Star Portfolio Corp.
TSX : XYM

Star Portfolio Corp.

August 26, 2015 17:29 ET

Star Portfolio Corp. Announces Proposed Changes to Fund Structure

TORONTO, ONTARIO--(Marketwired - Aug. 26, 2015) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

BMO Nesbitt Burns Inc., the administrator (the "Administrator") of Star Yield Managers Class, a class of shares of Star Portfolio Corp. (the "Fund") (TSX:XYM), is pleased to announce that it intends to settle the entire amount of the Fund's forward agreement (the "Forward Agreement") with its counterparty (the "Forward Settlement"). The Administrator is also pleased to announce that it intends to convert the Fund from a "mutual fund corporation" to a "mutual fund trust" (the "Conversion") for purposes of the Income Tax Act (Canada) (the "Tax Act"). The Fund will seek approvals for the Forward Settlement and the Conversion at a special meeting of the holders (the "Shareholders") of Star Yield Managers Class shares of the Fund.

Approvals for Forward Settlement and Conversion

The Administrator has obtained approval from the Independent Review Committee of the Fund for the Forward Settlement and Conversion, which has determined that the Forward Settlement and Conversion, if implemented, would achieve a fair and reasonable result for the Shareholders.

The proposed Forward Settlement and Conversion is subject to regulatory and shareholder approval. A special meeting of the Shareholders is expected to be held on or about October 8, 2015. For the purposes of the meeting, the record date is expected to be on or about September 7, 2015. Upon receipt of all necessary approvals, it is expected that the Forward Settlement will be implemented on or before October 28, 2015 and the Conversion will be implemented after the close of business on or about November 6, 2015.

Forward Settlement

The Fund is comprised of and/or exposed to three distinct portfolios managed by three Canadian investment managers and their teams: (i) the Dynamic Portfolio (invests in the Dynamic Real Estate & Infrastructure Income Fund), (ii) the Signature Portfolio (invests in the Signature Diversified Yield Fund), and (iii) the Aston Hill Portfolio. The Aston Hill Portfolio utilizes the Forward Agreement to obtain exposure to an underlying reference portfolio held by Star Yield Trust.

As a result of changes to the Tax Act, the Administrator has determined that it would be more efficient and less costly for the Fund to seek to achieve its investment objectives with respect to the Aston Hill Portfolio by investing that portion of its assets in substantially similar assets as those held by the Star Yield Trust. Accordingly, the entire amount of the Forward Agreement will be settled and the Fund will acquire the portfolio held by Star Yield Trust.

The Fund's investment objectives and investment restrictions will be amended in connection with the Forward Settlement to remove all references to the use of forward agreements, to delete references to "tax-advantaged" and to clarify that the Fund will invest directly in securities that are substantially similar to those held currently by Star Yield Trust. The amendments to the investment objectives and investment restrictions of the Fund are clarifications and will not change the Aston Hill Portfolio that Shareholders are currently exposed to indirectly through the Star Yield Trust. The termination of the Forward Agreement will not affect the status of the Fund as a "mutual fund corporation" under the Tax Act.

Conversion

The Administrator is proposing that the Fund change its structure from a "mutual fund corporation" to a "mutual fund trust" for purposes of the Tax Act. Pursuant to the Conversion, all or substantially all of the assets of the Fund will be transferred to a unit trust (the "Continuing Fund") created specifically for the purpose of effecting the Conversion in exchange for units of the Continuing Fund and the assumption of liabilities of the Fund. Shareholders will receive units of the Continuing Fund on the redemption of their shares of the Fund. After the completion of the Conversion, the Fund will be dissolved.

Assuming that the Conversion constitutes a "qualifying exchange" under section 132.2 of the Tax Act, the disposition of a Shareholder's shares to the Fund in exchange for units of the Continuing Fund will be effected on a tax-deferred basis for purposes of the Tax Act, and the transfer of the Fund's assets to the Continuing Fund will not give rise to adverse tax consequences under the Tax Act.

The investment restrictions of the Fund must be amended to permit the acquisition of all the units of the Continuing Fund as part of the Conversion.

The conversion of the Fund to a mutual fund trust is intended to be more tax-efficient. Post-Conversion, all operational aspects, investment objectives, investment strategies and investment restrictions will remain substantially the same. The Continuing Fund will be charged administration fees in amounts that are identical to the combined administration fee currently charged by the Administrator in respect of the Fund and Star Yield Trust.

Certain statements included in this news release constitute forward-looking statements, including, but not limited to, those identified by the expressions "expect", "intend", "will", "estimate" and similar expressions to the extent they relate to the Fund and the Administrator. The forward-looking statements are not historical facts but reflect the 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. Although the Fund and the Administrator believe that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. Neither the Fund nor the Administrator undertake any 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.

Contact Information

  • BMO Capital Markets
    1.866.864.7760