AIC Limited

AIC Limited

April 29, 2009 09:00 ET

AIC Limited Announces Plans for the Redemption of the AIC Diversified Canada Split Corp.

BURLINGTON, ONTARIO--(Marketwire - April 29, 2009) - AIC Limited announced today that in accordance with its initial terms, AIC Diversified Canada Split Corp. ("the Company") will be maturing on June 30th, 2009 (the "Maturity Date"). On the Maturity Date, all outstanding Capital Shares and Preferred Shares will be redeemed by the Company (hereinafter referred to as the "Redemption") and thereafter the Company will cease to operate.

In advance of the Redemption, the Capital Shares and Preferred Shares will be delisted from the Toronto Stock Exchange as at the close of business on Wednesday May 27th, 2009. Effective on June 1, 2009, monthly share retractions will no longer be accepted.

The payment options available to shareholders on Redemption depend upon the class of Shares held, and are presented below:

Capital Shares (TSX:ADC)

Upon redemption, a holder will receive for each Capital Share held, the amount ("Capital Share Redemption Amount"), if any, by which the Share Unit Value(1) at the Maturity Date exceeds the Preferred Share Redemption Amount. The holder will receive their Capital Share Redemption Amount in the form of front end sales charge units of AIC Diversified Canada Fund ("Fund Units") at 0% commission unless a holder would like to receive cash instead of Fund Units. If the cash option is desired, the holder must provide notice to CDS through a CDS participant within 20 business days prior to the Maturity Date that they would like to receive the Capital Share Redemption Amount in cash. AIC Diversified Canada Fund is an open ended mutual fund trust. For additional information on the AIC Diversified Canada Fund, please visit www.aic.com.

For greater clarity, CDS must be advised by 5:00pm on June 2, 2009 by any holders who would like to receive their Capital Share Redemption Amount in cash. Shareholders who do not give the required notice will receive Fund Units in exchange for their Capital Shares.

Preferred Shares (TSX:ADC.PR.A)

Upon redemption, a holder will receive for each Preferred Share held an amount ("Preferred Share Redemption Amount") equal to the lesser of (i) $25.00 plus accrued and unpaid distributions and (ii) the Share Unit Value1 on the Maturity Date. The Preferred Share Redemption Amount will be paid to holders in the form of cash unless a holder would like to receive Fund Units instead of cash. If the option of Fund Units is desired, notice must be provided to CDS through a CDS participant at least 20 business days prior to the Maturity Date.

(1) "Share Unit Value" on a particular date equals the net amount which would be received by the Company per Share Unit on the redemption of that number of Fund Units on that date represented by the Share Unit's pro rata share of each of the Fund Units and other net assets of the Company, if any.

For greater clarity, CDS must be advised by 5:00pm on June 2, 2009 by any holders who would like to receive their Preferred Share Redemption Amount in the form of Fund Units. Shareholders who do not give the required notice will receive cash for their Preferred Shares.

Distributions - Capital Shares

Immediately prior to the Redemption, the Company will dispose of all of its Fund Units. As a result, it will realize any accumulated capital gains or losses that have accumulated on those Fund Units since they were purchased upon inception of the Company. To the extent that capital gains are realized and in order to eliminate taxation of the Company in accordance with its articles, a special capital gain dividend will be paid on June 30, 2009 to Capital Shareholders of record of the Company as at June 29, 2009.

If applicable, the special capital gain dividend will be paid to Capital shareholders in the form of Shares (in the same form as the holder), rather than cash. Immediately following the payment of such dividend in Shares, outstanding Shares will be automatically consolidated pursuant to the Corporation's articles such that the number of Shares outstanding will be equal to the number of Shares outstanding immediately prior to the share distribution. After the share distribution and subsequent consolidation, each shareholder will hold the same number of Shares as they held before the non-cash distribution.

The special capital gain dividend will increase the aggregated adjusted cost base (ACB) to the holders of Capital Shares. The actual amount of the special capital gain distribution and the consolidation ratio of Capital Shares will be announced by way of press release on or about June 30, 2009.

Distributions - Preferred Shares

Immediately prior to the Redemption, the Preferred shareholders of record of the Company (TSX:ADC.PR.A) as at June 29, 2009 will receive their regular quarterly distribution payment of $0.375/share on June 30, 2009. Such distribution will be paid by way of cash to all Preferred Shareholders.

INCOME TAX CONSIDERATIONS FOR INVESTORS UPON MATURITY

For Shares Held in a Registered Plan

If Shares of the Company are held in a Registered Plan, the Redemption of Shares on the Maturity Date will create a disposition for tax purposes, regardless of whether the shareholder receives cash, or Fund Units upon Redemption. Capital gains from a disposition of the Shares are generally not subject to tax under the Income Tax Act until withdrawals are made from the plan (withdrawals from a TFSA are not subject to tax).

For Shares Not Held in a Registered Plan

If Shares of the Company are held outside of a Registered Plan, the Redemption of Shares on the Maturity Date will create a disposition for tax purposes, regardless of whether the shareholder receives cash, or Fund Units upon Redemption. A capital gain (or a capital loss) will be realized to the extent that the proceeds of disposition, less any costs of disposition, are greater (or less) than the adjusted cost base of the Share. Generally, one-half of a capital gain is included in computing income for Canadian income tax purposes.

Contact Information

  • Media Contact:
    AIC Limited, Burlington ON
    Terri Oswald
    Director, Media Relations
    (905) 331-4242, ext. 4345 or 1-888-710-4242, ext. 4345