TORONTO, June 18, 2013 /CNW/ - Return On Innovation Advisors Ltd. ("ROI Capital"), the manager of ROI Canadian Mortgage Income Fund (TSX: RIL.UN) (the
"Fund"), announced today that a distribution of $0.867 per unit will be paid
on July 15, 2013 to unitholders of record of the Fund on June 28, 2013.
The distribution includes the regularly scheduled monthly cash
distribution of $0.042 per unit plus a special $0.825 per unit
distribution paid by the issue of additional units of the Fund. All
distributions made by the Fund in the 2013 tax year are expected to
consist of capital gains, which are generally subject to tax in the
hands of taxable unitholders.
The units of the Fund that are issued for the non-cash portion of the
distribution will be consolidated immediately with all other units of
the Fund outstanding, so that thereafter, in most cases, a unitholder
of the Fund will hold the same number of units as were held before the
issue of such units. The additional units would be issued at a value
equal to the closing trading price on July 12, 2013, being the last
trading day on the Toronto Stock Exchange ("TSX") before the payment date of the distribution. A non-resident unitholder
of the Fund may have fewer units after the consolidation by reason of
withholding tax requirements in respect of the distribution to be
satisfied by the issue of units.
The March 2013 federal budget included proposed changes to eliminate
character conversion transactions using forward agreements; they affect
many funds in Canada that pursue tax advantaged distribution
strategies, including the Fund, whose units are traded on the TSX.
"The special distribution reflects the realized capital gains from the
matured forward contract of the Fund" says ROI Capital President and
Founding Partner, Wilfred Vos. "This special distribution means our
investors will realize their gains now and have more certainty as to
the characterization of the distributed income of the Fund in 2013 in
light of changes introduced in the March 2013 federal budget."
On May 6, 2013, the Fund's forward agreement settled in whole resulting
in the realization of a capital gain of approximately $102 million. The
Fund has determined that it is appropriate to effect a special
distribution by way of issuing additional units of the Fund at the same
time as the scheduled monthly cash distribution for June 2013, rather
than to defer the distribution until the year end. A year-end
additional distribution may still occur if the taxable income of the
Fund for 2013 exceeds the aggregate of the cash distributions made
during the year plus the amount of the June 2013 special distribution.
The quantum of such additional distribution, if any, is uncertain at
this time. As a result of the proposed changes introduced in the 2013
federal budget to eliminate character conversion transactions, it is
expected that, beginning in 2014, the Fund's scheduled monthly
distributions will consist primarily of ordinary income.
"Doing what is best for our unitholders is our paramount consideration.
We have communicated openly, consistently and transparently about the
Fund's value and holdings and we will continue to do so." said Vos.
"The investments in the Fund remain sound, the portfolio continues to
perform as expected and is well positioned to meet our distribution
targets for the rest of the year."
ROI Capital entered into a new forward agreement on May 6, 2013, on
behalf of the Fund, with a term of 179 days maturing on November 1,
2013. The intention was to permit the Fund to retain the previous
structure of its arrangements while providing it more time to assess
and implement appropriate arrangements beyond the short term that will
appropriately address its individual situation and the effects on
unitholders. ROI Capital is continuing to work with its lawyers and tax
advisors to assess the consequences of the proposed changes for forward
agreements under the March 2013 federal budget for the Fund and its
unitholders. ROI Capital will continue to examine the potential
implications of the proposed changes in the budget for the Fund and its
unitholders and possible changes for the Fund resulting from such
implications and will continue to act in the best interest of
unitholders in addressing the new circumstances.
Certain statements included in this news release constitute
forward-looking statements. The forward-looking statements are not
historical facts but reflect current expectations regarding future
results or events. 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 and, accordingly,
readers are cautioned not to place undue reliance on such statements
due to the inherent uncertainty therein. ROI Capital undertakes no
obligation to update publicly or otherwise revise any forward looking
statement whether as a result of new information, future events or
other such factors which affect this information, except as required by
law. Investment funds are not covered by the Canada Deposit Insurance
Corporation or by any other government deposit insurer. There is no
guarantee that an investment in the Fund will earn any positive return
in the short or long term nor is there any guarantee that the Fund's
investment objectives will be achieved or that the net asset value per
unit will appreciate or be preserved.
SOURCE: ROI Capital
For further information:
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
President & Founding Partner