TORONTO Sentry Select Capital Corp. is pleased to announce that Canadian Income Management Inc. (the "Corporation") and Canadian Income Management Trust (the "Trust') have entered into an agreement with Canaccord Capital Corporation (the “Agent”) to issue, by way of private placement on a "commercially reasonable efforts" basis, up to C$77,107,300 principal amount of 7% unsecured subordinated debentures of the Corporation due August 31, 2012 (the "Debentures") and up to 11,566,095 units (the "Trust Securities") of the Trust, subject to customary termination provisions.
The Debentures and the Trust Securities will be sold as bundled units ("Bundled Units") consisting of one Debenture having a principal amount of $100 and 15 Trust Securities with a minimum purchase of 25 Bundled Units. Each Trust Security consists of one trust unit of the Trust ("Trust Unit") and one warrant of the Trust ("Warrant"). Each of the Warrants entitles the holder to purchase one additional Trust Unit at a price of $2.60 at any time until February 28, 2012.
Pricing Prior to the closing date, the Corporation, the Trust and the Agent will determine the price at which each of the Debentures, Trust Units and Warrants will be issued pursuant to the offering. The offering price for each of the Debentures, Trust Units and Warrants shall be a price which is not less than the "market price" of the securities as determined in accordance with the rules of the Toronto Stock Exchange. The Corporation and the Trust will issue or cause to be issued a press release which will set forth the offering prices as soon as practicable after such prices have been determined.
Use of proceeds Each of the Corporation and the Trust will contribute the net proceeds which are received by them, after the payment of all expenses, in exchange for limited partnership units of Canadian Income Management LP (the "Partnership"). The Partnership will invest all of the proceeds received from the Corporation and the Trust in a diversified portfolio of securities consisting of income funds.
Investment Objectives The investment objectives of the Corporation include (i) to provide debentureholders with semi-annual interest payments at a rate of 7% per annum, and (ii) to preserve and potentially enhance the value of the portfolio in order to repay the Debentures at maturity.
The investment objectives of the Trust are (i) to provide unitholders with semi-annual cash distributions, currently expected to be $0.155 per Trust Unit per annum (7.75% of the issue price of the Trust Securities issued pursuant to the initial public offering of the Corporation and the Trust), and (ii) to preserve and potentially enhance the value of the portfolio in order to return to unitholders at least $2.00 per Trust Unit upon the termination of the trust in 2012.
Eligible investors In order to subscribe for bundled units pursuant to the private placement purchasers must be an “accredited investor” as defined in National Instrument 45-106 of the Canadian Securities Administrators and also comply with the requirements of applicable securities laws of the jurisdiction of residence of the purchaser.
Management fee reduction Effective July 1, 2006, the management fee payable to Pro-Vest Financial Management Inc. (“Pro-Vest”) will be reduced from 2% to 1.5%.
Servicing fee Pro-Vest will pay a servicing fee ("Servicing Fee") to investment dealers whose clients hold Debentures or Trust Units equal to: (a) 0.4% annually of the principal amount of the Debentures held by the clients of such investment dealers; and (b) 0.4% annually of the Net Asset Value per Trust Unit for Trust Units held by the clients of such investment dealers. The Servicing Fee will be paid in respect of Debentures and Trust Units which are held on the last business day of each calendar quarter. The first Servicing Fees will be paid for the three months ended September 30, 2006. In respect of the Servicing Fee payable with respect to Trust Units which are held by clients of investment dealers, the Net Asset Value per Trust Unit shall be calculated as of the last business day of the calendar quarter.
Trading information The Debentures, Trust Units and Warrants trade on the Toronto Stock Exchange under the symbols CAI.DB, CNM.UN and CNM.WT respectively.
Closing Subject to the receipt of all necessary regulatory approvals, the closing is expected to occur on or about July 7, 2006.
Qualifying The Trust Units and Warrants will be qualified investments for RRSPs, RRIFs, DPSPs and RESPs. The Debentures will not be qualified investments for deferred plans.
The Agent Canaccord Capital Corporation will act as the exclusive agent with respect to the offering.
The Investment Manager Sentry Select Capital Corp. provides investment, administrative and marketing services to 24 exchange-listed closed-end funds, 17 of which have exposure to the income trust sector, 16 mutual funds, 13 principal-protected notes and three flow-through limited partnerships. Sentry Select is one of the largest Canadian investment managers in the income trust sector. As of April 30, 2006, the firm had approximately $8.0 billion in gross assets under management.
More information Investor Services (broker/investor inquiries) or Brian McOstrich (media inquiries) Tel: 1-888-246-6656 Fax: 416-364-1197 email@example.com www.sentryselect.com
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Forward Looking Information: Certain information regarding the Corporation and the Trust in this news release, including management's assessment of the future performance of the Corporation and the Trust, including the potential for future distributions, may constitute forwarding-looking statements under applicable securities laws and necessarily involve risks. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Information on factors that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information and that could cause actual results to differ materially from those anticipated in the forward-looking statements are included in documents on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this news release are made as the date of this news release and the Corporation and the Trust do not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Les documents (y compris les communiqués de presse) se rapportant aux divers fonds d'investissement pour lesquels Sentry agit à titre de gestionnaire ou de conseiller ne sont fournis qu'à titre informatif. Ces documents ne peuvent être considérés comme étant exhaustifs ou exempts d'erreur sans un examen approfondi de la totalité des documents se rapportant à un fonds d'investissement en particulier disponibles sur SEDAR (www.sedar.com).