Keyera Announces Closing Details of Internal Reorganization

    CALGARY, Dec. 20 /CNW/ - Keyera Facilities Income Fund (TSX:KEY.UN;
KEY.DB) ("Keyera" or the "Fund") announced today that it has received all
necessary approvals relating to the internal reorganization approved by
Unitholders in June 2007 and expects to implement the reorganization on
January 2, 2008. The reorganization will streamline Keyera's existing
structure, enhance tax-planning flexibility, simplify accounting, legal,
reporting and income tax compliance, and reduce the general and administrative
costs associated with these activities.
    Due to uncertainty surrounding the interpretation of the legislation
imposing the new tax on flow-through entities, Keyera amended some of the
details of the reorganization presented to Unitholders at the annual and
special meeting of the Fund held in June 2007. As a result, the amended
reorganization will not result in any significant immediate tax savings within
Keyera's structure, but will permit Keyera to defer the utilization of some
tax pools until after January 1, 2011. As at January 1, 2007, Keyera had
approximately $385 million of unutilized tax pools and deductions, consisting
mostly of class 41 undepreciated capital costs, available for deduction by the
Fund's subsidiaries. Keyera plans to reduce the use of its available tax
deductions in years 2008 through 2010, thereby increasing deductions available
for the years after 2010.
    "The completion of this reorganization will be an important step for
Keyera as we prepare for the implementation of the Government of Canada's new
tax on the distributions of publicly-traded Canadian income trusts in 2011."
said Jim Bertram, President & CEO of Keyera. "In addition to the benefits
associated with simplified accounting, legal, reporting and income tax
compliance, the reorganization provides us with enhanced tax planning
flexibility that should enable us to minimize the amount of cash taxes payable
by Keyera in 2011."
    Having received an advance income tax ruling from the Canada Revenue
Agency confirming that the reorganization can be completed without adverse
Canadian tax consequences for the Fund or its Unitholders, and final court
approval for the plan of arrangement pursuant to which the reorganization will
be implemented, Keyera is positioned to close the reorganization on January 2,
    In connection with the implementation of the reorganization, a number of
events will take place, including the issuance and redemption of shares and
units of a number of subsidiaries of the Fund and the payment on January 2,
2008 of a special cash distribution in the amount of $0.003529 per unit plus a
special in kind distribution in the amount of $0.02 per unit to Unitholders of
record as of December 31, 2007. These special distributions are considered to
be a return of capital and should not be included in income. For further
information on the tax considerations applicable to these special
distributions, Unitholders are encouraged to refer to the tax information
provided on the "Investor Information" section of the Keyera website at, or to pages 50 through 51 of the Fund's Information Circular
dated April 30, 2007 which is available on SEDAR at
    The reorganization does not involve the acquisition of any additional
interest in any operating assets or the disposition of any of the Fund's
existing interests in operating assets. Upon completion of the reorganization,
each Unitholder will continue to hold the same number of units and the Fund
will continue to own the same proportionate interest in the assets that each
held immediately prior to the reorganization.

    About Keyera Facilities Income Fund

    Keyera Facilities Income Fund (TSX:KEY.UN; KEY.DB) operates one of the
largest natural gas midstream businesses in Canada. Its business consists of
natural gas gathering and processing as well as the processing,
transportation, storage and marketing of natural gas liquids (NGLs) and crude
oil midstream activities.
    Keyera's gas processing plants and associated facilities are
strategically located in the west central and foothills natural gas production
areas of the Western Canadian Sedimentary Basin. Its NGL and crude oil
infrastructure includes pipelines, terminals and processing and storage
facilities in Edmonton and Fort Saskatchewan, Alberta, a major North American
NGL hub. Keyera markets propane, butane and condensate to customers in Canada
and the United States.

    This release, and the documents referred to herein, contain
forward-looking statements that involve known and unknown risks and
uncertainties, many of which are beyond Keyera's control. The forward-looking
statements are based on management's current expectations and assumptions
relating to Keyera's business and the environment in which it operates. As the
results or events predicted or implied in these forward-looking statements
depend upon future events, actual results or events may differ materially from
those predicted.
    The discussion of the proposed reorganization (the "Reorganization") and
the discussion of future use of tax pools and future taxes constitute
forward-looking information. Unitholders and prospective investors are
cautioned not to place undue reliance on such forward-looking information as
such information is based on certain assumptions and a number of known and
unknown risks and uncertainties, of both a general and specific nature, that
could cause actual events to be materially different from those described
above. For example, with respect to the Reorganization these assumptions and
factors include, but are not limited to: there being no change in taxation or
other laws which would have a material adverse significance in respect of the
Reorganization; no laws or policies being enacted or promulgated, or no order
or decree being issued or made, which would cease trade, enjoin, prohibit or
impose material limitations on the Reorganization or the transactions
contemplated thereby; and management exercising its discretion to proceed with
the Reorganization. Readers should refer to Keyera's Information Circular
dated April 30, 2007 for a more complete discussion of the risks, assumptions
and conditions associated with the Reorganization. With respect to future use
of tax pools and future taxes, the assumptions and factors include, but are
not limited to, distribution levels and the potential for tax or other
regulatory or policy changes to be announced by the federal government. Keyera
cautions that the foregoing list of factors and assumptions is not exhaustive.
    For additional information on the factors which could cause actual
results or events to differ materially the forward-looking information
contained herein, see Keyera's public filings on Unless
otherwise required by applicable laws, Keyera does not intend to publicly
update or revise forward-looking statements, whether as a result of new
information, future events or otherwise.

    %SEDAR: 00019203E

For further information:

For further information: about Keyera Facilities Income Fund, please
visit our website at or contact: John Cobb, Director, Investor
Relations, or Bradley White, Investor Relations Advisor, E-mail:, Telephone: (403) 205-7670, Toll Free: 1-888-699-4853,
Facsimile: (403) 205-8440

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