Blue Ribbon Fund Management Ltd.

Blue Ribbon Fund Management Ltd.
Citadel Diversified Investment Trust
TSX : CTD.UN

Citadel Diversified Investment Trust
Citadel S-1 Income Trust Fund
TSX : SDL.UN

Citadel S-1 Income Trust Fund
Citadel HYTES Fund
TSX : CHF.UN

Citadel HYTES Fund
Series S-1 Income Fund
TSX : SRC.UN

Series S-1 Income Fund
Citadel Premium Income Fund
TSX : CPF.UN

Citadel Premium Income Fund

September 22, 2009 13:14 ET

Proposed Blue Ribbon IRC Approves Mergers Following Appointment of Blue Ribbon as Manager

TORONTO, ONTARIO--(Marketwire - Sept. 22, 2009) - Blue Ribbon Fund Management, the sponsor of the so-called "Hostile Proposal" relating to Citadel Diversified Investment Trust (TSX:CTD.UN), Citadel S-1 Income Trust Fund (TSX:SDL.UN), Citadel HYTES Fund (TSX:CHF.UN), Series S-1 Income Fund (TSX:SRC.UN), and Citadel Premium Income Fund (TSX:CPF.UN), (collectively, the "Citadel Funds") wishes to reassure Citadel unitholders that the Blue Ribbon proposal is valid and can be implemented following approval by Citadel unitholders.

The appointment of Blue Ribbon as manager of the Citadel Funds, with Bloom remaining as investment manager, WILL NOT require the approval of securities regulatory authorities or any independent review committee. The so-called "conflicts of interest" of Bloom and Brompton, if the Blue Ribbon Proposal succeeds and the Citadel Fund Administrator is terminated and paid a termination fee, DO NOT require the approval of securities regulatory authorities or any independent review committee. The Citadel Fund unitholder redemptions to occur following Blue Ribbon's appointment as manager DO NOT require the approval of securities regulatory authorities or any independent review committee.

Under National Instrument 81-107, the manager of an investment fund who is proposing the merger of funds that it manages will typically seek the review of that merger by the independent review committee (IRC) that it has appointed and the approval of unitholders before implementing the mergers. Crown Hill has been suggesting that Blue Ribbon should seek the review of the IRC that it intends to appoint for the Citadel Funds, before these individuals are actually appointed. Given the confusion that Crown Hill's statements have caused in the market, Blue Ribbon has taken the unprecedented step of asking the members of the IRC that it intends to appoint, as described in its circular, to review the Citadel Fund mergers proposed to occur after it becomes manager. These individuals have unanimously concluded that, in the event that the Blue Ribbon Proposal is approved by Citadel Fund unitholders, the terms of the mergers (as disclosed in the Blue Ribbon Circular) would achieve a fair and reasonable result for the unitholders of the Citadel Funds. Once the Blue Ribbon Proposal has been approved, and the IRC formally appointed, the IRC will ratify its recommendation in a press release to unitholders before the mergers take place.

If the Blue Ribbon Proposal is approved, Citadel Fund unitholders and the proposed IRC will have actually approved the mergers which form part of the Blue Ribbon Proposal before Blue Ribbon is appointed as manager and before the IRC is appointed. While counsel to Blue Ribbon does not believe that any additional review or approval of the proposed mergers should be necessary under National Instrument 81-107, given the unprecedented nature of this transaction, Blue Ribbon is in discussions with OSC Staff regarding the technical requirements of National Instrument 81-107 and the sequence of approvals for the mergers. If Blue Ribbon and OSC Staff reach the conclusion that technical regulatory relief for that sequencing would be helpful or is required, that technical relief will be applied for.

For the information of unitholders, as disclosed in Blue Ribbon's Circular, Paul Bloom is a unitholder in several of the Citadel Funds. As of August 4, 2009, the record date for the unitholders meetings, Bloom beneficially held 61,094 units (less than 0.7%) of Citadel HYTES Fund and 398,338 units (less than 1.5%) of Citadel Diversified Investment Trust. He holds no units, directly or indirectly in Citadel Premium Income Fund, Series S-1 Income Fund and Citadel S-1 Income Trust Fund.

Blue Ribbon recommends that the Right Way Forward for Citadel Funds is that unitholders vote their blue proxy / voting instruction forms both AGAINST the Reorganization Resolution and FOR the Hostile Resolution (Blue Ribbon Proposal) for the upcoming meeting of unitholders to be held on September 30, 2009.

Investors are urged to visit our website at www.therightwayforward.com, to review the Blue Ribbon Proxy Circular on www.sedar.com, and to vote their proxy as soon as possible. If you require information on how to change a previously cast vote, please contact the following people.

Contact Information

  • Mark Caranci
    416-642-6004
    or
    David Roode
    416-642-6008
    or
    Lorne Zeiler
    416-642-9058
    or
    Chris Cullen
    416-642-9064
    or
    Toll-free: 1-866-642-6001
    info@bromptongroup.com