TORONTO, June 4 /CNW/ - Crown Hill Fund (the "Trust") (TSX: MYT.UN)
announced today that it has acquired the management rights to all of the funds
in the Citadel Group of Funds, other than CGF Mutual Funds Corporation,
effective June 3, 2009, for an aggregate purchase price of $28 million (the
"Citadel Acquisition"). The Citadel Group of Funds is comprised of thirteen
investment funds (the "Citadel Funds") with approximately $1 billion in assets
under administration. The change of the administrator for CGF Mutual Funds
Corporation remains subject to notice to the securityholders of each mutual
fund class of CGF Mutual Funds Corporation and approval of the applicable
securities regulatory authorities.
Following the Citadel Acquisition, the Trust announced that it intends to
effect a reorganization of the business and affairs of the Trust (the
"Reorganization"). The purpose of the Reorganization is to facilitate the
merger with the Trust of the Citadel Funds with investment objectives similar
to those of the Trust (the "Mergers").
Pursuant to the Reorganization, the Trust and its manager, Crown Hill
Capital Corporation ("Crown Hill"), will enter into a joint venture through a
new joint venture entity (the "Joint Venture"). The Joint Venture will become
the trustee and manager of the Trust. The Joint Venture will also be the
trustee and manager of the Citadel Funds until they are merged with the Trust.
Under the terms of the Joint Venture, the Trust will be entitled to receive
all the management fees earned by the Joint Venture until the Trust recovers
all the expenses of the Citadel Acquisition, an initial $4 million return from
the Joint Venture plus approximately a 6% return on both such expense recovery
amount and $4 million return (collectively, the "Preferred Return"). Once the
Trust has received the Preferred Return in full, the Trustee will be entitled
to receive management fees from the Joint Venture.
Crown Hill believes the Reorganization will result in the following
benefits to the Trust:
- Increased NAV: As a result of the Trust holding a senior interest in
the Joint Venture, and assuming the merger with the Trust of Citadel
Funds with an aggregate net asset value of at least $600 million,
Crown Hill anticipates an increase in the net asset value of the
Trust of approximately $0.50 per Unit for the existing holders of
Trust units ("Unitholders").
- Lower General and Administration Costs per Unit: Fixed annual
operating costs will be spread across a larger base of assets, which
will reduce operating costs per Unit and should improve returns.
- Enhanced Liquidity: Following the Mergers, the combined fund will
have a larger market capitalization and a greater number of units and
Unitholders which is expected to provide greater liquidity to
Certain terms of the Reorganization constitute related party transactions
under Multilateral Instrument 61-101- Protection of Minority Security Holders
in Special Transactions ("MI 61-101"). As such, in order to proceed, the
Reorganization must be approved by a majority of the votes cast by Unitholders
of the Trust at a special meeting of Unitholders to be held on June 29, 2009
(the "Meeting"). Additional information on the Reorganization and the Meeting
will be set out in a notice of special meeting and management information
circular that will be mailed to Unitholders of the Trust and filed in
accordance with applicable securities laws.
The Trust also intends to move its listing to the Canadian National Stock
Exchange (the "CNSX"). CNSX is a new stock exchange for trading equity
securities. Once listed on the CNSX, the Trust intends to delist from the
Toronto Stock Exchange. The listing on the CNSX is intended to facilitate the
Mergers pursuant to the permitted merger provisions of the Citadel Funds'
declarations of trust without the requirement for Citadel unitholder approval.
As at June 2, 2009, the Trust had a net asset value of $5.50 per unit.
This release contains forward-looking statements. These statements are
based on certain factors and assumptions including, results of operations,
performance and effective income tax rates. While Crown Hill considers these
factors and assumptions to be reasonable based on information currently
available, they may prove to be incorrect. Several factors could cause actual
results to differ materially from those in the forward-looking statements,
including, but not limited to: the timing of and the ability to carry out the
Reorganization, including the Mergers and fluctuations in the net asset value.
Forward-looking statements are given only as at the date of this release and
Crown Hill and the Trust disclaims any obligation to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable law.
For further information:
For further information: Crown Hill Capital Corporation, Tel: (416)