Jan. 4, 2011 (Filing Services Canada) -- Proventure Income Fund (PVT.UN - TSX Venture), is pleased to announce that on December 31, 2010 (the "Effective Date") Proventure completed its previously announced restructuring transactions in order to qualify as a "real estate investment trust" under the Income Tax Act (Canada) and therefore not be subject to the tax imposed on publicly listed income trusts and limited partnerships that became effective January 1, 2011 (i.e. in order to qualify for the "REIT Exemption" from that tax).
Restructuring Transactions
Additional information regarding these restructuring transactions is presented in the information circular of Proventure dated October 1, 2010 (the "Information Circular") which is available on SEDAR at www.sedar.com. In summary, the restructuring by Proventure included the following steps, among others:
Creation of a Private Income Trust and transfer of certain assets to that Private Income Trust:
As described in the Information Circular, certain assets held by Proventure needed to be disposed of by Proventure in order for Proventure to qualify for the REIT Exemption. Prodev Trust ("Prodev"), a private income trust, was created to own such assets to be transferred out of Proventure. Prodev is not a subsidiary of Proventure.
As described in further detail in the Information Circular, the assets which were disposed of by Proventure to Prodev included the following:
* Real Estate held for development and sale in the following locations:
a. Olds, Alberta.
b. Kelowna, British Columbia (75% interest).
c. Netook Crossing, Olds, Alberta.
d. Red Deer, Alberta (Development Lands).
* Other assets:
a. Timberstone Parks Development Ltd. (100 shares).
b. Accounts receivable (related to Netook Crossing lands).
c. Deposit and expenses (related to lands to be acquired).
d. Cervus Equipment Corporation Shares (138,835 shares).
(together, the "Assets").
Proventure disposed of the Assets, subject to certain post-closing adjustments to be calculated, for an aggregate purchase price of $23,436,877 (the "Purchase Price"), which was paid in the form of a promissory note plus the assumption of any mortgages on the real estate properties being transferred. The principal amount of the promissory note was $17,120,829 and the principal amount of the assumed mortgages was $6,316,048. The promissory note is payable on demand and bears interest at a rate of 8%, payable quarterly in arrears.
The disposition of the Assets by Proventure to Prodev was considered a "related party transaction" under applicable Canadian securities legislation and consequently disinterested unitholder approval was obtained at a meeting of Proventure unitholders held on November 16, 2010.
Elimination of Certain Internal Debt Obligations
In order to qualify for the REIT Exemption, Proventure was also required to eliminate certain promissory notes and preferred limited partnership units within the Proventure subsidiary organizational structure.
About Proventure
Proventure Income Fund is an open-ended mutual fund trust established under laws of the Province of Alberta. Proventure is in the commercial real estate business and leases a significant portion of its commercial real estate to Cervus Equipment Corporation. The units of Proventure Income Fund are listed on the TSX Venture Exchange and trade under the symbol "PVT.UN".
For further information, please contact:
Peter Lacey - President & CEO
of Proventure Income Fund
Telephone: (403) 567-0339
Fax: (403) 567-0392
Email: placey@cervuscorp.com
or
Randy Muth - Chief Financial Officer
of Proventure Income Fund
Telephone: (403) 567-0339
Fax: (403) 567-0392
Email: rmuth@cervuscorp.com
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Source: Proventure Income Fund (TSX-V: PVT.UN) http://www.cervuscorp.com
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