C.A. Bancorp Inc.

C.A. Bancorp Inc.
Sentry Select Total Strategy Fund

February 28, 2008 11:45 ET

C.A. Bancorp Inc. (TSX:BKP) Proposes Changes to Sentry Select Total Strategy Fund (TSX:TSF.UN)

TORONTO, ONTARIO--(Marketwire - Feb. 28, 2008) - C.A. Bancorp Inc. (TSX:BKP) ("C.A. Bancorp" or the "Manager"), the manager of the Sentry Select Total Strategy Fund (TSX:TSF.UN) (the "Fund"), announces today that it proposes important changes to the Fund's investment objectives and strategy, and to certain other provisions included in its Trust Agreement.

In August 2006, the Fund closed its initial public offering and raised total gross proceeds of $55 million, including the over-allotment.

Investment Strategy

The Fund was created to capitalize on the Manager's and Sentry Select Capital Corp.'s ("Sentry Select" or the "Investment Manager") extensive experience and expertise across various industry sectors and investment strategies. A distinctive feature of the Fund was that up to 25% of the Fund's assets were to be invested in securities of private companies. Such investments would typically focus on mature, cash flow positive, Canadian small and mid-cap companies. The Fund's investment objective was to maximize the total return to unitholders.

For the fiscal year 2007, the Fund generated a 5.0% return on net asset value and a 7.9% return on market value assuming re-investment of distributions. The Fund paid a special cash distribution on January 15, 2008 of $0.06 per unit to unitholders of record on December 31, 2007. Three private equity investments were made, totaling $3.1 million (see Private Equity Update).

Results of Annual Redemption

On February 20, 2008, the Manager announced that 71% of the Fund's units (3,889,011 of the 5,491,500 issued and outstanding units of the Fund) were submitted for the 2008 annual redemption. The Fund is expected to have approximately $16 million in net assets remaining post-redemption. The Manager believes that any further redemptions would leave the Fund with insufficient capital to operate in a viable manner.

The Fund was created with a view to a long term investment strategy. However, since the Fund has experienced such a large redemption, the Manager believes that in order for this long term investment strategy to be realized, proposed changes to the Fund's Trust Agreement are required. The proposed changes require the support by a two-thirds majority of the unitholders voting at a special meeting to be held on or about April 25, 2008.

If the Fund does not receive the support by a two-thirds majority, the Manager believes it may be in the best interest of the unitholders to de-list the Fund from the Toronto Stock Exchange and to liquidate the Fund's assets in accordance with the Fund's Trust Agreement.

Proposed Changes

The Manager proposes the following important changes to the Fund's Trust Agreement, which will require unitholder approval, at a special unitholder meeting to be held on or about April 25, 2008:

1. A shift in the overall investment mandate of the Fund from a primary focus on public securities and a secondary focus on private equity to a primary focus on private equity and secondary focus on public securities. This shift will require the removal of the current investment restriction that provides that no more than 25% of the Fund's total assets can be invested in private investments (the "Private Portfolio"). This amendment will allow the Fund to invest up to 100% of its assets in the Private Portfolio.

2. The elimination of the annual redemption feature.

The Fund's annual redemption feature is negatively impacting the ability of the Fund to make private equity investments and realize its targeted returns. More importantly, unitholders who wish to participate in the Fund's strategy (including those who bought their units on the premise that the Private Portfolio would help garner above-average returns) are negatively impacted by the actions of short-term opportunistic holders. Redemptions reduce the size of the Fund and exert pressure on the Fund to reduce its investment holdings, often prematurely. In turn, the Manager's ability to initiate new positions in private equity investments is limited regardless of how compelling the merits of the investment may be.

3. The removal of the restriction that the net proceeds of any issuance of securities by the Fund must be equal to or greater than the most recently calculated net asset value per unit prior to the pricing of such securities. Removing the restriction will provide greater flexibility to issue more units which in turn could enhance the liquidity of the units, provide better opportunities for diversification and reduce the management expense ratio.

The Manager believes that these proposed changes are in the best interests of unitholders of the Fund and will better position the Fund to benefit from a greater exposure to private equity investment opportunities (See Background and Rationale for the Proposed Changes).

Background and Rationale for the Proposed Changes

The Manager believes that an important feature of the Fund, at the time of its initial public offering, was the private equity exposure it provided to retail investors. Private equity is a higher potential return asset class that has traditionally not been available to retail investors. Under the current investment restrictions, the growth of the Fund's Private Portfolio is limited as it cannot make up more than 25% of the Fund's assets. The Private Portfolio includes those investments recommended, managed and co-invested in by C.A. Bancorp.

To date, the Manager has successfully originated and closed a number of private equity investments in which the Fund has participated. Looking ahead, the Manager believes it can provide the Fund's investors with numerous high-quality investment opportunities. In the Manager's view, market conditions for small- and mid-cap private equity investments, including pricing and general terms and conditions are very favourable. This is due, in part, to the high degree of uncertainty that exists in the marketplace as well as the relatively less competitive nature of smaller-cap private equity.

Alternative assets, including private equity, have increasingly become an important asset class for large institutional investors, including pension funds, seeking to generate higher returns that are not closely correlated to the public markets. These asset classes occupy upward of 10% of the total assets of some of the largest pension funds in Canada. However, investing in private equity requires a sophisticated, long-term and patient perspective if those expected higher returns are to be realized.

The Manager is of the view that the Fund represents a unique opportunity for retail investors to gain direct exposure to this asset class. The Manager believes that the Fund can deliver strong returns, uncorrelated with the public market.

Private Equity Update

To date, the Fund has made the following private equity investments:

- High Fidelity HDTV Inc. - $1.25 million (alongside $2.75 million by C.A. Bancorp)

- AgriFinancial Canada Corp. - $1.0 million (alongside $9.5 million by C.A. Bancorp)

- Bermingham Foundation Solutions - $0.8 million (alongside $9.2 million by C.A. Bancorp)

Also, the Fund has committed an additional $0.4 million to an investment that the Manager believes will close imminently.

The majority of these investments have a monthly payment to the Fund in the form of interest or a dividend. Additionally, each of these investments was made with a targeted internal rate of return of over 20% per annum, with expected holding periods of between three and five years.

Sentry Select Total Strategy Fund

Sentry Select Total Strategy Fund is a publicly traded closed-end fund which provides investors with an opportunity to benefit from Sentry Select Capital Corp.'s extensive management expertise across various investment strategies as well as C.A. Bancorp's experience with private equity investments.

C.A. Bancorp Inc.

C.A. Bancorp is a publicly traded Canadian merchant bank and alternative asset manager that provides investors with access to a range of private equity and other alternative asset class investment opportunities. C.A. Bancorp is focused on investments in small- and middle-capitalization public and private companies, with emphasis on the industrials, real estate, infrastructure and financial services sectors.

Sentry Select Capital Corp.

Sentry Select Capital Corp. is a Canadian wealth management company that manages approximately $8 billion in gross assets as of December 31, 2007. The company offers a diverse range of investment products including closed-end trusts, mutual funds, principal protected notes and flow-through limited partnerships, covering a variety of domestic and global mandates. Sentry Select is the manager and/or advisor to 30 TSX-listed reporting issuers. In addition, Sentry Select manages and/or provides advisory services to four reporting issuers listed on the TSX Venture Exchange.

Certain statements included in this news release constitute forward looking statements, including those identified by the expressions ''expect'', ''believe'', ''intend'', "will" and similar expressions to the extent they relate to the Fund or the Manager. The forward looking statements are not historical facts but reflect the Manager's current expectations regarding future results or events. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations including but not limited to the outcome of the unitholder vote at the special meeting, the number of units redeemed by the Fund, the timing of the closing of the Fund's additional investment and private equity market conditions. Readers are cautioned not to place undue reliance on forward-looking information. The Fund or the Manager undertakes no obligation to update publicly or otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.

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