TSX: SPF.UN
CALGARY, Oct. 20 /CNW/ - Mr. Grant Billing, Executive Chairman of
Superior Plus commented today on the consultation process on Flow Through
Entities ("FTE's") being undertaken by the Federal Government's Department of
Finance.
"FTE's have been a growing segment of the Canadian investment market for
over a decade. Through FTE's, individual Canadian investors have participated
in the ownership of Canadian equities in historic proportions doing so without
any expressed concern from taxation authorities. Before FTE's, Canadians
relied on bank deposits, GIC's, bonds and preferred shares. FTE's have
resulted in higher equity participation rates by taxable Canadian investors
with higher levels of taxable returns than alternative investments. In
principle, the Government's process of consultation is a reasonable approach.
Our hope is that the review will be balanced particularly considering the
$170 billion commitment, largely by Canadian individual savings to this sector
over the past decade. Unfortunately, we have concerns with the analysis
undertaken by the Finance Department which seems to be based on a number of
questionable assumptions, including erroneous assumptions about the estimated
loss of tax revenues and the future impact of FTE's on the Canadian economy.
The Government needs to be very careful in any changes to this structure as
they can destroy significant current value for investors as well as stifle
economic growth by reducing an economic advantage for Canadian business. In
fact, the announcement by the Government to study the tax issues related to
FTE's has already created significant uncertainty in the income trust markets
and destroyed substantial value for income trusts, its investors and for the
Canadian economy. It is paramount for the success of any business and economy
that tax rules are consistent and transparent.
Superior Plus was one of the first Income Trusts to become public in
October 1996 and is very proud of its record in stimulating significant
economic activity and value. It has managed its businesses to promote strong
gains in economic efficiency. The FTE structure demands this approach through
the efficient allocation of capital and transparency of financial reporting.
Superior Plus has expanded internationally, acquired Canadian and non-Canadian
businesses from non-Canadians and in the process added to the income flows to
be taxed in Canadian hands. We have also started new businesses from scratch.
Over nine years we have invested $2.3 billion in building our business for the
benefit of all our stakeholders. Distributable cash flow per trust unit has
increased from a forecast of $1.15 per trust unit at the time we went public
in 1996 to $2.51 per trust unit generated in 2004, evidencing our ability to
improve our productivity and profitability. In the process we have distributed
in excess of $800 million in taxable interest and dividends to approximately
44,000 investors, most of whom are individual Canadian investors with
relatively few tax-exempt pension plans. In addition, our investors decide how
to re-invest these distributions, which results in further efficiencies to the
economy, as investors generally redeploy their investments in the most
profitable investment opportunity. Superior Plus has raised $1.6 billion in
capital which now has a market value of $2.3 billion, representing potential
capital gain tax revenue for governments. This would not have been possible
without the FTE structure. Canadian individual savers and governments have
been winners as we continue to make substantial contributions to the Canadian
economy. Unfortunately, market uncertainty created by the announcement of the
governments consultation process, has contributed to a loss of market value
experienced by Superior Plus' investors in excess of $600 million."
In response to enquiries from numerous Superior Plus unitholders seeking
assistance in participating directly in the consultation process we are
providing the following Department of Finance contact information:
For written submissions by e-mail to: trusts-fiducies(at)fin.gc.ca
or to contact the Minister of Finance: The Honourable Ralph Goodale
Department of Finance Canada
140 O'Connor Street
Ottawa, Ontario K1A 0A6
Phone: 613-996-4743 /
Fax: 613-996-9790
E-Mail: goodale.R(at)parl.gc.ca
or to contact your Member of Parliament:
www.canada.gc.ca/directories/direct_e.html
Superior Plus Income Fund is a member of the Canadian Association of
Income Funds ("CAIF") and will support CAIF in making submissions as part of
the consultation process.
The Fund holds 100% of Superior Plus Inc., which has five operating
divisions: Superior Propane is Canada's largest distributor of propane,
related products and services; ERCO Worldwide is a leading supplier of
chemicals and technology to the pulp and paper and water treatment industries
and the second largest producer of potassium products in North America; JW
Aluminum is a leading manufacturer of specialty, flat-rolled aluminum products
in the United States; Winroc is the seventh largest distributor of walls and
ceilings construction products in North America; and Superior Energy
Management provides fixed price natural gas supply services in Ontario and
Quebec.
The Fund's trust units and convertible debentures trade on the Toronto
Stock Exchange (the "TSX") as follows:
Trading Symbol Security Issued and Outstanding
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SPF.un Trust Units 85.3 million
SPF.db 8% Debentures, Series 1 $ 9.0 million principal amount
SPF.db.a 8% Debentures, Series 2 $ 62.4 million principal amount
SPF.db.b 5.75% Debentures $ 175.0 million principal amount
SPF.db.c 5.85% Debentures $ 75.0 million principal amount
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