CRT.UN & ENI.UN
TORONTO, Feb. 15, 2012 /CNW/ - Crown Hill Capital Corporation ("Crown Hill"), the administrative agent of Citadel SMaRT Fund (TSX: CRT.UN) (the "Smart Fund") and the manager of Energy Income Fund (TSX: ENI.UN) (the "Energy Fund", and together with the Smart Fund, the "Funds") is pleased to announce that, subject to regulatory and other approvals, Smart Fund will merge (the "Merger") into Energy Fund on March 23, 2012 (the "Effective Date"). The Merger will be effected in accordance with the "permitted merger" provisions set out in Smart Fund's declaration of trust made as of July 19, 2001 and amended and restated as of October 12, 2005.
The Merger will be effected using an exchange ratio calculated as the net asset value per unit of Citadel SMaRT Fund divided by the net asset value per unit of Energy Income Fund, each determined as at the close of trading on the Toronto Stock Exchange ("TSX") on the business day immediately prior to the Effective Date (the "Exchange Ratio").
The TSX requires unitholder approval for the Merger, unless an exemption is applicable, as a condition of acceptance of the transaction since the units of Energy Income Fund issuable pursuant to the Merger would represent greater than 25% of the outstanding units of Energy Income Fund. The rules of the TSX contain an exemption from the requirement to obtain unitholder approval if the Independent Review Committees of both the continuing fund and terminating fund have approved the transaction, the manager of the continuing fund has determined that the acquisition is consistent its investment objectives and the number of securities issued or made issuable by the continuing fund is less than 100% of the number of securities of the continuing fund issued and outstanding on a non-diluted basis.
The Independent Review Committees of the Smart Fund and the Energy Fund have approved the Merger and Crown Hill, in its capacity as manager of the Energy Fund, has determined that the Merger is consistent with the investment objectives of the Energy Fund.
ENI currently has 8,287,520 units issued and outstanding. ENI expects to issue approximately 3,829,821 additional units pursuant to the acquisition representing approximately 46% of the number of ENI units currently issued and outstanding (or approximately 33% of ENI units on a fully diluted basis).
Investors in Smart Fund will not experience any change in the total management and advisory fees paid as a result of the Merger. The Funds will bear none of the costs and expenses of the Merger.
Prior to the Merger, Smart Fund will provide unitholders who do not wish to become unitholders of Energy Fund with a redemption right ("Cash Alternative") to have their units redeemed for an amount in cash equal to 100% of the net asset value per unit determined on the close of business on March 22, 2012 (the "Redemption Date"). In order to receive the Cash Alternative, unitholders of Smart Fund must ensure that their request for redemption of units is received by no later than the close of business on March 15, 2012. Please note that if you exercise the right to receive the Cash Alternative you are not obliged to exercise such right in respect of all units that you own.
Payment in respect of the Cash Alternative will be made as soon as practically possible and in any event no later than March 28, 2012.
Unitholders of Smart Fund who do not exercise the right to receive the Cash Alternative will receive units of Energy Fund in exchange for their units of Smart Fund.
Crown Hill will issue a press release on March 22, 2012 setting out the exact Exchange Ratio.
Crown Hill believes that the Merger, which is expected to be implemented on a taxable basis will provide investors with enhanced liquidity and a lower management expense ratio. In addition, the Manager believes that the investment strategy and restrictions in Energy Fund are more appropriate in the current environment and are more robust for dealing with future changes than that of Smart Fund and that the investment advisor for the Energy Fund has more experience investing in the energy sector.
Certain statements contained in this press release may include forward-looking information with respect to the Fund's operations and future financial results. Such statements are based on current expectations, are subject to a number of uncertainties and risks, and actual results may differ materially from those contained in such statements. Further information can be found in the disclosure documents filed by the Fund at www.sedar.com.
For further information:
Investor Relations department at 416.361.9673 or toll-free at 1.877.261.9674.