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TORONTO, Dec. 10, 2014 /CNW/ - Further to its press release dated November 20, 2014, Onex Credit Partners, LLC (the "Manager"), as the manager of OCP Credit Strategy Fund (the "Fund") (TSX: OCS.UN) announces that its forward agreement (the "Forward Agreement") with The Bank of Nova Scotia will expire on December 29, 2014 (the "Termination Date").
As a result of changes to the Income Tax Act (Canada) (the "Tax Act"), the Forward Agreement will be terminated on the Termination Date, and the portfolio (the "Portfolio") held by OCP Investment Trust (the "Reference Fund") will, subsequent to the Termination Date, be held directly by the Fund. Currently the Fund obtains exposure to the Portfolio through the Forward Agreement.
The Fund's investment objectives will be amended on or about the Termination Date to remove all references to the use of forward agreements to gain exposure to the Reference Fund, to delete references to "tax-advantaged" and to clarify that the Fund will invest directly in securities similar to those held currently by the Reference Fund.
The investment objectives of the Fund after the proposed amendments will be: (i) to maximize total returns for unitholders; (ii) to provide unitholders with attractive, quarterly, distributions, initially targeted to be $0.70 per annum, representing an annual yield of 7% based on the original issue price of $10.00 per Unit; and (iii) to preserve capital; by investing in a portfolio comprised primarily of senior debt obligations of non-investment grade North American issuers.
The amendments to the investment objectives of the Fund are clarifications and will not change the Portfolio unitholders are currently exposed to indirectly through the Reference Fund.
It is expected that the Fund will generate capital gains upon the termination of the Forward Agreement due to unrealized appreciation in positions selected by the Manager for the Portfolio. Based on current valuations however, the Fund does not expect the amount of such gains to exceed the amount of cash distributions paid to unitholders on account of 2014. To the extent the Fund realizes capital gains which exceed its distributions, the Fund intends to declare a special capital gains distribution to unitholders of record on December 31, 2014 (the "Special Distribution"). In such circumstances, the Fund intends to pay a portion of the Special Distribution in cash (for payment of all or part of the tax liability of unitholders of the Fund resulting from any such capital gains distribution).
In addition, following the termination of the Forward Agreement, distributions paid by the Fund will be characterized primarily as income for tax purposes to the extent they exceed available non-capital losses of the Fund. The termination of the Forward Agreement will not affect the status of the Fund as a "mutual fund trust" under the Tax Act.
SOURCE: Onex Credit Partners, LLC
For further information: Please contact: OCP Credit Strategy Fund, Toronto: 647.260.4055, Toll Free: 1.877.260.4055, www.ocpcreditstrategy.com; Onex Credit Partners, LLC, [email protected], 1.201.541.2121