(All financial figures are in Canadian dollars.)
CALGARY, Oct 1 /CNW/ - The Board of Directors of Pembina Pipeline
Corporation announced today the closing of the Plan of Arrangement
pursuant to which Pembina Pipeline Income Fund (the "Fund") has
converted into a dividend-paying corporate entity carrying on business
as Pembina Pipeline Corporation ("Pembina").
Pembina's common shares and convertible debentures will commence trading
on the Toronto Stock Exchange ("TSX") on Tuesday, October 5, 2010 under
the symbols "PPL" and "PPL.DB.B", respectively. The Fund's trust units
and convertible debentures (TSX: PIF.UN, PIF.DB.B) will be de-listed by
the TSX that same day.
Under the Plan of Arrangement, investors received one common share in
Pembina in exchange for each trust unit held in the Fund. Convertible
debentures of the Fund have become direct obligations of Pembina. As
such, holders of the outstanding series of Pembina convertible
debentures, namely the 7.35% convertible unsecured subordinated
debentures due December 31, 2010, will be entitled to receive common
shares in Pembina on the same basis that they were entitled to receive
trust units of the Fund prior to the closing of the Plan of Arrangement.
This is expected to be a tax-deferred reorganization; however investors
should consult with financial advisors regarding potential tax
consequences of the exchange. Pursuant to the Plan of Arrangement, all
outstanding securities of the Fund have been cancelled and the Fund has
The decision to convert to a corporate entity resulted from a Government
of Canada decision in 2006 that introduced legislation designed to
change the taxation of income trusts. By converting to a corporation,
Pembina has avoided the imposition of specified-investment flow through
("SIFT") tax applicable beginning in 2011. Pembina expects conversion
may provide greater access to capital markets, improved liquidity and
greater flexibility to pursue growth and expansion.
"Completing corporate conversion is a key step in Pembina's growth
strategy as it supports our financial plans to increase cash flow by
expanding our businesses and service offerings," said Bob Michaleski,
Pembina's President and Chief Executive Officer. "As a corporation we
intend to maintain our highly competitive dividend while also working to
grow the long-term value of our shares."
Based on certain assumptions, Pembina expects to maintain its current
level of cash distributions as a dividend of $1.56 per share per year
(payable monthly at $0.13 per share per month) through 2013 (see
Forward-Looking Statements and Information below). Eligible Canadian
investors may benefit from an enhanced dividend tax credit afforded to
the receipt of dividends, as compared to distributions of income,
depending on individual circumstances. Dividends paid to eligible U.S.
investors should qualify for the reduced rate of tax applicable to
long-term capital gains.
Pembina transports crude oil and natural gas liquids produced in Western
Canada, owns and operates oil sands pipelines and has a growing presence
in the midstream and gas services sectors.
Forward-Looking Statements and Information
This document contains certain forward-looking statements and
information that are based on Pembina's current expectations, estimates,
projections and assumptions in light of its experience and its
perception of historical trends. In some cases, forward-looking
statements and information can be identified by terminology such as
"plans," "expects," "will," "may," "intend" and similar expressions.
In particular, this document contains forward-looking statements and
information, including certain financial outlook, pertaining to the
trading of Pembina's common shares and convertible debentures and
delisting of the Fund's securities on the TSX, resulting access to
capital markets, improved liquidity and future growth and expansion, the
ability of Pembina to maintain its current level of cash dividends to
its equity holders through 2013, and the tax treatment of dividends.
These forward-looking statements are being made by Pembina based on
certain material factors and assumptions that Pembina has made in
respect thereof including those discussed under the section entitled
"Forward-Looking Statements and Information" in the Fund's management's
discussion and analysis for the six months ended June 30, 2010, which
can be found under the Fund's SEDAR profile at www.sedar.com.
Although Pembina believes the expectations and material factors and
assumptions reflected in these forward-looking statements and
information are reasonable as of the date hereof, there can be no
assurance that these expectations, factors and assumptions will prove to
be correct. Readers are cautioned that events or circumstances could
cause results to differ materially from those predicted, forecasted or
projected. By their nature, forward-looking statements involve numerous
assumptions, known and unknown risks and uncertainties that contribute
to the possibility that the predictions, forecasts, projections and
other forward-looking statements will not occur, which may cause actual
performance and financial results in future periods to differ materially
from any projections of future performance or results expressed or
implied by such forward-looking statements and information.
None of the forward-looking statements described above are guarantees
of future performance and are subject to a number of known and unknown
risks and uncertainties, including, but not limited to: the impact of
competitive entities and pricing; reliance on key industry partners,
alliances and agreements; the strength and operations of the oil and
natural gas production industry and related commodity prices; the
continuation or completion of third- party projects; regulatory
environment and inability to obtain required regulatory approvals; tax
laws and treatment; fluctuations in operating results; lower than
anticipated results of operations and accretion from Pembina's business
initiatives; reduced amounts of cash available for dividends to
Shareholders; the ability of Pembina to raise sufficient capital (or to
raise capital on favourable terms) to complete future projects and
satisfy future commitments, including the construction of the Nipisi and
Mitsue Pipelines and related facilities; construction costs of the
Mitsue and Nipisi Pipelines and related facilities, construction delays;
labour and material shortages; and certain other risks detailed from
time to time in Pembina's public disclosure documents available at
www.sedar.com. Readers are cautioned that this list of risk factors
should not be construed as exhaustive.
The forward-looking statements and information contained in this
document speak only as of the date of this document. Pembina does not
undertake any obligation to publicly update or revise any
forward-looking statements or information contained herein, except as
required by applicable laws. The forward-looking statements and
information contained in this document are expressly qualified by this
cautionary statement. Management of the Fund approved the financial
outlook contained herein as of the date of this news release. The
purpose of the financial outlook contained herein is to give the reader
an indication of the potential effects on investors of the completion of
the Plan of Arrangement. Readers should be aware the information
contained in the financial outlook contained herein may not be
appropriate for other purposes.