TORONTO, Dec. 18, 2014 /CNW/ - Marret Asset Management Inc. ("Marret") today announced that Marret Multi-Strategy Income Fund (TSX: MMF.UN) will terminate. The decision to terminate the fund was made after receipt of annual redemption requests aggregating approximately $14.5 million which, if processed, would result in the fund becoming too small to obtain adequate diversification when divided across four investment portfolios (collectively, the "Portfolio") pursuant to its objectives. As a result, Marret, the manager of the fund, is of the opinion that it is in the best interests of unitholders to terminate the fund.
The fund currently pursues its investment objective by using a forward agreement to gain exposure to the Portfolio held by a reference trust. In connection with terminating the fund, the Manager intends to settle the forward agreement and thereafter have the fund invest directly in securities of the reference trust.
It is expected that the net assets of the fund will be distributed to unitholders in two stages. Unitholders of record on January 19, 2015 will receive on or about January 22, 2015 a distribution of their pro rata amount of the net proceeds received by the fund from redeeming securities of the reference trust equal in value to the liquid assets (the "Liquid Portfolio") of the reference trust after providing for the liabilities of the fund. The fund will redeem its remaining securities of the reference trust and distribute to unitholders the net proceeds therefrom (less any amount necessary to provide for the liabilities of the fund) at a later date once the reference trust has liquidated the asset not included in its Liquid Portfolio (the "Private Portfolio"). As of December 15, 2014, $8.2905, or 90.87% of the fund's net asset value per unit of $9.1237 was attributable to the Liquid Portfolio, and $0.8332, or 9.13% of the fund's net asset value per unit was attributable to the Private Portfolio. If all redemption requests are processed on December 31, 2014, it is expected that the remaining Liquid Portfolio would constitute approximately $15.4 million of the fund's net asset value and the Private Portfolio of approximately $3 million would become equivalent to approximately 16.75% of the net asset value of the fund. Any returns of the fund after the settlement of the forward agreement will no longer be tax-advantaged.
Subject to obtaining regulatory relief, all requests received by the fund to redeem units on December 31, 2014 will be suspended in order that all unitholders may be treated in a similar manner in connection with the termination of the fund.
The fund will continue until such time (the "Termination Date") as the net proceeds from the sale of the Private Portfolio are distributed to unitholders. No ongoing management or other fees will be charged by Marret for overseeing the liquidation of the fund's assets and the termination of the fund. It is Marret's current intention to seek to maintain the listing of the Class A units of the fund on the Toronto Stock Exchange until the Termination Date; however, there is no guarantee the TSX will allow the Class A units to remain listed. Marret also intends to publish a NAV for the units on a weekly basis on its website at www.marret.com.
The Private Portfolio consists of bonds issued by:
- Cline Mining Corporation, a Canadian resource development company with mineral interests that include assets in coal, gold, iron ore, oil and gas and uranium. Cline's principal asset is the New Elk Coal Mine, based in Trinidad, Colorado, which is a fully permitted metallurgical coal project with a measured and indicated coal resource of almost 620 million tons of in-place coal.
- Data & Audio-Visual Enterprises Holdings Inc., which owns and operates a mobile communications network under the Mobilicity name. It owns valuable wireless spectrum licences that are necessary for wireless operators to meet the increasing demand for wireless data services.
Marret further announces that the fund will pay a distribution in the amount of $0.15 per unit on or before January 15, 2015 to Class A and Class F unitholders of record on December 31, 2014. Given the fund's planned termination, and on the recommendation of Marret, as manager, this is anticipated to be the last fixed quarterly distribution by the fund.
Canadian federal income tax considerations
The following is a general discussion of the relevant tax considerations in respect of the units and the termination of the fund. Unitholders should consult their own tax advisors with respect to their particular tax circumstances.
A unitholder who is resident in Canada will generally be required to include in computing income for a taxation year that part of the net income of the fund, including net realized taxable capital gains, that is paid or becomes payable to the unitholder by the fund in the year. To the extent that amounts payable to a unitholder are designated by the fund as the taxable portion of net realized capital gains, those amounts will retain their character and be treated as such in the hands of the unitholder.
Distributions to a unitholder in excess of the unitholder's share of the fund's net income and net realized capital gains will generally not result in an income inclusion, but will reduce the adjusted cost base of the unitholder's units. To the extent that the adjusted cost base of a unit held as capital property would otherwise be less than zero, the unitholder will be deemed to have realized a capital gain equal to such negative amount and the adjusted cost base to the unitholder will be increased by the amount of such deemed capital gain.
About Marret Asset Management Inc.
Marret Asset Management Inc. specializes in fixed income and particularly in high-yield debt strategies. The experienced team of investment professionals is led by Barry Allan, President and Chief Investment Officer. He founded Marret in 2000, following a career at Altamira, Nesbitt Thomson and a Canadian chartered bank, and has over 30 years of experience in credit and fixed-income markets.
This press release contains forward-looking statements and information within the meaning of applicable securities legislation. Forward-looking statements can be identified by the expressions "seeks", "expects", "believes", "estimates", "will", "target" and similar expressions. The forward-looking statements are not historical facts but reflect the current expectations of Marret and the managers of the underlying portfolios regarding future results or events and are based on information currently available to them. Certain material factors and assumptions were applied in providing these forward-looking statements. All forward-looking statements in this press release are qualified by these cautionary statements. Marret believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions; however, Marret can give no assurance that the actual results or developments will be realized. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risks Factors" in the prospectus. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. Marret undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances except as required by securities laws. These forward-looking statements are made as of the date of this press release.
SOURCE: CI Investments Inc.
For further information: Marret Investor Services, 416-214-5800 or [email protected]