TORONTO, ONTARIO--(Marketwire - March 7, 2013) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.
U.S. Cyclicals IncomeSeeker Fund (the "Fund") is pleased to announce that it has obtained a receipt for its amended and restated preliminary prospectus for the initial public offering (the "Offering") of the Fund's Class A Units and Class U Units (collectively, "Units"). Class A Units are being offered for $10.00 per Class A Unit and Class U Units are being offered for U.S. $10.00 per Class U Unit. The Class U Units are designed for investors wishing to make their investment in U.S. dollars and will not be listed on a stock exchange but will be convertible into Class A Units on a monthly basis.
The Fund has been established to provide holders of Units ("Unitholders") with investment exposure, on a tax-advantaged basis, to an equally-weighted portfolio (the "Portfolio") comprised of the five highest yielding equity securities in each of the following six cyclical industry sectors of the S&P 500: Industrials, Information Technology, Materials, Energy, Financials (excluding REITs) and Consumer Discretionary. The Fund will have a five-year term and is expected to terminate on or about April 30, 2018.
The investment objectives of the Fund are to provide Unitholders with: (i) monthly tax-advantaged distributions; (ii) the opportunity for capital appreciation; and (iii) lower overall volatility of returns, in each case by obtaining exposure, by virtue of one or more forward purchase agreements, to the Portfolio. The Portfolio will be held by U.S. Cyclicals Investment Trust (the "Portfolio Trust"), a newly formed investment fund established for the purpose of acquiring and holding the Portfolio.
The Portfolio will be reconstituted and rebalanced at the end of May and November of each year to include on an equally-weighted basis the then top five highest yielding equity securities in each of the Industrials, Information Technology, Materials, Energy, Financials (excluding REITs) and Consumer Discretionary sectors of the S&P 500. Connor, Clark & Lunn Capital Markets Inc. (the "Portfolio Manager") intends each month to sell call options on up to, and not more than, 25% of the market value of the equity securities held in the Portfolio.
The Fund intends to pay monthly distributions to Unitholders. Distributions are initially estimated to be $0.05 per Class A Unit and U.S. $0.05 per Class U Unit ($0.60 and U.S. $0.60 per annum, respectively) representing an annual yield of 6.00% on the issue price, consisting primarily of returns of capital which are not immediately taxable but which reduce a Unitholder's adjusted cost base of its Units.
The Fund will also offer a mandatory market purchase program pursuant to which the Fund will offer to purchase any Class A Units offered in the market at a price that is less than 98% of the latest net asset value per Class A Unit. Under the mandatory market purchase program, the Fund will purchase up to a maximum amount in any rolling 10 business day period of 10% of the number of Class A Units outstanding at the beginning of such 10 business day period, subject to the terms set out in the Fund's declaration of trust.
Connor, Clark & Lunn Capital Markets Inc. has been retained as the portfolio manager of the Fund and of the Portfolio Trust and will be responsible for implementing the investment strategies of the Fund and the Portfolio Trust. The Portfolio Manager is part of the Connor, Clark & Lunn Financial Group, a multi-boutique asset management firm whose affiliated managers are collectively responsible for the investment of approximately $44 billion in assets as at December 31, 2012.
BMO Nesbitt Burns Inc. is the promoter of the Fund, one of the agents in connection with the Offering and will act as the administrator of the Fund.
The syndicate of agents for the Offering is being led by BMO Capital Markets and includes CIBC, National Bank Financial Inc., Scotiabank, TD Securities Inc., Canaccord Genuity Corp., GMP Securities L.P., Macquarie Private Wealth Inc., Raymond James Ltd., Desjardins Securities Inc. and Mackie Research Capital Corporation.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities of the Fund have not been registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws and may not be offered or sold in the United States or to a U.S. person absent registration under the 1933 Act or an applicable exemption from the registration requirements of the 1933 Act and applicable state securities laws.
An amended and restated preliminary prospectus containing important information relating to these securities has been filed with securities commissions or similar authorities in each of the provinces and territories of Canada. The amended and restated preliminary prospectus is still subject to completion or amendment. Copies of the amended and restated preliminary prospectus may be obtained from any of the agents listed above. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued.