TORONTO, Sept. 15 /CNW/ - Middlefield Group, on behalf of STaRS Income Fund ("STaRS"), announces that, in conjunction with the merger of STaRS and MINT Income Fund ("MINT") which was approved by unitholders of STaRS on August 12, 2009, a special distribution will be paid to holders of record as at the close of business on September 24, 2009. This special distribution will be paid by way of additional Units, based on the net asset value per Unit on September 24, 2009. Subject to a final review of the Fund's taxable income for the period ended September 24, 2009, it is expected that the special distribution will be $2.60 per Unit and will be treated as a capital gain for tax purposes. The Fund's Declaration of Trust requires that all taxable income be paid to Unitholders prior to the end of its taxation year. Since STaRS will be merging with MINT on September 25, 2009, its year end for tax purposes is deemed to be September 24, 2009 resulting in the requirement to make the special distribution at this time.
The special distribution payable to STaRS Unitholders is primarily a result of the termination of the forward agreement with CIBC which STaRS put in place to provide capital protection when it was launched in December 2001. This agreement was designed to ensure that income generated thereby would be treated as capital gains rather than regular income. In addition, Middlefield was successful in having CIBC waive its early termination fee. The primary benefits of the merger with MINT are expected to be increased liquidity and reduced operating costs on a per unit basis, including a reduction in management fees.
Immediately after the issuance of the additional Units, the outstanding Units of the Fund will be consolidated such that the number of Units will remain unchanged from the number outstanding immediately prior to the special distribution. A Unitholder will be required to include the amount of the special distribution in income, most of which will be in the form of capital gains, and this same amount also will be added to the adjusted cost base of the Units held by such Unitholder thereby reducing taxable capital gains that may be realized on future dispositions of the MINT units received in exchange for STaRS units upon the merger with MINT.
STaRS trades on the Toronto Stock Exchange under the symbol STZ.UN.
This press release contains forward-looking information which is based on historical information. Actual future results, including the amount of the special distribution to be paid by the Fund, may differ materially from the special distribution currently expected to be paid. The risks, uncertainties and other factors that could influence actual results are described under "Risk Factors" in the Fund's prospectus dated November 27, 2001 and other documents filed by the Fund with the Canadian securities regulatory authorities. The forward-looking information contained in this press release constitutes the Fund's current estimate, as of the date of this press release, with respect to the matters covered hereby. Investors and others should not assume that any forward-looking statement contained in this press release represents the Fund's estimate as of any date other than the date of this press release.
SOURCE STARS INCOME FUND
For further information: For further information: please visit our website at www.middlefield.com or contact the undersigned: Nancy Tham, Senior Vice President, (416) 847-5349