.

Fairness Opinion

The Board of Directors of Pembina Pipeline Corporation retained Scotia Waterous Inc. ("Scotia") to act as its financial advisor in connection with the conversion of Pembina into a corporation. Pursuant to this mandate, Scotia today provided the Board of Directors with its verbal opinion that the consideration to be received by Unitholders of Pembina pursuant to the corporate conversion is fair, from a financial point of view, to such Unitholders. The full text of Scotia's fairness opinion, along with the assumptions, limitations and considerations upon which it was based, will be appended to the management information circular and proxy statement to be mailed to Unitholders.

Board Approval

The Board of Directors of Pembina Pipeline Corporation has determined that the conversion of Pembina into a corporation is in the best interests of Pembina and its Unitholders. The Board of Directors unanimously recommends that Unitholders approve the corporate conversion. The verbal opinion from Scotia referred to above was one of a number of factors taken into consideration by the Board of Directors in supporting its determination that the corporate conversion is in the best interests of Pembina and its Unitholders.

About Pembina

Pembina Pipeline Corporation, a wholly-owned subsidiary of Pembina Pipeline Income Fund, transports crude oil and natural gas liquids produced in Western Canada, owns and operates oil sands pipelines and has a growing presence in the midstream and gas services sectors.

    
    (1) Based on Pembina's current assumptions, estimates, expectations and
        projections, actual results may differ materially. See "Forward-
        looking Statements and Information" on page 40 of Pembina's 2009
        annual report for more information.
    

Forward-Looking Statements and Information

This document contains certain forward-looking statements and information that are based on Pembina's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements and information can be identified by terminology such as "plan", "expand", "expect", "will", "to be", "estimate", "target", "schedule", "generate" and similar expressions suggesting future events or future performance.

In particular, this document contains forward-looking statements and information, including certain financial outlook, pertaining to, without limitation, the following: Pembina's corporate strategy, including the proposed conversion of Pembina to a corporate form in 2010; the anticipated benefits from conversion to a corporation; the ability of Pembina to maintain its current level of cash distributions to its equity holders both prior to and after conversion through 2013 (in the form of dividends after conversion); the listing of the shares of Pembina Pipeline Corporation on the Toronto Stock Exchange following completion of the corporate conversion, the ongoing utilization and expansions of and additions to Pembina's business and asset base, growth and growth potential. These forward-looking statements and information are being made by Pembina based on certain assumptions that Pembina has made in respect thereof as at the date of this document including those discussed below.

With respect to forward-looking statements and information contained in this document, Pembina has made assumptions regarding, among other things: ongoing utilization and future expansion, development, growth and performance of the Fund's business and asset base; future demand for oil sands transportation services; future levels of oil and natural gas development in proximity to Pembina's pipelines and other assets (which could be affected by, among other things, possible changes to applicable royalty and tax regimes); the amount of future liabilities related to environmental incidents; the availability of coverage under Pembina's insurance policies (including in respect of Pembina's business interruption insurance policy); future acquisitions, growth and growth potential in Pembina's Conventional Pipelines, Oil Sands & Heavy Oil and Midstream & Marketing operations; potential revenue and cash flow enhancement; future cash flows; maintenance of operating margins; additional throughput potential on additional connections and other initiatives on the Conventional Pipelines; expected project start-up and construction dates; future distributions, payout ratios, taxation of distributions and, after conversion, dividends; tax and SIFT tax legislation, future financing capability and sources; negative credit rating adjustments; and the ability of Pembina to meet the listing conditions of the Toronto Stock Exchange for the listing of the shares of Pembina Pipeline Corporation.

Although the Fund believes the expectations and material factors and assumptions reflected in these forward-looking statements and information are reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. Readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause 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 and information.

None of the forward-looking statements described above are guarantees of future performance and are subject to a number of known and unknown risks and uncertainties, including, but not limited to: that the conversion to a corporate entity may not close when planned or at all or on the terms and conditions set forth herein and the failure of Pembina to obtain the necessary Unitholder, Court, regulatory and other third-party approvals, including approvals from Pembina's lenders, required in order to proceed with the conversion; the impact of competitive entities and pricing; reliance on key industry partners, alliances and agreements; the strength and operations of the oil and natural gas production industry and related commodity prices; the continuation or completion of third party projects; regulatory environment and inability to obtain required regulatory approvals (including in respect of the Nipisi and Mitsue pipelines and related facilities); tax laws and treatment; fluctuations in operating results; lower than anticipated results of operations and accretion from the Fund's business initiatives; reduced amounts of cash available for distributions to Unitholders; the ability of Pembina to raise sufficient capital (or to raise capital on favourable terms) to complete future projects and satisfy future commitments, including the construction of the Nipisi and Mitsue pipelines and related facilities; construction costs of the Nipisi and Mitsue pipelines and related facilities, construction delays; labour and material shortages; that Pembina may not meet the listing conditions of the Toronto Stock Exchange in respect of the listing of the shares of Pembina Pipeline Corporation following completion of the corporate conversion; and certain other risks detailed from time to time in the Fund's public disclosure documents available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements and information contained in this document speak only as of the date of this document. The Fund does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws. The forward-looking statements and information contained in this document are expressly qualified by this cautionary statement.

    
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    Internal Revenue Service ("IRS") Circular 230 disclosure: To ensure
    compliance with requirements imposed by the IRS you are hereby notified
    that: (a) any discussion of United States federal tax issues in this
    document is not intended or written by Pembina to be relied upon and
    cannot be relied upon by you for the purpose of avoiding penalties that
    may be imposed on you under the Internal Revenue Code; (b) such
    discussion is written in connection with the promotion or marketing of
    the transactions or matters addressed herein; and (c) you should seek
    advice based on your particular circumstances from an independent tax
    advisor.
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SOURCE Pembina Pipeline Corporation

For further information: For further information: Glenys Hermanutz, Vice President, Corporate Affairs, Pembina Pipeline Corporation, (403) 231-7500, 1-888-428-3222, e-mail: investor-relations@pembina.com


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