TORONTO, May 5 /CNW/ - Home Equity Income Trust (TSX: HEQ.UN) ("HOMEQ" or
the "Trust") is pleased to announce that the Ontario Superior Court of Justice
issued a final order approving the plan of arrangement to convert HOMEQ to a
corporate structure. The conversion, which was previously approved by the
Trust's unitholders at its annual and special meeting on April 30, will result
in the reorganization of HOMEQ's income trust structure to a publicly-listed
corporation ("HOMEQ Corporation") that will own all the units of the Trust.
Unitholders of the Trust will receive, for each unit held, one common share of
HOMEQ Corporation on the effective date of the conversion. The Trust
anticipates that the conversion will be completed on a tax-free rollover basis
for Canadian residents.
The conversion is part of the Trust's plan to continue its operating
subsidiary, Canadian Home Income Plan Corporation ("CHIP"), as a
federally-regulated, Schedule I Canadian bank. The new bank will be called
HomEquity Bank in English and Banque HomEquity in French. By obtaining a bank
charter, HomEquity Bank will have access to retail deposits sourced through
deposit brokers. Continuing CHIP as a bank is subject to the review and
approval of an application to the Minister of Finance. The Trust has been
advised by the Office of the Superintendent of Financial Institutions that
under current federal policy, the bank application will not be considered by
the Minister until the conversion has been completed.
The conversion will be completed when all necessary conditions are
satisfied and the Trust's board believes that the bank application is likely
to be approved. Management expects the conversion to take effect before the
end of the second quarter.
"We are very pleased that the final court order has been issued approving
the plan of arrangement", said Steven Ranson, President and CEO, Home Equity
Income Trust. "The establishment of the bank is intended to enhance the
reliability and availability of funding for our core reverse mortgage
business. We are excited about moving forward with our bank application",
added Mr. Ranson.
Forward Looking Statements
Home Equity Income Trust from time to time makes written and verbal
forward-looking statements about business objectives, operations, performance,
and financial condition, including, in particular, the forecast of cash
distributions and anticipated dividend policy, the Trust's plans relating to
the conversion and the establishment of HomEquity Bank, and the likelihood of
HOMEQ's success in developing and expanding its business. These may be
included in the Annual Reports, regulatory filings, reports to unitholders,
press releases, Trust presentations and other communications. These
forward-looking statements are based upon a number of assumptions and
estimates that are inherently subject to significant uncertainties and
contingencies as described in the Trust's Annual Information Form and the
Management Discussion and Analysis in its most recent financial statements,
many of which are beyond the control of HOMEQ. Actual results may differ
materially from those expressed or implied by such forward-looking statements.
HOMEQ does not undertake to update any forward-looking statement, whether
written or verbal, that may be made from time to time except as required by
applicable securities laws.
About Home Equity Income Trust
Home Equity Income Trust provides unitholders with monthly cash
distributions from a portfolio of reverse mortgages originated by its wholly
owned subsidiary Canadian Home Income Plan Corporation. As of December 31,
2008, the portfolio generating cash returns to the Trust comprised
approximately 7,000 reverse mortgages with an accrued value of $814 million,
secured by residential properties across Canada worth approximately $2.3
billion. CHIP (www.chip.ca), has been the main underwriter of reverse
mortgages in Canada since pioneering the concept in 1986.
The Trust's units trade on the Toronto Stock Exchange under the symbol
HEQ.UN. Additional information on HOMEQ, including annual and quarterly
reports can be viewed at www.homeq.ca.
For further information:
For further information: Steven K. Ranson, President and Chief Executive
Officer, (416) 413-4663, firstname.lastname@example.org; Gary Krikler, Senior Vice President
and Chief Financial Officer, (416) 413-4679, email@example.com