TORONTO, May 1 /CNW/ - The Northwater Top 75 Income Trusts PLUS (the
"Trust") today is providing investors with an update on the status of actions
taken within the Trust to effect the orderly liquidation of the Trust's assets
as previously announced.
The Trust generally holds an income trust portfolio comprised of an
equally weighted portfolio of the largest 75 income trusts by market
capitalization listed on the Toronto Stock Exchange. The Trust also has
exposure to a portfolio of market-neutral hedge funds held by Enhancement Fund
Limited (the "Fund") through a forward purchase and sale agreement.
Status of Wind-Up
Market conditions have caused many underlying hedge funds held by the
Fund to invoke various restrictions on redemptions including, without
limitation, restricting redemptions to a limited percentage of the aggregate
net asset value of such underlying hedge funds, the temporary suspension of
redemptions altogether, or the commencement of a controlled liquidation and
wind-up of the underlying hedge fund's business.
As of March 31, 2009, approximately 80% of the Fund (118% of the Trust)
continued to have exposure to underlying hedge fund market movements. Based on
the information that Northwater Capital Management Inc. (the "Manager") had
available to it as of March 31, 2009, the Manager anticipates that
approximately 49% of the Fund (72% of the Trust) may be subject to
restrictions on liquidity that could extend beyond December 31, 2009 (the
"Termination Date"). The Manager is working to affect the monetization of the
hedge fund portfolio on or prior to the Termination Date against a backdrop of
liquidity constraints. In some instances, the Fund (and by extension the
Trust) will have exposure to the particular investment strategy engaged in by
a hedge fund until the Fund's redemption in the hedge fund is effective.
Potential Tax Implications of Wind-Up
As announced previously, the Manager currently anticipates commencing
cash distributions ("Termination Distributions") to investors on or about
December 31, 2009. Upon the commencement of the payment of Termination
Distributions from the Trust, the percentage of a particular illiquid holding
in relation to the Trust's assets is likely to exceed the 10% concentration
limits required in order for the Trust to continue to qualify as a unit trust
for Canadian income tax purposes. If and when the Trust fails to qualify as a
unit trust it will no longer qualify as a mutual fund trust for Canadian
income tax purposes and the Trust will no longer be a "qualified investment"
for registered accounts, including without limitation, RRIF's, RRSP's and
RESP's. The Manager anticipates that the Trust will lose its "qualified
investment" status for Canadian income tax purposes on or about December 31,
However, it is possible that the Trust could lose its "qualified
investment" status prior to December 31, 2009. The Manager will endeavor to
provide investors with as much advance notice as reasonably possible if the
Trust's loss of its "qualified investment" status will occur prior to December
31, 2009. Investors are advised to speak with their advisors to obtain tax
advice with respect to appropriate actions to take in respect of the failure
of the Trust to qualify as a mutual fund trust.
Units of the Northwater Top 75 Income Trusts PLUS are listed on The
Toronto Stock Exchange under the symbol NTP.UN.
For further information:
For further information: Mohamed Khaki at Northwater Capital Management
Inc. at (416) 360-5435