EnerVest Diversified Income Trust Announces:
September 29 2008 - 1:44PM
Marketwired Canada
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES OF AMERICA.
EnerVest Diversified Income Trust, (TSX:EIT.UN) ("EnerVest") is pleased to
announce that it:
- will endeavor to continue to operate as an income generating investment
vehicle through the impending rule changes to trust taxation to be imposed after
December 31, 2010;
- intends to modify its investment strategy, as approved by unitholders at the
special meeting in July 2007, to focus on a broader range of income producing
investment vehicles in various industries and geographic regions, and reduce its
reliance on conventional royalty trusts and business trusts which will be
impacted by tax rule changes coming into effect in 2011;
- intends to continue to provide its investors with a $0.07 per unit per month
distribution for the next 12 months, representing a cash on cash yield of 16.4%
based on the closing price of EnerVest units as of September 25, 2008;
- has appointed Jacob Roorda as President and Chief Executive Officer; and
- has filed a preliminary short form prospectus for a treasury offering of its
units to be issued in connection with an exchange offering (the "Exchange
Offer"), enhanced by the preferential distribution of discounted warrants
available to existing Unitholders of record on the Warrant Record Date (the
"Warrant Offer"), as described below;
- has received approval of the normal course issuer bid for the next 12 months.
Investment Strategy and Distribution Guidance:
EnerVest announces that it will continue to pursue its objective for Unitholders
of maximizing monthly distributions relative to risk and maximizing net asset
value while maintaining and expanding a diversified investment portfolio.
However, in light of impending taxation rules to be implemented for "SIFT"
trusts in 2011, EnerVest intends to modify its investment strategy, as approved
by unitholders at the special meeting in July 2007, to include a broader range
of income producing investment vehicles in various industries and geographic
regions, and reduce its reliance on conventional royalty and business trusts.
Following a review of the portfolio with the Investment Advisor, Cypress Capital
Management Ltd., EnerVest also feels sufficiently confident to announce that it
intends to continue to offer the $0.07 per unit monthly distribution for the
next 12 months, representing a cash on cash yield of 16.4% based on the closing
price of EnerVest units on September 25, 2008. The exchange offer and warrant
offering described below should significantly complement the investment strategy
by attracting a broader class of assets to the portfolio, and the raising of
cash to target new investments for the portfolio. Given recent market
conditions, EnerVest believes that current investment prices represent good
value, providing an opportunistic time to build the portfolio. EnerVest has also
renewed its normal course issuer bid. The Investment Manager believes that from
time to time it may be in the best interest of unitholders to purchase units for
cancellation. This purchase of units will increase the proportionate interest
of, and be advantageous to, all remaining unitholders. Any purchases made by
EnerVest may also afford increased liquidity to those unitholders of EnerVest
who may wish to dispose of their units.
Appointment:
EnerVest announces that Mr. Jacob Roorda has accepted the role of President and
Chief Executive Officer, replacing Mr. Kevin Wolfe, who has resigned to pursue
other business opportunities. Mr. Roorda brings almost 30 years of energy and
financial industry experience, including as president of a successful oil and
natural gas royalty trust, a co-founder of a group of mutual funds and as a
senior partner of an investment banking firm. He has also held senior roles in
corporate finance, equity research, business development and oil and natural gas
operations.
Enhanced Exchange Offering:
EnerVest has filed a preliminary short form prospectus for a treasury offering
of its units to be issued in connection with an exchange offering (the "Exchange
Offer"), described below. EnerVest is offering to issue EnerVest units in
exchange for securities of selected royalty, income and real estate investment
trusts, limited partnerships and corporations, ("Issuer Securities") all of
which are listed on the Toronto Stock Exchange (the "TSX"). A listing of the
Issuers is set out below.
Coincident with the Exchange Offer, EnerVest also announces that it will issue
Warrants to subscribe for EnerVest units to existing Unitholders of record at
the close of business on the day immediately following the expiry of the
rescission rights under the (final) short form prospectus (the "Warrant Record
Date"), likely occurring in early November 2008. The number of warrants issued
to existing Unitholders will vary with the size of the Exchange Offer. At the
minimum Exchange Offer of $50 million, 0.025 Warrants will be issued for each
EnerVest unit held on the Warrant Record Date (one whole Warrant for each 40
EnerVest units then held). One Warrant will entitle the holder to purchase one
EnerVest Unit at a price 20% below the EnerVest Exchange Price as announced on
or about October 17, 2008. At the maximum Exchange Offer of $500 million, 0.25
Warrants will be issued for each EnerVest unit held on the Warrant Record Date
(one whole Warrant for each 4 EnerVest units then held). The Warrant Exercise
Date will be that day which is 21 clear days after the Warrant Record Date or,
if such day is not a business day, the immediately succeeding business day and
upon exercise the holders of these units acquired through the Warrant offering
will be entitled to one month's distribution of $0.07 per unit upon exercise.
Exchange Offer: The Exchange Offer is open to all holders of Issuer Securities
until 4:00 p.m. EST on October 16, 2008 (the "Deposit Date"). The Exchange Offer
may be accepted only by means of a book-entry deposit through CDS Clearing and
Depository Services Inc. Security holders of an Issuer who wish to accept the
Exchange Offer must request their investment advisor or nominee to effect the
transaction for them. Some nominees may require an earlier deadline for
receiving instructions concerning a deposit.
The Exchange Ratio for the Issuer Securities of each Issuer will be determined
by dividing the respective weighted average trading price of such Issuer
Securities on the TSX during the period of three consecutive trading days ending
on the Deposit Date by the weighted average trading price of the EnerVest Units
on the TSX during the same period. The Exchange Ratios will be announced in a
press release issued by EnerVest on or about October 17, 2008 and disclosed in a
final short form prospectus to be filed shortly thereafter.
The maximum number of Securities of any particular Issuer which EnerVest will
own subsequent to the Exchange Offer will amount to less than 10% of the
outstanding Issuer Securities of such Issuer. This Exchange Offer does not
constitute a takeover bid with respect to any of the Issuers.
EnerVest Diversified Management Inc., the manager, and/or its parent will
reimburse EnerVest for the costs of the offering including fees paid to the
dealer manager and the soliciting dealers and this obligation will be evidenced
by a promissory note in favour of EnerVest.
The potential benefits of participating in the Exchange Offer include the following:
LOWER RISK: Unitholders who participate will gain diversification over a broad
range of issuers and timely opportunity for holders of certain royalty trusts,
income trusts, real estate investment trusts, corporations and limited
partnerships, debt and other high yielding securities to participate in a
diversified, highly liquid, actively managed portfolio of high quality
securities with no cash outlay;
HIGH YIELD: The current yield on EnerVest's units is approximately 16.4%, based
on the closing price of EnerVest units as of September 25, 2008. EnerVest's
portfolio is actively managed to maximize monthly cash distributions relative to
risk and maximize the underlying net asset value over the life of EnerVest.
EXPERIENCED MANAGEMENT: The Investment Manager is Cypress Capital Management
Ltd. ("Cypress"), a portfolio manager providing active, proven and experienced
investment management.
PERFORMANCE: EnerVest provided annual compounded returns (capital appreciation
plus average trading value of rights issued plus distributions) of 8.84% -0.66%
and 10.19% for the one three and five years ended August 31, 2008, respectively.
Furthermore, EnerVest enjoys a management expense ratio ("MER") of 1.34%
excluding interest and issue costs, for the year ended December 31, 2007, one of
the lowest of the major diversified closed end trusts.
STABILITY OF DISTRIBUTION: EnerVest intends to continue its current monthly
distribution of $0.07 per EnerVest Unit for each of the next 12 months,
reflecting a yield of approximately 16.4% based on the closing price of an
EnerVest Unit on the TSX on September 25, 2008;
COMMITMENT: EnerVest's intention of maintaining its status as an income
producing fund up to and following the implementation of the new tax rules for
"SIFT" trusts in 2011, by diversifying its portfolio holdings to include
non-income trust securities such as preferred shares, corporate bonds and high
yield debt.
INCOME TAX ADVANTAGES: Current holders of Issuer Securities can optimize their
specific tax needs by realizing either taxable capital gains or capital losses
through the Exchange Offer. In addition, since its inception to December 31,
2007, EnerVest's distributions have been 49.7% non-taxable and are estimated to
be 25% non-taxable for 2008.
NO INITIAL DIRECT FEES: The Exchange Offer enables current holders of units or
other securities of the identified Issuers to acquire EnerVest units at no
direct cost or brokerage commission. Furthermore, the manager and/or its parent
has agreed to reimburse fees payable to the dealer manager and soliciting
dealers incurred by EnerVest.
ENHANCED LIQUIDITY: EnerVest units are publicly traded on the TSX and have
significant liquidity. As at August 31, 2008 the daily average trading volume
for 2008 was 549,356.
Warrant Offer: As described above, EnerVest also announces that it will issue
Warrants to subscribe for EnerVest units to existing Unitholders in conjunction
with the Exchange Offer on the Warrant Record date, likely occurring in early
November 2008. The number of warrants issued to existing Unitholders will vary
with the size of the Exchange Offer. At the minimum Exchange Offer of $50
million, 0.025 Warrants will be issued for each EnerVest unit held on the
Warrant Record Date (one whole Warrant for each 40 EnerVest units then held).
One Warrant will entitle the holder to purchase one EnerVest Unit at a price 20%
below the EnerVest Exchange Price as announced on or about October 17, 2008. At
the maximum Exchange Offer of $500 million, 0.25 Warrants will be issued for
each EnerVest unit held on the Warrant Record Date (one whole Warrant for each 4
EnerVest units then held. The Warrant Exercise Date will be that day which is 21
clear days after the Warrant Record Date or, if such day is not a business day,
the immediately succeeding business day and upon exercise the holders of these
units acquired through the Warrant offering will be entitled to one month's
distribution of $0.07 per unit, payable upon exercise.
The potential benefits to Existing Unitholders who participate in the Warrant
Offer include the following:
EFFICIENT PURCHASE: Existing Unitholders will have the ability to invest
incrementally in a discounted fashion, in the growth and recovery that the
manager anticipates will follow from current weak market conditions. Unitholders
could realize an annual yield of 20.5%, assuming the purchase price of an
EnerVest Unit which is at a 20% discount to the trading price on September 25,
2008.
MARKET OPPORTUNITY: Existing Unitholders will benefit from EnerVest's purchase
of securities in the Exchange Offer, securities targeted with strong
fundamentals and market values that are expected to be trading at a discount to
their underlying value and to facilitate the diversification of EnerVest's
investments pursuant to its stated portfolio management strategy;
STABILITY OF DISTRIBUTION: EnerVest intends to continue its current monthly
distribution of $0.07 per EnerVest Unit for each of the next 12 months,
reflecting a cash on cash yield of approximately 20.5% for each warrant
exercised at 20% discount to the closing price of an EnerVest Unit on the TSX on
September 25, 2008;
COMMITMENT: EnerVest's intention of maintaining its status as an income
producing fund up to and following the implementation of the new tax rules for
"SIFT" trusts in 2011, by diversifying its portfolio holdings into non-income
trust securities such as preferred shares, corporate bonds and high yield debt.
For additional information, please see a copy of the Preliminary Short Form
Prospectus dated September 26, 2008 which will be available on the EnerVest and
SEDAR websites, or contact the EnerVest Investor Relations department at
1-800-459-3384.
EnerVest is an actively managed, closed-end trust which invests in a diversified
portfolio of income, royalty and real estate investment trusts, limited
partnerships, and corporations or other securities. EnerVest's objectives are to
maximize monthly distributions relative to risk and maximize net asset value
while maintaining and expanding a diversified investment portfolio. EnerVest
currently has 301,117,272 units outstanding, a net asset value of approximately
$1.8 billion and a daily average trading volume of approximately 549,356 units
for the first eight months of 2008.
EnerVest Exchange Offer List of Issuers
INCOME FUNDS
------------
Oil & Gas
---------
Conventional Oil & Gas
----------------------
Advantage Energy Income Fund
ARC Energy Trust
Baytex Energy Trust
Bonavista Energy Trust
Bonterra Energy Income Trust
Canadian Oil Sands Trust
Crescent Point Energy Trust
Daylight Resources Trust
Enerplus Resources Fund
Freehold Royalty Trust
Harvest Energy Trust
NAL Oil & Gas Trust
Paramount Energy Trust
Pengrowth Energy Trust
Penn West Energy Trust
PEYTO Energy Trust
Progress Energy Trust
Provident Energy Trust
Trilogy Energy Trust
True Energy Trust
Vermilion Energy Trust
Zargon Energy Trust
Energy Services
---------------
Black Diamond Income Fund
Cathedral Energy Services Trust
EnerFlex Systems Income Fund
Energy Savings Income Fund
Mullen Group Income Fund
Phoenix Technology Income Fund
Precision Drilling Trust
Savanna Energy Services
Stoneham Drilling Trust
Pipeline & Utilities
--------------------
Energy
------
AltaGas Income Trust
Enbridge Income Fund
Fort Chicago Energy Partners L.P.
Inter Pipeline Fund
Keyera Facilities Income Fund
Pembina Pipeline Income Fund
Utilities
---------
EPCOR Power L.P.
Gaz Metro Limited Partnership
Great Lakes Hydro Income Fund
Innergex Power Income Fund
Macquarie Power & Infrastructure Income Fund
Northland Power Income Fund
Algonquin Power Income Fund
Business Trusts
---------------
Diversified Financials
----------------------
CI Financial Income Fund
Davis & Henderson Income Fund
DirectCash Income Fund
First National Financial Income Fund
Morneau Sobeco Income Fund
New Flyer Industries Inc. (IDS)
Healthcare
----------
CML Healthcare Income Fund
Industrials & Other
-------------------
Ag Growth Income Fund
Armtec Infrastructure Income Fund
Badger Income Fund
Bird Construction Income Fund
GMP Capital Trust
IBI Income Fund
Superior Plus Income Fund
Vicwest Income Fund
Wajax Income Fund
Materials
---------
Labrador Iron Ore Royalty Income Fund
Noranda Income Fund
TimberWest Forest Corp.
Media & Entertainment
---------------------
Cineplex Galaxy Income Fund
Gamehost Income Fund
Yellow Pages Income Fund
Telecommunication Services
--------------------------
Bell Aliant Regional Communications Income Fund
Transportation
--------------
Contrans Income Fund
Jazz Air Income Fund
Livingston International Income Fund
TransForce Income Fund
Westshore Terminals Income Fund
Real Estate Investment Trusts
-----------------------------
Allied Properties REIT
Altus Group Income Fund
Boardwalk REIT
Calloway REIT
Canadian Apartment Properties REIT
Canadian REIT
Chartwell REIT
Cominar REIT
Crombie REIT
Dundee REIT
H&R REIT
InnVest REIT
Morguard REIT
Northern Property REIT
Primaris Retial REIT
Retrocom Mid-Market REIT
RioCan REIT
EQUITIES
--------
Banks / Financial Services
--------------------------
AGF Management Ltd.
Bank of Montreal
Bank of Nova Scotia (The)
Canadian Imperial Bank of Commerce
Canadian Western Bank
DundeeWealth Inc.
Great-West Lifeco Inc.
Home Capital Group Inc.
IGM Financial Inc.
Industrial Alliance Insurance and Financial Services
ING Canada Inc.
Manulife Financial Corporation
National Bank of Canada
Power Corporation of Canada
Power Financial Corporation
Royal Bank of Canada
Sun Life Financial Inc.
Toronto-Dominion Bank (The)
Consumer Products
-----------------
Saputo Inc.
Gildan Activewear Inc.
Tim Hortons Inc.
Energy Services
---------------
Trinidad Drilling Ltd.
Industrials
-----------
Russel Metals Inc.
Oil & Gas
---------
Canadian Natural Resources Corp.
EnCana Corp.
Nexen Inc.
Petro-Canada
Talisman Energy Inc.
Pipeline & Utilities
--------------------
TransCanada Corporation
Enbridge Corporation
Real Estate
-----------
Brookfield Properties Corporation
First Capital Realty Inc.
Telecommunications & Media
--------------------------
Astral Media Inc.
BCE Inc.
Cogeco Cable Inc.
Corus Entertainment Inc.
Manitoba Telecom Services Inc.
Rogers Communications Inc.
Shaw Communications Inc.
TELUS Corporation
Thomson Reuters Corp.
CONVERTIBLE DEBENTURES
----------------------
Oil & Gas
---------
Baytex Energy DB
BonaVista Energy DB
BonaVista Energy DB-A
Daylight Energy DB-B
Harvest Energy DB
Harvest Energy DB-A
Harvest Energy DB-D
Harvest Energy DB-F
Harvest Energy DB-G
NAL Energy DB
Progress Energy DB
Provident Energy DB-A
Industrials
-----------
Western Canadian Coal DB
Pipeline & Utilities
--------------------
Northland Power DB
REITs
-----
Cominar DB-C
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