Coast Wholesale Appliances Inc.

Coast Wholesale Appliances Inc.

January 04, 2011 08:00 ET

Coast Wholesale Appliances Income Fund Completes Conversion to Publicly-Traded Corporation

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 4, 2011) -


Coast Wholesale Appliances Inc. (TSX:CWA) (Coast Inc.) today announced that it has completed its planned conversion from an income trust structure to a publicly traded corporation. Shares of the new dividend-paying corporation will trade on the Toronto Stock Exchange under the symbol "CWA".

Under the plan of arrangement for the conversion, investors received one common share in Coast Inc. for each trust unit held in Coast Wholesale Appliances Income Fund (the Fund). In addition, CWAL Investments Ltd. (CWAL), the previous owner of the Coast business, received one share of Coast Inc. for each combined exchangeable unit of Coast Wholesale Appliances LP and special voting unit of the Fund held. As a result, Coast Inc. has a total of 10,034,166 common shares issued and outstanding.

Management of Coast Inc. anticipates that the new entity will pay a monthly dividend approximately equal to 50% of net income, expected to initially translate to $0.035 ($0.42 per annum) per share of Coast Inc. This should provide most investors with an after-tax return similar to, or in some cases better than, what they previously received in distributions from the Fund, depending on their tax bracket. The first monthly dividend is anticipated to be declared for the month ended January 31, 2011.

Coast Profile

Coast is a leading independent supplier of major household appliances and accessories to developers and builders of multi-family and single-family housing, and to retail customers. Founded in 1978, Coast currently operates 15 stores across the four western provinces and one store in the Greater Toronto Area of Ontario, as well as a network of warehouse distribution centres strategically situated to serve these locations.

Forward-looking Statements

This news release includes forward-looking statements. These involve known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", "expect", "may", "plan", "will", and similar terms and phrases, including references to assumptions. Such statements may involve, but are not limited to, comments with respect to the sustainability of Coast Inc.'s dividends and the level of its payout ratio in the future.

These forward-looking statements reflect current expectations of Coast Inc.'s management regarding future events and operating performance as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: sensitivity to general economic conditions; maintenance of profitability and management of growth; competition; interest rates; reliance on suppliers and their ability to supply product for sale on a timely basis; changes in consumer preferences; changes in the mix of product sales; fluctuations in fuel and commodity pricing, which may impact freight and other costs; usage of extended warranty programs and the costs to deliver these services; changes to planning and supply chain processes; lack of supplier agreements; reliance on key personnel; and foreign exchange rates as they relate to imported products.

Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, Coast Inc. cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements reflect management's current beliefs and are based on information currently available to the company. They speak only as of the date of this news release, and reflect current assumptions regarding future events and operating performance. These assumptions include, without limitation: slow economic growth during 2011 in both Western Canada and the Greater Toronto Area (Coast Inc.'s current market areas); continued fluctuations in exchange rates; low but increasing interest rates through 2011; improved but still cautious credit markets for its major builder customers to obtain financing for their current and future building activities; continued weak consumer confidence due to the slow economic recovery, which may be reflected in lower retail sales; and a continued increase in new home construction activity, reflected in higher levels of new building permits issued and housing starts compared to last year. These forward-looking statements are made only as of the date of this news release and Coast Inc. assumes no obligation to update or revise them to reflect new events or circumstances, other than as required by law.

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