TransForce Announces Proposed Conversion to a Growth-Oriented, Dividend-Paying Corporation

    MONTREAL, March 27 /CNW Telbec/ - TransForce Income Fund (TSX: TIF.UN)
("TransForce" or the "Fund"), the leader in the Canadian transportation and
logistics industry, today announced its intention to convert from an income
fund to a growth-oriented corporation (the "Reorganization"). The decision
follows a review of financing alternatives by the Board of Trustees of
TransForce, as announced on February 28.
    "TransForce remains fully committed to pursuing its growth strategy and
continuing to lead the consolidation of our industry. The flexibility of the
corporate structure is better suited to achieving our goals, given
developments in the income fund sector," said TransForce Chairman, President
and CEO Alain Bédard. "We will be asking unitholders to approve the
Reorganization at our annual meeting in May"

    Background and Benefits of the Reorganization

    The Fund investigated a number of restructuring alternatives subsequent
to the announcement by the federal Minister of Finance on October 31, 2006
regarding specified investment flow-through trusts ("SIFTs") and the
clarification updates that were provided on December 15, 2006, as well as
December 21, 2006 draft legislation. The government's announcements resulted
in management and the Board of TransForce conducting a review of the long-term
strategic direction of the Fund. They have determined that, as a trust, it
would be increasingly difficult for TransForce to meet its strategic
objectives given: the higher cost of capital as a result of the new SIFT
rules; a decline in investor interest for trusts, which increasingly limits
access to equity capital as 2011 approaches; and limited financial flexibility
due to TransForce's commitment as an income trust to distribute a large
portion of its cash flow to unitholders. Additionally, the Board and
management of TransForce believe that the value of TransForce's distribution
payments is not being properly reflected in the price of its trust units in
comparison to other Canadian income funds.
    Following the Reorganization, TransForce plans to reinvest a significant
portion of its cash flow in order to continue its disciplined consolidation of
the transportation industry, as it has done for more than 10 years. The
Canadian transportation industry remains highly fragmented, with more than 70%
of industry revenues of $55-billion generated by carriers with less than
$25 million in annual revenues, according to Statistics Canada. Additionally,
the current operating environment provides numerous attractive acquisition
opportunities which TransForce believes can create significant value for its
securityholders. In addition to reinvesting its cash flow in growth
opportunities, TransForce may also use its excess free cash flow to reduce
leverage over time and return capital to shareholders through dividends and
share repurchases under a normal course issuer bid.
    "TransForce significantly benefited from its conversion from a
corporation to an income trust in 2002. Since then, we have almost quadrupled
our revenue to more than $2 billion (pro forma) and we have successfully
diversified our operations both geographically and across complementary
operating segments. This was achieved in large part through our successful
acquisition strategy, as we completed more than 75 acquisitions totaling
revenue in excess of $1.0 billion over the period. Additionally, we have
created value for our unitholders by distributing approximately $8.00 per
unit, and have raised distributions 10 times", said Mr. Bédard.
    "While we believe we must continue our successful consolidation strategy,
our cost of capital and access to equity capital markets have deteriorated
following the Minister of Finance's announcement on SIFTs, making the funding
of our growth as a trust more difficult. Because we remain committed to growth
and see numerous attractive opportunities in the current market, we strongly
believe that the most suitable way to pursue our acquisition strategy and
create value for our securityholders is to retain a greater portion of our
significant free cash flows, to better support and fund our disciplined
acquisition program and other growth opportunities in the new tax
environment," added Mr. Bédard. "The transportation market remains highly
fragmented and we are in advanced discussions regarding a number of highly
strategic and complementary acquisition opportunities totaling more than
$100 million, in a number of our operating segments. These acquisitions could
be realized in the short term."

    Mechanics of the Reorganization

    It is contemplated that the Reorganization will be completed pursuant to
a plan of arrangement. Holders of trust units of the Fund will exchange their
trust units for common shares of a new corporation, to be called "TransForce
Inc.", on a one-for-one basis. Holders of "tracking shares" of TFI Holdings
Inc., an affiliated corporation, will exchange their shares for common shares
of the new corporation on the same one-for-one basis. This will result in
approximately 86.8 million common shares of TransForce Inc. being issued and
outstanding after giving effect to the Reorganization. TransForce Inc. will
apply to the Toronto Stock Exchange for the listing of its common shares and
the Fund will seek the delisting of its units from the TSX upon completion of
the Reorganization.
    The Reorganization is subject to receipt of all required court and
regulatory approvals and approval by at least 66 2/3% of the votes cast by
securityholders of the Fund (unitholders and holders of special voting units
voting together as a single class) and by at least 66 2/3% of the votes cast
by shareholders of TFI Holdings Inc.
    TransForce expects that an annual and special meeting of the Fund and a
special meeting of TFI Holdings Inc. at which the Reorganization will be
considered will be held on May 12, 2008, and that a management proxy circular
statement will be mailed to unitholders of the Fund and shareholders of TFI
Holdings Inc. in early April.
    Alain Bédard, Jolina Capital Inc. and trustees of TransForce, holding in
the aggregate more than 20% of TransForce's outstanding units, have indicated
that they will sign support agreements with TransForce under which they will
agree to vote in favour of the Reorganization.

    Recommendation of the Board

    The Board of Directors has unanimously concluded that the Reorganization
is in the best interests of TransForce and its securityholders, and has
unanimously resolved to recommend that TransForce securityholders vote their
trust units and special voting units in favour of the Reorganization.
    National Bank Financial Inc. and RBC Capital Markets are acting as
financial advisors to TransForce with respect to the Reorganization. They have
provided opinions to the Board of Trustees that, as at the date hereof, the
consideration to be received by TransForce securityholders in connection with
the Reorganization is fair from a financial point of view.

    Business Outlook

    The current economic and operating environment remains challenging as
Canadian and U.S. markets adjust to the significant changes in currency values
and a slowdown in manufacturing activity. While management see the marketplace
remaining challenging for the balance of 2008, TransForce benefits from its
leadership position and diversification across geographic and operating
    In 2007, pro forma EBITDA and EPS as a corporation (adjusted to include
the full contribution of already-announced acquisitions) would have been
approximately $280 million and $0.83, respectively. Based on current business
conditions, management expects EBITDA in 2008 to be in line with 2007 pro
forma EBITDA.
    Furthermore, TransForce is considering various alternatives and is
currently in discussions regarding increased financial flexibility and
availability of credit facilities, all of which is consistent with the
continuation of TransForce's acquisition strategy following the

    Dividend Policy & Notice of Distribution

    Following completion of the Reorganization, TransForce intends to
establish a dividend policy under which it will declare annual dividends of
$0.40 per share, to be paid quarterly. The first dividend is expected to be
announced on September 30, 2008.
    The Fund also announces that the cash distribution for the month of April
will be $0.1325 per unit, to be paid on May 15, 2008 to all unitholders of
record as of April 30, 2008. Additionally, if the Reorganization is approved,
the Fund expects to pay a final cash distribution of $0.06625 per unit for the
period from May 1 to May 15, 2008, to be paid on June 13, 2008 to all
unitholders of record as of May 15, 2008.

    Investor Conference Call and Webcast

    TransForce will hold a conference call on Friday, March 28, 2008 at
10:00 AM EST. To participate, please call (Toronto) 416 915 5761 or
(Toll-Free) 800 732 0232. The conference call will also be recorded and
available by calling (Toronto) 416 640 1917 or (Toll-Free) 877 289 8525 and
entering passcode 21267622 followed by the #key.
    A corporate presentation with further details is available at
TransForce's website,


    TransForce Income Fund ( is the leader in Canada's
transportation and logistics industry. Headquartered in Montreal, Quebec, the
Fund's objective is to create value for unitholders through managing and
investing in a growing network of wholly-owned, independent operating
subsidiaries. TransForce provides a comprehensive and unique combination of
capabilities, resources and geographical coverage in both domestic and
trans-border markets. Its companies currently operate in five well-defined
business segments:

    - Less Than Truckload;
    - Package and Courier;
    - Specialized Services, which includes its ancillary transportation
      services such as logistics, warehousing & dedicated services, fleet
      management & personnel services; oilfield & oilsand services, and;
      waste management;
    - Specialized Truckload; and
    - Truckload.

    TransForce's trust units (TIF.UN) are listed on the Toronto Stock Exchange
and are included in the S&P/TSX Composite Index.

    Forward-Looking Statements

    Except for historical information provided herein, this press release may
contain information and statements of a forward-looking nature concerning the
future performance of TransForce. These statements are based on suppositions
and uncertainties as well as on management's best possible evaluation of
future events. Such factors may include, without excluding other
considerations, fluctuations in quarterly results, evolution in customer
demand for TransForce's products and services, the impact of price pressures
exerted by competitors, and general market trends or economic changes. As a
result, readers are advised that actual results may differ from expected
    %SEDAR: 00018303EF

For further information:

For further information: Investors: Alain Bédard, Chairman of the Board,
President and CEO, TransForce Income Fund, (514) 331-4200,; Media: John Lute, Lute & Company, (416) 929 5883,

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