UE Waterheater Income Fund

UE Waterheater Income Fund

November 18, 2005 17:50 ET

UE Waterheater Income Fund Comments on Finance Department Consultation Paper Concerning Flow Through Entities

TORONTO, ONTARIO--(CCNMatthews - Nov. 18, 2005) -


UE Waterheater Income Fund (TXS:UWH.UN) President and CEO Roger Rossi commented today on the consultation process on Flow Through Entities (FTE's) being undertaken by the Federal Government's Department of Finance.

"We believe income trusts are a successful made-in-Canada means of raising capital that benefits Canadians and the Canadian economy - any additional tax imposed by the government will directly harm investors, pensioners and the economy. Income trusts play a unique role by providing a steady stream of income to retirees and those on fixed incomes. Changes can destroy significant current value for investors as well as stifle economic growth by creating an economic disadvantage for Canadian business. Changes would also result in a reduced level of income generated for distribution to unitholders, many of whom rely on the investment income generated by income trusts to make ends meet. We believe the Government's concerns regarding the current tax structure should be challenged. The Government is encouraged to refrain from imposing any additional taxes on the income trust sector.

The UE Waterheater Income Fund indirectly owns Union Energy Limited Partnership (Union Energy) and Protectron Limited Partnership (Protectron). Its 1,400 employees provide 1.2 million customers with a full range of heating, ventilation, water heating, air conditioning, and home security products and services. UE Waterheater Income Fund is proud of its record to date in creating significant economic activity and value for its employees, customers and unitholders, as supported by the following:

- Since becoming an income trust, Union Energy has expanded its business through both organic growth and the acquisition of Protectron, Canada's second largest privately-held security monitoring and installation company, which was previously owned by a US-based organization. As part of this growth, we've increased the income flows to unitholders, which in turn provides additional tax to the government.

- Over the past two years, UE Waterheater Income Fund has invested over $253-million in building its business for the benefit of all its stakeholders.

- Distributable cash flow per trust unit has increased from a forecast of 85 cents per trust unit at the time the organization went public in 2003 to $1.21 per trust unit generated in 2004, demonstrating the Fund's ability to improve its productivity and profitability.

- UE Waterheater Income Fund has raised $520-million in capital, which now has a market value of $630-million as at November 10, representing potential capital gain tax revenue for governments.

- To support this growth, the Fund's overall workforce has increased by 18% in Ontario alone. Its over 1.2 million customers across Canada are served by over 1,400 employees located primarily in Ontario, Quebec and British Columbia.

We're proud of UE Waterheater Income Fund's record to date in creating significant economic growth for Canada and value for our employees, customers and unitholders, including the additional tax revenue we have generated. This level of success would not have been possible without the current FTE structure. Any changes in the current tax structure will inhibit our continued growth, and our ability to contribute to the economy and community through job creation and re-investment in our business. My hope is that we can look forward to the same degree of success in the future, unhampered by new taxes."

In response to enquiries from numerous UE Waterheater Income Fund unitholders seeking assistance in participating directly in the consultation process, we are providing the following Department of Finance contact information: For written submissions by e-mail contact: trusts-fiducies@fin.gc.ca or to contact the Minister of Finance:

The Honourable Ralph Goodale
Department of Finance Canada
140 O'Connor Street
Ottawa, Ontario K1A 0A6
Phone: 613-996-4743 /
Fax: 613-996-9790
E-Mail: goodale.R@parl.gc.ca

or to contact your Member of Parliament:


The UE Waterheater Income Fund is a member of the Canadian Association of Income Funds and is supportive of the Association in making submissions as part of the Government's consultation process.

For more information about UE Waterheater Income Fund, visit our web site at www.ueincomefund.com.

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