TORONTO, Oct. 14 /CNW/ -- Citadel Fund Administrator ("Citadel") announced today that special meetings of unitholders are being called for the following funds (the "Special Meetings"):
Citadel HYTES Fund: CHF.UN, TSX
Citadel Premium Income Fund: CPF.UN, TSX
Citadel SMaRT Fund: CRT.UN, TSX
Citadel Stable S-1 Income Fund: CSR.UN, TSX
Citadel S-1 Income Trust Fund: SDL.UN, TSX
(the "Citadel Funds")
Series S-1 Income Fund: SRC.UN, TSX
Citadel Diversified Investment Trust: CTD.UN, TSX
(the "Blue Ribbon Funds")
Following discussions with Bloom Investment Counsel Inc. ("Bloom"), Brompton Administration Limited and Brompton Funds Management Limited (collectively "Blue Ribbon"), Citadel and Blue Ribbon have agreed upon proposals to be put to unitholders at the Special Meetings. Wayne Pushka, President of the Citadel Funds, said "One thing that was very clear from the September 30th meetings, which we recently held, was that a substantial number of unitholders wished to either redeem their units or merge into a new, larger fund. These proposals will allow unitholders to act upon those wishes."
Citadel Fund Administrator and Blue Ribbon have each agreed that they will pay the costs associated with the meetings at which their respective proposals are to be considered. As a result, unitholders will not be paying any expenses to hold these meetings.
The meetings for the Citadel Funds will consider a proposal to offer a special redemption right to unitholders of the Citadel Funds and to merge such funds with the Crown Hill Fund and Equal Weight Plus Fund to form a continuing fund to be named Citadel Income Fund. Benefits of the Citadel Funds proposal include:
- Jarislowsky, Fraser Limited ("Jarislowsky, Fraser") as Investment
Manager: Jarislowsky, Fraser is one of Canada's pre-eminent money
managers. In addition to being Canada's largest independent money
manager (with over $40 billion in assets under management) it is also
considered to be one of Canada's leading authorities on matters of
shareholder rights and corporate governance.
- Lower Expenses: The new, larger fund will have reduced per unit
operating costs. Savings will be achieved by rationalizing, reducing
or eliminating some expenses currently being paid by the funds. All of
these savings will be passed on to unitholders.
- Redemptions: A number of the Citadel Funds do not currently offer
redemption privileges. If the proposal is approved, unitholders who do
not wish to hold units in the continuing fund will be able to redeem
their units. In addition, the continuing fund will have an unlimited
redemption right in 2010 and a limited annual redemption right in
- Broader Investment Mandate: The investment strategy of the continuing
fund will include a broader range of income producing securities and
reduce the reliance upon income trust investments.
- Continued High Level of Distributions: The continuing fund intends to
pay a high level of monthly distributions. The initial annual
distribution rate will be set at approximately 8.5% of net asset value
- Greater Liquidity and Continued TSX Listing: Following the merger, the
continuing fund is expected to have a significantly larger market
capitalization. This should result in improved trading and liquidity
for the units of the fund.
- Warrants: Unitholders in the continuing fund will be issued warrants
at no cost and these warrants shall allow them to acquire additional
units of the fund.
- Improved Governance: The continuing fund will have annual meetings and
will also lower the quorum for meetings to 10%, as well as eliminate
the termination fees payable to the investment manager. It has also
recruited some of Canada's top professionals to serve on the board of
directors and independent review committee.
The meetings of the Blue Ribbon Funds will consider a proposal from Blue
Ribbon to take over the administration of and merge such funds. Terms and
conditions of this proposal, including termination fees, will be similar to
those described in the Blue Ribbon information circular dated September 8,
2009. Blue Ribbon's proposal has the following benefits:
- Maintaining Bloom as Portfolio Manager: Bloom is the experienced and
respected portfolio manager for the Blue Ribbon Funds and has
developed a strategy to maintain a high level of distributable cash
flow up to and beyond 2011.
- Lower Administration and Management Fees: Unitholders would pay a
combined annual administration and investment management fee of 1.0%.
- Redemption Privileges: Unitholders will have an unlimited annual
redemption privilege at 100% of NAV less direct costs, with the first
such redemption expected to occur in November 2009 following the
approval of the Blue Ribbon proposal.
- High Monthly Distributions: The new fund is expected to have an
initial distribution rate representing a yield on the July 30, 2009
NAV of 10%. This currently represents a yield of approximately 9.25%.
- Trailer Fee: Blue Ribbon will pay a trailer fee to investment dealers
of 0.40% of NAV per year.
- Enhanced Unitholder Protection and Governance Features: Independent
oversight, no future mergers or fundamental changes to the fund
without unitholder approval and no dilutive offerings. Management may
be terminated without payment of a break fee or early termination and
the fund may not be delisted from the TSX without unitholders
- Warrants: The fund will issue warrants to its unitholders to acquire
Both Citadel and Blue Ribbon have agreed not to contest these meetings and Citadel has agreed that it will cooperate with Blue Ribbon in implementing the Blue Ribbon proposal if it is approved by unitholders. Subject to the review of the Citadel Funds Independent Review Committee, Bloom will no longer serve as the investment manager of any of the Citadel Funds and Citadel will discontinue its lawsuit against Bloom. Citadel intends to appoint Jarislowsky, Fraser as the new investment manager of the Citadel Funds. Jarislowsky, Fraser is already the manager of the Crown Hill Fund.
Unitholders of record on October 16, 2009 will be eligible to vote at the meetings, which are expected to be held on November 17, 2009.