TORONTO, May 8, 2013 /CNW/ - The Board of Directors of Utility Corp. (the "Company") has today declared a capital gains dividend payable on May 21, 2013 to holders of record on May 17, 2013 in the amount of $2.86 per Class C Share, of which $2.20 is payable in Class C Shares and $0.66 is payable in cash. The purpose of the cash portion of the capital gains dividend is to offset all or part of any tax liability of a holder of Class C Shares ("Shareholder") resulting from the capital gains dividend. Capital gains were realized primarily as a result of a one-time adjustment to the portfolio in line with a recently approved extension of the Company. The re-balanced the portfolio is comprised of securities of selected issuers in the electrical, power and pipeline utilities and telecommunication issuers held initially on and approximately equally weighted basis. This adjustment was made in order to increase the portfolio's diversification, reduce its single name exposure, and is currently expected to increase the portfolio's gross dividend yield. The capital gains dividend is not expected to result in any additional tax liability for Shareholders who have retracted their Class C Shares pursuant to the special retraction right on May 21, 2013 than otherwise would have been realized had the capital gains dividend not have been declared.
The Company is declaring the capital gains dividend in shares and cash pursuant to the provisions of the Class C Shares. Immediately following payment of the $2.20 non-cash portion of the dividend in Class C Shares, the number of Class C Shares outstanding will be consolidated such that the number of Class C Shares outstanding will be equal to the number of Class C Shares outstanding immediately prior to such non-cash payment. The effect on a Shareholder of the payment of the non-cash portion of the dividend is a taxable capital gain of $2.20 per share with a matching increase in the aggregate adjusted cost base per Class C Share. The $0.66 cash portion of the dividend will be taxed as a capital gain. The payment of the capital gains dividend minimizes the tax payable by the Company and, as such, benefits both the Company and its Shareholders.
Utility Corp. is a mutual fund corporation whose investment portfolio consists of publicly listed securities of selected Canadian utility and telecommunications issuers. The Class C Shares of Utility Corp. are listed for trading on the Toronto Stock Exchange under the symbol UTC.C.
SOURCE: Utility Corp.
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