CI Financial Inc. announced today that its board of directors has unanimously approved the terms for the conversion of CI into an income trust.

Under the proposed structure, CI shareholders will be entitled to elect to receive in exchange for each of their CI shares (or shares of a single purpose company holding their CI shares), either:

  • one unit of the trust; or
  • a combination of Class B limited partner units (Exchangeable LP Units) of Canadian International LP and special voting units of the trust and (possibly) units.

The holders of Exchangeable LP Units will be entitled to vote at meetings of unitholders and, after Jan. 1, 2007, to exchange their Exchangeable LP Units for units on a one-for-one basis. The total number of Exchangeable LP Units that may be issued will be subject to a maximum.

Sun Life Financial Inc., the holder of approximately 35% of the issued and outstanding common shares of CI, will be afforded the right to receive Exchangeable LP Units in priority to CI minority shareholders.

A special committee of the CI board, consisting of independent directors, has concluded that the arrangement is in the best interests of CI and its minority shareholders having regard to the preferential treatment afforded Sun Life.

Genuity Capital Markets, acting as financial advisor to the board said the arrangement is fair to the minority shareholders.

Full details of the conversion will be provided to shareholders upon the mailing of the information circular being prepared.

The conversion is subject to a number of approvals and consents, including, but not limited to, the approval of the Ontario Superior Court of Justice, the approval of the shareholders of CI and certain regulatory approvals as well as the receipt of a favourable tax ruling.

CI will seek an interim court order on May 25 for declarations and directions in relation to the plan of arrangement and the special meeting of shareholders to be held to consider the conversion, including approval of a record date of May 23, 2006, a mailing date of May 31, 2006 and a shareholders’ meeting date of June 22, 2006.

CI management and board members have agreed to vote in favour of the arrangement. Sun Life also intends to vote in favour of the arrangement provided that the final tax ruling received from the Canada Revenue Agency and the final form of the material contracts of the trust are satisfactory to Sun Life.

If approved by the shareholders of CI, a final order approving the conversion will be sought; management currently anticipates that the conversion will be completed on or about June 30.