PRT Forest Regeneration Income Fund
TSX : PRT.UN

PRT Forest Regeneration Income Fund

May 11, 2011 15:00 ET

PRT Announces Definitive Plan to Convert to a Corporation

VICTORIA, BRITISH COLUMBIA--(Marketwire - May 11, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S.

PRT Forest Regeneration Income Fund (TSX:PRT.UN) (the "Fund") announced today that, in accordance with its previously announced intention to convert to a corporation, it has entered into an arrangement agreement ("Arrangement Agreement") under which the Fund will convert under a plan of arrangement (the "Arrangement") from an income trust structure to a publicly traded corporation. The Arrangement is expected to be effective October 1, 2011.

The Arrangement is subject to, among other customary conditions, approval by the Supreme Court of British Columbia, the approval of the Toronto Stock Exchange (the "TSX") and a positive vote in favour of the Arrangement by at least: (i) 66 2/3% of the votes cast by Unitholders of the Fund voting as a single class, and (ii) 66 2/3% of the votes cast by Unitholders and Unit Optionholders of the Fund, voting together as a single class.

"The Board of Trustees is of the view that the Arrangement will result in a simplified business structure and come with a number of benefits, including providing more flexibility regarding the growth and retention of capital and eliminating the limitations upon non-resident ownership of units of a mutual fund trust that is not applicable to shares of a corporation providing a potential broader base of investors," said Robert K. Withers, Chairman of the Fund.

The Board of Trustees of the Fund, based upon its own investigations, on information provided by management of the Fund and the advice of legal and tax counsel of the Fund, has unanimously determined that the Arrangement is fair, from a financial point of view, to the Fund and the Unitholders and is in the best interests of the Fund and its Unitholders, and recommends that Unitholders vote in favour of the Arrangement.

Pursuant to the Arrangement, Unitholders will receive, for each unit of the Fund ("Unit") held, one common share of 7850247 Canada Inc. ("PRT Newco"), a newly incorporated wholly-owned subsidiary of the Fund. The Fund will be wound up into PRT Newco and PRT Newco will amalgamate with Pacific Regeneration Technologies Inc. ("PRT"). Upon completion of the Arrangement, the amalgamated company ("PRT Inc.") will carry on the business of the Fund previously carried on by PRT and the former Unitholders and Unit Optionholders of the Fund will be Shareholders and Optionholders, respectively of PRT Inc. The Fund has made application to the TSX for the listing of the common shares of PRT Inc. on the TSX under the symbol "PRT" once the Arrangement is completed, subject to the ability of PRT Inc. to satisfy all of the listing conditions of the TSX.

The Arrangement will occur pursuant to a statutory plan of arrangement under Section 192 of the Canada Business Corporations Act. The details of the Arrangement are further described in the Management Information Circular to be sent to Unitholders in the week ahead in connection with the Arrangement along with other matters to be considered at the annual and special meeting (the "Meeting") of Unitholders which will take place on June 13, 2011 at 10:00 a.m. (Pacific time) at the offices of Farris, Vaughan, Wills & Murphy LLP, 2500 – 700 West Georgia Street, Vancouver, British Columbia. The record date for determining Unitholders entitled to vote on the Arrangement is May 2, 2011.

If the Arrangement is approved at the Meeting, Unitholders will also be asked to approve a share option plan, employee share purchase plan and shareholder rights plan for PRT Inc. to replace the existing unitholder option plan, employee share ownership plan and unitholder rights plan of the Fund.

It is anticipated that PRT Inc., as successor to the Fund, will not pay any cash dividends on the PRT Inc. shares in 2011 but will review that policy for 2012 and from time to time as circumstances warrant with a view to re-establishing a policy of regular distributions. Any decision to declare and pay dividends in the future will be made at the discretion of the board of directors of PRT Inc. with a view to maintain a strong financial position, and will depend on, among other things, the financial performance and condition of PRT Inc., including the results of operations, current and anticipated cash requirements and surplus, growth opportunities available to PRT Inc., and current and expected economic conditions, together with such other factors as the board of directors may consider relevant. In addition, contractual restrictions and financing agreement covenants and restrictions imposed by corporate law may limit PRT Inc.'s ability to pay dividends.

About the Fund

PRT is the largest producer of container grown forest seedlings in North America, currently operating 13 nursery locations expected to produce over 170 million seedlings in 2011. Units of the Fund are listed for trading on the Toronto Stock Exchange under the trading symbol PRT.UN.

Forward Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, potential outcomes of voting and other statements that are not historical fact. Risks and uncertainties include, but are not limited to, the possibility that the proposed conversion to a corporation may not proceed either because it does not receive the requisite shareholder and regulatory approvals or for other reasons, whether or not PRT Inc. pays dividends in the future and the level and sustainability of those dividends, our ability to grow and supply products in accordance with defined specifications, customer credit risks, and other risks identified from time to time in the Fund's annual report and annual information return. These risks and uncertainties may cause actual results to differ materially from the expectations expressed herein. As such, readers are cautioned to not to place undue reliance on forward-looking statements.

Forward-looking statements are based on current expectations and neither the Fund nor PRT assumes any obligation to update such information to reflect later events or developments, except as required by law.

Contact Information

  • PRT Forest Regeneration Income Fund
    Tony Pollard
    VP Finance/CFO
    (866) 553-8733 ext. 229