Business
TransForce Announces Proposed Conversion to a Growth-Oriented, Dividend-Paying Corporation
MONTREAL, March 27 /CNW Telbec/ - TransForce Income Fund (TSX: TIF.UN) ("TransForce" or the "Fund...
About this update from Tfi International Inc.
[{"type":"text","content":"\n\n\n\nMONTREAL, March 27 /CNW Telbec/ - TransForce Income Fund (TSX: TIF.UN)\n("TransForce" or the "Fund"), the leader in the Canadian transportation and\nlogistics industry, today announced its intention to convert from an income\nfund to a growth-oriented corporation (the "Reorganization"). The decision\nfollows a review of financing alternatives by the Board of Trustees of\nTransForce, as announced on February 28.\n\n\n"TransForce remains fully committed to pursuing its growth strategy and\ncontinuing to lead the consolidation of our industry. The flexibility of the\ncorporate structure is better suited to achieving our goals, given\ndevelopments in the income fund sector," said TransForce Chairman, President\nand CEO Alain Bedard. "We will be asking unitholders to approve the\nReorganization at our annual meeting in May"\n\n\nBackground and Benefits of the Reorganization\n\n\nThe Fund investigated a number of restructuring alternatives subsequent\nto the announcement by the federal Minister of Finance on October 31, 2006\nregarding specified investment flow-through trusts ("SIFTs") and the\nclarification updates that were provided on December 15, 2006, as well as\nDecember 21, 2006 draft legislation. The government's announcements resulted\nin management and the Board of TransForce conducting a review of the long-term\nstrategic direction of the Fund. They have determined that, as a trust, it\nwould be increasingly difficult for TransForce to meet its strategic\nobjectives given: the higher cost of capital as a result of the new SIFT\nrules; a decline in investor interest for trusts, which increasingly limits\naccess to equity capital as 2011 approaches; and limited financial flexibility\ndue to TransForce's commitment as an income trust to distribute a large\nportion of its cash flow to unitholders. Additionally, the Board and\nmanagement of TransForce believe that the value of TransForce's distribution\npayments is not being properly reflected in the price of its trust units in\ncomparison to other Canadian income funds.\n\n\nFollowing the Reorganization, TransForce plans to reinvest a significant\nportion of its cash flow in order to continue its disciplined consolidation of\nthe transportation industry, as it has done for more than 10 years. The\nCanadian tran...