GMI warrantholders to receive Compass units after exercising warrants
TORONTO, Oct. 3, 2011 /CNW/ - Middlefield Group is pleased to announce its intention to merge GMIncome Growth Fund ("GMI") and Compass Income Fund ("Compass" or the "Continuing Fund") (collectively, the "Funds") with Compass being the Continuing Fund. Both GMI and Compass are co-advised by Guardian Capital LP and Middlefield Capital Corporation and have similar investment objectives. The purpose of the merger is to provide unitholders with the opportunity to hold units of a fund that offers a larger market capitalization, increased trading liquidity and lower operating costs on a per unit basis. All costs and expenses associated with the merger will be borne by the manager and not the Funds.
Completion of the merger is expected to take place on or about December 22, 2011 (the date of completion being the "Effective Date") and is subject to all regulatory requirements and customary closing conditions being satisfied. The merger will be effected on a tax-deferred "rollover" basis using an exchange ratio calculated as the net asset value per unit of GMI divided by the net asset value per unit of Compass, each determined as at the close of trading on the Toronto Stock Exchange ("TSX") on the business day immediately prior to the Effective Date.
Since its inception on April 16, 2002, Compass has generated strong returns for investors and provided high levels of monthly income. As at August 31, 2011, Compass' annualized total returns for the one, three and five year periods then ended and since inception were 26.2%, 7.2%, 5.0% and 12.1% respectively. Unitholders of GMI will also benefit from a reduction in management fees from 1.20% per annum of net asset value to 1.10% per annum of net asset value.
Compass currently pays the same monthly cash distribution as GMI at an annualized rate of $0.84 per unit. It is expected that the Continuing Fund will also pay distributions at this level.
GMI warrantholders who exercise their warrants on or before the expiry date of October 14, 2011, at the subscription price of $12.00 per unit, and continue to own such units until the Effective Date will automatically participate in the merger and receive units of Compass on the Effective Date.
Unitholders of GMI who do not wish to participate in the merger and become unitholders of the Continuing Fund will have the opportunity to redeem their units before the merger occurs. GMI's annual redemption has been accelerated to coincide with Compass' annual redemption of November 30, 2011. Accordingly, GMI unitholders who choose to participate in the November 30, 2011 redemption must provide notice and surrender their units of GMI by 5:00 pm (Toronto time) on November 2, 2011. Surrendered units will be redeemed in accordance with GMI's declaration of trust.
GMI units, GMI warrants and Compass units trade under the symbols GMF.UN, GMF.WT and CMZ.UN, respectively, on the TSX.
Certain statements in this press release may be viewed as forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, intentions, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "is expected", "anticipates", "plans", "estimates" or "intends" (or negative or grammatical variations thereof), or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Statements which may constitute forward-looking statements relate to: the proposed timing of the merger and expected completion thereof; the expected benefits of the merger and future distributions; and the Funds that are proposed to be merged. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements including as a result of changes in the general economic and political environment, changes in applicable legislation, and the performance of each Fund. There are no assurances the Funds can fulfill such forward-looking statements and the Funds do not undertake any obligation to update such statements. Such forward-looking statements are only predictions; actual events or results may differ materially as a result of risks facing one or more of the Funds, some of which are beyond the control of the Funds.