The Consumers' Waterheater Income Fund

The Consumers' Waterheater Income Fund

March 16, 2007 14:57 ET

The Consumers' Waterheater Income Fund Announces Adoption of Unitholder Rights Plan

TORONTO, ONTARIO--(CCNMatthews - March 16, 2007) -


The Consumers' Waterheater Income Fund (the "Fund") (TSX:CWI.UN) announced today that it had approved and adopted a unitholder rights plan (the "Rights Plan"). In making the announcement, the Fund stated that it is not aware of any pending or threatened takeover bid.

The primary objectives of the Rights Plan are (1) to provide the trustees of the Fund with additional time to explore and develop alternatives for maximizing unitholder value if an unsolicited take-over bid is made for the units of the Fund (the "Units") and (2) to ensure, to the extent possible, that all holders of Units (the "Unitholders") are treated fairly in connection with any such bid.

The Rights Plan is effective immediately and is subject to ratification by a special majority of Unitholders at the Fund's 2007 annual and special meeting, scheduled for April 26, 2007. If ratified by the Unitholders at the meeting, the Rights Plan will be subject to Unitholder confirmation every three years.

The Rights Plan is similar to many other rights plans adopted by Canadian public issuers. The rights issued under the Rights Plan (the "Rights") will be exercisable only after a person has acquired, or commences or announces a take-over bid to acquire, 20% or more of the Units, other than pursuant to a Permitted Bid (described below) or with the approval of the Board (or in certain other circumstances described in the Rights Plan). Upon the acquisition by any person, or group of persons acting in concert, (an "Acquiring Person") of 20% or more of the Units, other than by way of a Permitted Bid, each Right (other than those held by the Acquiring Person or related party) will permit the holder of the Right to purchase Units having a fair market value of $100 for $50.

Under the Rights Plan, in order to qualify as a permitted bid ("Permitted Bid") a bid must (i) be made by way of a take-over bid circular to all registered Unitholders, (ii) be open for acceptance for a minimum period of 60 days, (iii) prohibit the bidder from taking up any Units tendered pursuant to the take-over bid prior to the expiry of a 60 day period and then only if at such time more than 50% of the Units held by Unitholders, other than the bidder, have been tendered to the take-over bid and not withdrawn; and (iv) require the bidder, if more than 50% of the Units held by Independent Unitholders (as defined in the Rights Plan) are tendered to the take-over bid within the 60 day period, to make a public announcement of that fact and keep the take-over bid open for acceptance for at least 10 business days from the date of such public announcement.

About The Consumers' Waterheater Income Fund

The Consumers' Waterheater Income Fund indirectly owns a portfolio of approximately 1.4 million installed water heaters and other assets, rented primarily to residential customers in Ontario.

The Fund is an unincorporated open-ended trust established with an unlimited number of trust units under the laws of the Province of Ontario pursuant to a Declaration of Trust dated October 28, 2002.

The Fund commenced operations on December 17, 2002, when it completed its initial public offering of Fund units, the proceeds of which were used to fund the purchase of the rental portfolio from Direct Energy Marketing Limited ("Direct Energy").

Direct Energy continues to provide service support to the rental portfolio and subject to certain exceptions, receives 35% of aggregate rental revenues for its co-ownership interest in certain water heater related assets (with the Fund owning and receiving the remaining 65%). As a result, the Fund's exposure to operating risk is significantly reduced. The Fund has no investment interest in Direct Energy's services business or operations.

Additional information regarding the Fund, including its current Annual Information Form ("AIF") is available on SEDAR at A copy of the Rights Plan will also be available on SEDAR and on the Fund's website at

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