TORONTO, March 20 /CNW/ - Marret Asset Management Inc., representing
holders of 8.6% of the outstanding Units of Countryside Power Income Fund (the
"Fund"), today announced that it had today written to James Sardo, the
Chairperson of the trustees of the Fund, to request that two of the Fund's
trustees resign immediately to be replaced by David Gluskin and Francis Stark,
the recently retired General Counsel of CN Investment Division.
In its letter, Marret indicated to Mr. Sardo that, for a number of
reasons, it had lost all confidence in the ability of the current trustees to
discharge their fiduciary duties to act with a view to the best interests of
the Fund. Foremost among those reasons were the consequences of the new
management arrangements negotiated by the trustees in September 2005 with the
former executives of Countryside, Goran Mornhed, Edward Campagna and Allan
Rothman. According to Marret, these new arrangements including a Long Term
Incentive Plan ("LTIP") have to date resulted in payments to the former
executives' new management company, Countryside Ventures LLC, which Marret
views as excessive.
As an example of such excessive compensation, Marret noted that,
according to the Fund's February 9 press release, as part of a recent
negotiation with the Fund's lenders, the management company is to receive
consideration in cash and Fund Units valued at that time in excess of
$16 million in exchange for waiving 85% of the Subordinated Interest in Ripon
Power LLC which had been granted to it as part of the LTIP. At the Fund's Unit
value at the close of trading on March 19, this compensation would ascribe
value exceeding $22 million to the Manager's total Subordinated Interest in
the Ripon and San Gabriel facilities whose cost to the Fund in 2005 was
approximately US$ 95 million. Moreover, this $22 million of LTIP value
represents over 10% of the Fund's current market capitalization at that Unit
In Marret's view, the net effect of these new management arrangements
appears to result in an excessive transfer of value from the Fund's
Unitholders to its former executives.
Marret is particularly concerned about how the Fund will deal with cash
totaling $116 million which is due to the Fund under the USEB settlement. In
its March 20 letter, Marret advised Mr. Sardo that it strongly believes that
representatives of the Fund's Unitholders must have a say in the disposition
of these funds, in particular before they are applied in a manner that would
attract the Manager's 25% Subordinated Interest under the LTIP.
According to Marret, the reconstitution of the trustees must occur
immediately for two principal reasons: First, it is important that the
approval and implementation of the strategic review process announced by the
Fund on February 9, which Marret strongly supports, be conducted by trustees
who can act independently of management and in the best interests of the Fund.
Secondly, independent trustees are required to ensure that the reallocation of
the Fund's value from its Unitholders to management through excessive
compensation arrangements be stopped immediately.
Marret has initiated the process required to request that a Special
Meeting of Unitholders be called to consider the removal of two of the
trustees and their replacement by Messrs. Gluskin and Stark. Such a meeting
would only be necessary if the current trustees do not accede to Marret's
About Marret Asset Management Inc.
Marret Asset Management Inc. is an employee-owned firm concentrating on
analysis of higher yielding corporate securities. The firm was founded in
November 2000 by Barry Allan, the President and Chief Investment Officer, and
has Cdn.$1.4 billion under management in mutual fund, pension and private
For further information:
For further information: Dorothea Mell at Marret Asset Management, (416)
214-5800 (ext. 239)