Boyd Group to Undergo Internal Capital Restructuring
December 16, 2010
Boyd Group Income Fund today announced it has received trustee approval to implement an internal capital restructuring. Company officials say they expect the restructuring to be completed next month—in January 2011—and that the restructing will “better reflect its significant U.S. base of business and its expected source of future growth.”
As a result of the restructuring, the company has announced that the new level of distributions to unitholders will be funded entirely by its U.S. operations. Fund distributions that are sourced from U.S. business earnings are not subject to Specified Investment Flow-Through Tax, and, as a result of this cash flow savings, the fund trustees have approved a 16.7-percent increase in distributions to $0.42 per unit annually ($0.035 per month) from the current level of $0.36 per unit annually ($0.03 per month), according to a company statement. The first distribution at the new level will be payable on February 24, 2011 to unitholders of record at the close of business on January 31, 2011.
In addition, this internal capital restructuring also is expected to result in future corporate tax savings of approximately $500 thousand per year in the fund's subsidiaries, as the result of transferring intercompany interest deduction tax shield to its U.S. business, which is subject to a higher corporate tax rate than its Canadian business.
"As we had indicated in previous press releases and other disclosures, the fund does not intend to convert into a corporation at this time," says Brock Bulbuck, president and chief executive officer of the Boyd Group. "We continue to believe that this decision is in the best interests of our unitholders. Not only have we been able to maintain our distributions while remaining as a trust, as was our stated goal moving into 2011, we have now been able to organize our business in a way that allows us to increase our distributions."
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