CALGARY, Aug. 30, 2011 /PRNewswire/ - Canadian Equipment Rental Fund Limited Partnership ("CERF LP" or the "Partnership") (TSX Venture: CFL.UN) announced today that it has entered into an arrangement agreement (the "Arrangement Agreement") with CERF GP Corp. (the "General Partner"), the general partner of CERF LP, and CERF Incorporated ("CERF Inc."), a wholly-owned subsidiary of CERF LP, relating to a proposed arrangement (the "Arrangement") under Section 193 of the Business Corporations Act (Alberta) involving CERF LP, the General Partner, CERF Inc. and the holders (the "Unitholders") of limited partnership units of CERF LP (the "Units"). The Arrangement will result in the conversion of CERF LP from a limited partnership to a taxable Canadian corporation, namely, CERF Inc. The Arrangement is expected to become effective on October 1, 2011(the "Effective Date"). CERF LP intends to seek approval of the Arrangement and other matters from Unitholders at a special meeting of Unitholders scheduled for September 29, 2011 (the "Meeting").
Rationale and Anticipated Benefits of the Arrangement
The board of directors of the General Partner (the "Board of Directors") believes that the proposed Arrangement will enable CERF LP to pursue its current strategic plan for the benefit of Unitholders. Given the changes to Canadian federal income tax legislation relating to publicly traded specified investment flow-through trusts and partnerships ("SIFTs") which have been effective since January 1, 2011 for CERF LP, resulting in the diminished value of a publicly traded limited partnership structure, the Board of Directors believes that the best opportunity for creating value is to move to a corporate structure effective on October 1, 2011, allowing CERF LP to continue as a dividend paying public corporation.
In addition, the Board of Directors believes that the Arrangement provides a number of strategic benefits including, among other things, the expectation that the Arrangement would:
- remove CERF LP from any uncertainty that exists today in the publicly
traded income trust and partnership marketplace;
- remove the restrictions on non-resident ownership applicable to
"Canadian partnerships" (as defined in the Income Tax Act (Canada) (the "Tax Act")), which may provide CERF Inc. greater access to capital and improved
liquidity;
- permit CERF Inc.'s financial and operational performance to be more
easily valued relative to its corporate peers;
- position CERF Inc. to invest in and structure attractive opportunities
for growth and expansion;
- provide for the payment of dividends to shareholders of CERF Inc. with a
view to sustainability while at the same time delivering strong returns
through capital appreciation; and
- be accomplished, from a Canadian federal income tax perspective, on a tax-deferred rollover basis for Unitholders.
Recommendation of the Board of Directors
The Board of Directors, based upon its own investigations and on the advice of legal counsel and tax advisors, has unanimously determined that the Arrangement is in the best interests of CERF LP and the Unitholders. The Board of Directors unanimously recommends that Unitholders vote in favour of the Arrangement.
Details of the Arrangement
Pursuant to the Arrangement, Unitholders will receive one common share of CERF Inc. (each, a "Common Share") in exchange for each Unit held as of the Effective Date. Upon completion of the Arrangement, Unitholders will own all of the issued and outstanding Common Shares and CERF Inc. will own all of the issued and outstanding Units and carry on the businesses presently carried on by CERF LP. The board of directors of CERF Inc. will be comprised of the current members of the board of directors of the General Partner and the management of CERF Inc. will be comprised of the current management of the General Partner, CERF LP and its subsidiaries. The Arrangement will not result in any benefits for, or change of control, termination or other payments being made to, any officers, directors or employees of CERF LP or any of its subsidiaries or of the General Partner.
An information circular of CERF LP with respect to the Arrangement and other matters to be considered at the Meeting is expected to be mailed on or about September 2, 2011 to Unitholders of record at the close of business on August 22, 2011. A copy of the information circular will also be available on SEDAR at www.sedar.com.
Arrangement Approvals
The Arrangement must be approved by a majority of not less than 66?% of the votes cast by Unitholders, other than CERF LP, the General Partner or any of their respective affiliates, voting in person or by proxy at the Meeting. Completion of the Arrangement is also subject to the satisfaction or waiver of certain conditions set out in the Arrangement Agreement including, among other things, the approval of the Court of Queen's Bench of Alberta and receipt of all requisite regulatory approvals and material third party consents and approvals.
The TSX Venture Exchange (the "TSXV") has conditionally approved, among other things, the listing of the Common Shares issuable pursuant to the Arrangement in substitution for the issued and outstanding Units. The listing of the Common Shares on the TSXV is subject to CERF Inc. fulfilling all of the listing requirements of the TSXV.
Effect of the Arrangement on Distributions
CERF LP currently anticipates that there will be no change in its distribution policy following the completion of the Arrangement and that CERF Inc. will declare cash dividends on a quarterly basis substantially in the same manner as distributions have previously been made by CERF LP prior to the completion of the Arrangement. CERF Inc. expects to designate any dividends paid as eligible dividends for Canadian income tax purposes, which are anticipated to qualify for the enhanced federal dividend tax credit in Canada.
CERF LP
CERF LP is an Alberta limited partnership engaged in the rental, sale and service of industrial and construction equipment and in waste management services. CERF LP trades on the TSXV under the symbol "CFL.UN" and has 9,530,906 Units issued and outstanding.
Forward-Looking Statements
Certain information contained herein relating to, but not limited to, CERF LP and its businesses and the anticipated completion of the Arrangement constitutes forward-looking information under applicable securities laws. All statements, other than statements of historical fact, which address activities, events or developments that CERF LP expects or anticipates may or will occur in the future, are forward-looking information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", 'plan", "intend", "target", "project", 'forecast" or similar words suggesting future outcomes or outlook. Forward-looking statements in this news release include, but are not limited to, statements with respect to the Arrangement including, but not limited to, the timing and completion of the Arrangement, the anticipated benefits of the Arrangement, the receipt of the necessary consents and approvals for the Arrangement to proceed, and the anticipated Canadian federal tax treatment of dividends declared and paid on the Common Shares. The risks and uncertainties that may affect the forward-looking statements in this news release include, but are not limited to, the following factors: CERF LP's ability to successfully obtain the regulatory, stock exchange, court and any other third party approvals necessary to complete the Arrangement; the failure to complete the Arrangement and the resulting continued application of the SIFT legislation to CERF LP; the failure to realize the anticipated benefits of the Arrangement; and changes in Canadian federal tax laws. Additional information on risks, uncertainties and factors that could affect CERF LP's operations or financial results is included in its filings with the securities commissions or similar authorities in the provinces of British Columbia, Alberta and Ontario, as may be updated from time to time. Many of the risks described in such filings will also be applicable to CERF Inc. following completion of the Arrangement. Readers are also cautioned that such additional information is not exhaustive. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are independent and management's future course of action would depend on its assessment of all information at that time.
Although CERF LP believes that the expectations conveyed by the forward-looking information are reasonable based on information available on the date of preparation, no assurances can be given as to future results, levels of activity and achievements. Undue reliance should not be placed on the information contained herein, as actual results achieved will vary from the information provided herein and the variations may be material. CERF LP makes no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof and CERF LP does not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise. Any forward-looking information contained herein is expressly qualified by this cautionary statement.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Canadian Equipment Rental Fund Limited Partnership
