CI board rubber stamps income trust conversion

(May 18, 2006) CI Financial’s board of directors has unanimously approved a plan to convert the mutual fund company into an income trust. Shareholders will vote on the proposal next month.

Under the proposed structure, CI shareholders will be entitled to receive either one unit of the fund, or a combination of Class B limited partner units (also known as exchangeable LP units) of Canadian International LP and special voting units of the fund.

Sun Life Financial, which owns about 35% of CI’s common shares, will be given the right to receive exchangeable LP Units ahead of other CI shareholders.

“A special committee of the board of directors of CI, consisting of independent directors, has concluded that the arrangement is in the best interests of CI and its minority shareholders having regard to the preferential treatment afforded Sun Life,” CI said in a statement.

Genuity Capital Markets, CI’s financial advisor on the deal, has agreed this arrangement is fair, from a financial point of view, to CI’s shareholders.

CI is preparing an information circular containing details of the conversion, which will be mailed to shareholders at the end of May.

The move to a trust is still subject to a number of conditions, including the approval of the Ontario Superior Court of Justice, the approval of the shareholders of CI and certain regulatory approvals as well as the receipt of a favourable tax ruling.

Sun Life intends to vote in favour of the conversion, CI says, provided that the final tax ruling received from the CRA and the final form of the material contracts of the fund are satisfactory.

CI management and board members have also agreed to support the conversion. The shareholders’ meeting is scheduled for June 22.

If approved, CI expects the trust conversion to be complete by June 30.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com