TORONTO, May 29, 2014 /CNW/ - Propel Capital Corporation (the "Manager"), as Manager of the Diversified Alpha Fund II (the "Fund"), announced today the intention to terminate the Fund (the "Termination"). The decision was made to terminate the Fund following receipt of the most recent annual redemption requests. As a result of redemptions, the net asset size of the Fund has been reduced to a level below which, in the opinion of the Manager, it is no longer economically feasible to continue the Fund. The Fund will terminate on or about June 29, 2014 (the "Termination Date") and the net assets of the Fund will be distributed, in one or more instalments, to unitholders of record on the Termination Date.
The Fund is linked to the return of Diversified Alpha II Corp. ("Portfolio Corp.") through a forward agreement. Currently, approximately 98% of the net asset value of Portfolio Corp. (the "Portfolio NAV") is represented primarily by cash (the "Liquid Assets"). The Fund also has exposure to two illiquid assets (the "Illiquid Assets") held by Portfolio Corp. representing approximately 2% of the Portfolio NAV.
The Annual Redemption has been suspended to facilitate the valuation and orderly disposal of the Illiquid Assets by Portfolio Corp. prior to the Termination Date. Units surrendered in connection with the Annual Redemption will be redeemed for the net asset value per unit determined on or about June 16, 2014 and will be paid all of their redemption proceeds on or before June 29, 2014.
All remaining unitholders may be paid in two or more instalments. If the Fund continues to hold an Illiquid Asset on the scheduled Termination Date, all remaining unitholders will be paid substantially all of the net asset value per unit as soon as practicable after the scheduled Termination Date and will receive the balance when the Fund disposes of such Illiquid Asset. Unitholders need not take any action to receive such payment. If the Fund continues to hold an Illiquid Asset on the scheduled Termination Date, it will continue until such time as such Illiquid Asset is sold. The Fund will not maintain the listing of the units on the Toronto Stock Exchange (the "TSX") after the scheduled Termination Date. The Fund intends to update unitholders as soon as practicable.
Effective May 30th, 2014, no ongoing management fees will be charged by the Manager or the portfolio manager of Portfolio Corp.
Unitholders who hold their units within a registered plan will not be subject to tax on the distribution payment. The Fund anticipates that the distribution payment received by unitholders will be received as a return of capital. The exact tax treatment will depend on each unitholder's circumstances. If the Fund no longer qualifies as a "mutual fund trust" within the meaning of the Income Tax Act (Canada) and the units are no longer listed on the TSX, the tax considerations for holders of registered plans would in some respects be materially and adversely different. All unitholders should consult with their own tax advisors regarding the Termination and distribution payment.
This press release constitutes notice to unitholders of termination of the Fund pursuant to the Fund's declaration of trust.
This press release contains forward-looking statements and information within the meaning of applicable securities legislation. Forward-looking statements can be identified by the expressions "seeks", "expects", "believes", "estimates", "will", "target" and similar expressions. The forward-looking statements are not historical facts but reflect the current expectations of the Manager and the portfolio managers of the underlying portfolios regarding future results or events and are based on information currently available to them. Certain material factors and assumptions were applied in providing these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements. The Manager believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions; however, the Manager can give no assurance that the actual results or developments will be realized. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. The Manager undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances except as required by securities laws. These forward-looking statements are made as of the date of this press release.
SOURCE: Propel Capital Corporation
For further information: please call Krista Matheson, Senior Vice President, Propel Capital at 416-572-2431 or visit www.propelcapital.ca