Trust conversion detailsWestshore Terminals Income Fund - Q3 DISTRIBUTION AND FUND RESTRUCTURING ANNOUNCEMENTS9/14/2010 8:00 PM - Canada NewsWire
VANCOUVER, Sep. 14, 2010 (Canada NewsWire via COMTEX News Network) --
WestshoreTerminals Income Fund (TSX: WTE.UN) (the "Fund") announced today that acash distribution of $34,155,007 (representing
.46 per trust unit)will be paid on or before October 15, 2010 to unitholders of record atSeptember 30, 2010 as compared to $23,760,005 (representing
.32 pertrust unit) for the same period in 2009.
.38 per unit of the Q3distribution is derived from the results from operations of WestshoreTerminals Limited Partnership ("Westshore") in the current period, and
.08 per unit comes from Westshore's cash reserves.
For thethird quarter of 2010, Westshore anticipates that its tonnagethroughput will be approximately 6.3 million tonnes as compared to 5.4million tonnes for the same period in 2009. Tonnage throughput toSeptember 30, 2010 is anticipated to be approximately 18.5 milliontonnes compared to 14.9 million tonnes over the same period in 2009.
Basedon estimates provided periodically to Westshore by its customers,Westshore anticipates that total throughput for 2010 should be inexcess of its previous 23.5 million tonnes record set in 1997, ascompared to the 20.1 million tonnes shipped in 2009.
TheTrustees have approved a process for conversion of the Fund to acorporation effective January 1, 2011. A Special Meeting of Unitholdershas been called for November 4, 2010 to consider and vote on theproposal. Under the proposal Unitholders will receive a combination ofshares and debt in exchange for their Fund Units. The shares will beissued by a newly formed public company ("Westshore Corp"). The debt,in the amount of $5.00 per existing Unit, will be issued in the form ofNotes by a wholly owned subsidiary of Westshore Corp. The Notes willmature in 2040 and bear a commercial rate of interest at a rate to beset in early October 2010. The debt will be secured, but can besubordinated to any senior debt incurred in the future by theenterprise (that might be used for future expansion opportunities, forexample). The shares and debt will be separate instruments but will belisted and trade together as units.
Following the conversion ofthe Fund, unitholders will receive interest on the Notes and dividendson the shares based on the same record date and payment date. It isanticipated that the dividends on the shares will be paid onessentially the same basis as is the current distribution policy of theFund. The current distribution policy is to distribute to unitholdersall of its earnings after interest (including on the new notes) andtaxes but before depreciation and unrealized gains or losses on forwardexchange contracts, less amounts equal to the expected cashrequirements of Westshore, such as capital expenditures and specialpension contributions.
As previously announced, the Trustees ofthe Fund have considered the options open to the Fund in respect ofconversion to the corporate form which is desirable as a result of taxchanges that will become effective on January 1, 2011. Thatconsideration has included normalization of the debt/equity structureof the enterprise, which has been debt free while operating under apartnership/trust structure since 2005. It would be unusual for theenterprise to continue debt free in the corporate form, and the Fundhas received advice that a number of options exist to put in place adebt component of the corporation's capitalization. Having consideredthe available options, the Trustees have determined that having asubordinated debt component held by public securityholders and tradedin conjunction with the shares of Westshore Corp is in the bestinterests of the existing Fund Unitholders, and will also be in thebest interests of securityholders of the resulting corporate entities.
Fulldetails of the proposed conversion and of the mechanics for exchangingexisting Fund Units for new securities will be contained in theInformation Circular of the Fund for the Special Meeting ofUnitholders, which the Fund expects to circulate around October 7,2010.
SOURCE: Westshore Terminals Income Fund
Nick Desmarais, Secretary, (604) 488-5214