Business
Sun Gro Horticulture Income Fund Announces Details of Proposed Conversion to a Corporation
Sun Gro Horticulture Income Fund Announces Details of Proposed Conversion to a Corporation
About this update from Coloured Ties Capital Inc
[{"type":"text","content":"\n\n\n\nVANCOUVER, Mar. 17, 2010 (Canada NewsWire Group) -- /CNW/ -- Sun Gro Horticulture Income Fund (the Fund) today announced the details of the proposed conversion plan of the Fund from an income trust to a corporation. The new entity (New Sun Gro) will continue the business of the Fund's wholly owned subsidiary, Sun Go Horticulture Canada Ltd. (Sun Gro or the company). The proposed conversion is expected to be completed by way of a statutory plan of arrangement (the Arrangement) under Section 192 of the Canada Business Corporations Act. The Fund anticipates that a management information circular will be mailed to voting unitholders at the end of April 2010, in connection with the conversion and other matters to be considered at the annual and special meeting (the Meeting) of unitholders to be held on May 27, 2010.Background to and Reasons for the ArrangementOn October 31, 2006, Canada's Minister of Finance (the Minister) announced the federal government's proposal to apply a tax at the trust level on distributions of certain income from, among other entities, certain publicly traded mutual fund trusts at a rate of tax comparable to the combined federal and provincial corporate tax rate and to treat such distributions as dividends to unitholders. The Minister announced that existing trusts would have a four-year transition period and generally would not be subject to the new rules until 2011, provided such trusts experienced only \"normal growth\" and no \"undue expansion\" before then. The announcement had an immediate impact on the Canadian capital markets and resulted in a significant decline in trading prices for publicly traded income trusts.On December 15, 2006, the Minister released further guidance concerning the proposed tax changes, including guidance respecting \"normal growth\" for the purposes of this proposal, as well as the Finance Department's confirmation that it would not recommend any extension of the four-year transition period. Bill C-52, the Budget Implementation Act, 2007, which received royal assent on June 22, 2007, contained rules relating to the tax treatment of specified investment flow-through (SIFT) trusts or partnerships, which are designed, among other things, to implement the proposal.Following a thorough analysis of the various strategic alternatives with respect to Sun Gro's structure going...