General Donlee Income Fund Signs Agreement to Convert to a Corporation

TORONTO, April 20 /CNW/ - General Donlee Income Fund (the "Fund") (TSX: GDI.UN) announced today that it has signed a definitive agreement (the "Arrangement Agreement") with General Donlee Limited ("General Donlee") and General Donlee Canada Inc. ("GDI"), a newly incorporated wholly-owned subsidiary of the Fund, setting out the principal terms of a proposed arrangement to convert the Fund to a publicly listed corporation (the "Arrangement").

Proceedings for approval of the Arrangement under Section 192 of the Canada Business Corporations Act (the "CBCA") will be submitted for approval to the Nova Scotia Supreme Court (the "Court") on or about April 27, 2010. If an interim order is granted by the Court, the Arrangement will be subsequently submitted for approval by Unitholders at the Fund's annual and special meeting of Unitholders (the "Meeting") to be held in Toronto, Ontario on June 14, 2010. If approved by Unitholders at the meeting, the Arrangement will then be submitted to the Court for final approval.

Principal Terms of the Arrangement

Pursuant to the Arrangement, the Fund's unitholders (the "Unitholders") will ultimately receive, for each unit of the Fund ("Unit") held, one common share of GDI ("GDI Share") at the effective time of the Arrangement (the "Effective Time"), which is expected to be 12:01 a.m. (E.S.T) on January 1, 2011 (the "Effective Date"). At the Effective Time, GDI Shares will be listed on the Toronto Stock Exchange ("TSX"), subject to TSX approval. The Arrangement is structured to allow Unitholders resident in Canada to receive GDI Shares on a tax deferred basis for Canadian income tax purposes.

In connection with the Arrangement, GDI will assume all of the covenants and obligations of the Fund under the indenture (the "Debenture Indenture") dated June 20, 2007, between the Fund and Computershare Trust Company of Canada (the "Debenture Trustee") in respect of the Fund's outstanding 7.0% convertible unsecured subordinated debentures ("Debentures"). Provided the Arrangement is completed, holders of Debentures will be entitled to receive GDI Shares rather than Units on conversion of such Debentures after the Effective Date, on the same conversion basis as Units were previously issuable on conversion thereof. All other terms and conditions of the Debenture Indenture will continue to apply. At the Effective Time, the Debentures to be assumed by GDI pursuant to the Arrangement and the GDI Shares to be reserved for issuance on conversion, redemption or maturity of such Debentures, will be listed on the TSX, subject to TSX approval. Immediately following the Effective Time, GDI and the Debenture Trustee will enter into a supplemental debenture indenture giving effect to the assumption of the Debentures by GDI in accordance with the requirements of the Debenture Indenture.

The information circular being prepared in connection with the Meeting (the "Information Circular") will include a summary of the Arrangement Agreement and any additional details concerning the Arrangement. Unitholders should review the full text of the Arrangement Agreement, including the plan of arrangement attached as Exhibit "A" to the Arrangement Agreement, which will be filed on SEDAR at, for all terms and conditions of the Arrangement.

Information Concerning GDI

GDI was incorporated on April 14, 2010 pursuant to the CBCA for the sole purpose of participating in the Arrangement. The head and principal office of GDI is located at 1959 Upper Water Street, Suite 900, Halifax, Nova Scotia, B3J 2X2. GDI is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares issuable in series. The Fund is the sole shareholder of GDI. Each common share entitles the holder thereof to receive notice of and to attend all meetings of the shareholders of GDI and to one vote at such meetings. The holders of common shares will be, at the discretion of the board of directors and subject to applicable legal restrictions, entitled to receive any dividends declared by the board of directors on the common shares. The holders of common shares will be entitled to share equally in any distribution of the assets of GDI upon the liquidation, dissolution, bankruptcy or winding up of GDI or other distribution of its assets among its shareholders for the purpose of winding-up its affairs. The preferred shares of GDI are issuable in one or more series. The board of directors is empowered to fix the number of preferred shares and the rights, privileges, restrictions and conditions to be attached to the preferred shares of each series. The full text of rights, privileges, restrictions and conditions of such shares set out in the articles of incorporation of GDI, a copy of which will be filed on SEDAR at

Approvals and Closing of the Arrangement

The Information Circular is expected to be available on SEDAR, and mailed to Unitholders, on or about May 19, 2010. The Unitholder vote in respect of the Arrangement will take place at the Meeting. To proceed, the Arrangement must be approved by the holders of at least 66 2/3% of the Fund's units represented at the meeting. In addition to the requirement of Court approval and the approval of Unitholders, the Arrangement is subject to other customary conditions, including the requirement to obtain all necessary third party and regulatory consents and approvals.

Board Recommendation

Based on its review, the Board of Trustees of the Fund (the "Board") concluded the trust structure will cease to be an effective structure for the maximization of Unitholder value beginning in 2011 and that Unitholders will benefit from conversion of the Fund to corporate status at that time. Accordingly, the Board has unanimously determined that the Arrangement is fair to Unitholders and is in the best interests of the Fund and Unitholders, and recommend that the Unitholders vote in favour of the Arrangement resolution as will be presented in the Information Circular (the "Arrangement Resolution"). Each of the Trustees of the Fund and the directors and officers of General Donlee have indicated they intend to vote all of their Units (if any) in favour of the Arrangement Resolution.


It is expected that the Fund will pay regular monthly cash distributions in the normal course up to the Effective Date, subject to the discretion of the Trustees of the Fund. If the Arrangement is approved by Unitholders at the Meeting and the Effective Date occurs on or about January 1, 2011, as currently scheduled, it is anticipated that GDI will adopt a cash management policy that will enable GDI to pay regular dividends in order to provide a significant level of current income to shareholders, while providing GDI with flexibility to repay debt and/or repurchase convertible debentures and shares in the market in a manner that will maximize long term shareholder value. The cash management policy will be subject to the discretion of the board of directors of GDI and may vary depending on, among other things, GDI's operating cash flow, financial requirements, limitations in credit facilities, restrictions under credit facilities, the satisfaction of solvency tests imposed by the CBCA for the declaration of dividends and other conditions existing at such future time. As a result, no assurance can be given as to whether GDI will pay dividends, or the frequency or amount of any such dividend.

About General Donlee Income Fund

The Fund is a trust established to hold the securities of General Donlee, a leading diversified manufacturer of precision-machined products for the military, commercial and general aerospace industries, and a specialist in the manufacture of precision-machined products for the industrial products and power generation industries. General Donlee's operating strategy focuses on targeting niche markets for products that are aligned with its sophisticated manufacturing capabilities and skilled workforce.

Forward-Looking Statements

This press release and the documents incorporated by reference herein contain forward-looking statements. Forward-looking information and statements are identified by words or phrases such as "anticipates", "expects", "believes", "estimates", "intends", "could", "may", "plans", "predicts", "projects", "will", "would", "foresees", "remain confident that" and other similar expressions or the negative of these terms and include, without limitation, forward-looking statements made in this press release relating to: (i) distributions and dividends; (ii) expected timing of the Arrangement; (iii) the plans of GDI on completion of the Arrangement and the effect thereof; (iv) listing on stock exchanges and the timing thereof; (v) expected timing of court hearings; (vi) tax implications of the Arrangements; (vii) the execution of a supplemental indenture and other documents relating to the Debentures; (viii) mailing and filing date of meeting materials; and (ix) the voting intentions of trustees, officers and directors. Actual events or results may differ materially. Forward-looking statements included in this press release are made based on management's belief as well as assumptions made by, and information currently available to, management of the Fund. While such beliefs and assumptions are considered reasonable by the Fund, they are inherently subject to significant business, economic and competitive uncertainties and contingencies. A number of important factors could cause actual results to differ materially from those projected in the forward-looking statements. These uncertainties and risks include, but are not limited to: (i) changes in laws and regulations affecting the Fund or GDI and their respective business operations, (ii) changes in taxation of the Fund or GDI, (iii) general economic and business conditions in the markets affecting the Fund or GDI, (iv) failure to satisfy the conditions of the conversion, (v) inability to meet stock exchange listing requirements, (vi) inability to obtain required consents, permits or approvals, for the conversion, including the requisite Unitholder approval and Court approval of the Arrangement, (vii) inability to meet or continue to meet listing requirements; (viii) failure to realize anticipated benefits of the Arrangement; (ix) actual future market conditions and actual future operating and financial results being different than anticipated by management and the board of trustees of the Fund; * stock market volatility and the inability to access sufficient capital from internal and external sources; (xi) fluctuation in foreign exchange or interest rates. The foregoing list is not exhaustive. In addition, these forward-looking statements relate to the date on which they are made. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, the Fund cannot assure Unitholders that actual results will be consistent with these forward-looking statements, and, except as required by law, the Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In formulating the forward-looking statements herein, management has assumed that business and economic conditions affecting it will continue substantially in the ordinary course, including without limitation with respect to industry conditions, general levels of economic activity, regulation, taxes, foreign exchange rates and interest rates, that there will be no unexpected material changes in its facilities, equipment, customer and employee relations, credit arrangements or credit and collections experience, and that the integration of new equipment will proceed relatively smoothly.

%SEDAR: 00017571E


For further information: For further information: Gerald Thain, Chief Financial Officer, Telephone: (416) 743-4417, E-mail:, Web site:

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