B.C.’s income trust sector continues shrinking with Westshore Terminals Income Fund (TSX:WTE.UN) becoming the latest to announce plans to revert back into a corporation by the end of the year.
A vote will be held November 4 on the proposal for unit holders to receive a combination of shares and debt for each of the fund’s existing trust units.
The shares will be issued by a newly formed public company called Westshore Corp., which will also issue interest-bearing notes in the amount of $5 per unit. Interest on the notes, maturing in 2040, will be set in early October. Both the shares and debt will be listed and traded together as units.
Since federal finance minister Jim Flaherty announced plans in late 2006 to tax income trust distributions the same as corporate dividends starting January 1, 2011, the income trust sector in B.C. has all but disappeared.
Only a handful of the 21 B.C. income trusts in existence five years ago remain, with many of the largest, like Canadian Hotel Income Properties REIT, Versacold Income Fund and Gateway Casinos Income Fund, having been acquired by large investors.
Those that remain include revenue royalty income trusts, like A&W Revenue Royalties Income Fund (TSX:AW.UN), Boston Pizza Royalties Income Fund (TSX:BPF.UN) and the Keg Royalties Income Fund (TSX:KEG.UN), all of which derive revenue from restaurant sales and are not operating entities themselves.
According to Westshore Terminals’ trustees, given the looming tax changes on income trusts, converting back into a corporate state was considered the best option for unit holders, with both shares and subordinated debt units publicly traded.
Westshore Terminals' share price range during the past week: between $19 and $20.12; 52-week high: $20.20; 52-week low: $11.56.