December 16, 2010
Boyd Group Announces Internal Capital Restructuring and Distribution Increase
- Announces 16.7% Increase in January 2011 Distribution to $0.035 per unit -
Not for distribution to U.S. newswire services or for dissemination in the United States.
Winnipeg, Manitoba — December 16, 2010 — Boyd Group Income Fund (TSX: BYD.UN) (“the Fund” or “the Boyd Group”) today announced it has received Trustee approval to implement an internal capital restructuring that better reflects its significant U.S. base of business and its expected source of future growth. The restructuring, which is expected to be completed in January 2011, is subject to certain third-party approvals. A consequence of this change is that the new level of distributions to unitholders announced today will be funded entirely by its U.S. operations. Fund distributions that are sourced from U.S. business earnings are not subject to Specified Investment Flow-Through (“SIFT”) Tax. As a result of this cash flow savings, the Trustees of the Fund have approved a 16.7% increase in distributions to $0.42 per unit annually ($0.035 per month) from the current level of $0.36 per unit annually ($0.03 per month). The first distribution at the new level will be payable on February 24, 2011 to unitholders of record at the close of business on January 31, 2011.
In addition, this internal capital restructuring is also expected to result in future corporate tax savings of approximately $500 thousand per year in the Fund’s subsidiaries, as the result of transferring intercompany interest deduction tax shield to its U.S. business, which is subject to a higher corporate tax rate than its Canadian business.
“As we had indicated in previous press releases and other disclosures, the Fund does not intend to convert into a corporation at this time,” said Brock Bulbuck, President and Chief Executive Officer of the Boyd Group. “We continue to believe that this decision is in the best interests of our unitholders. Not only have we been able to maintain our distributions while remaining as a trust, as was our stated goal moving into 2011, we have now been able to organize our business in a way that allows us to increase our distributions.”
“We are, therefore, pleased to report that this restructuring provides us with additional cash that can be used for a combination of increased distributions to our unitholders as well as to fund future growth. With this increase, we have, in essence, accelerated the quarterly increases that unitholders may have expected during 2011 as a single increase at the beginning of the year. We believe that this provides us with a natural opportunity to move to a more flexible process of evaluating additional distribution increases during the remainder of 2011 and beyond. While we may now stay with our current level of distribution for a few quarters, our objective continues to be to gradually increase distributions over time, while at the same time being committed to a conservative distribution policy that will provide us with financial flexibility necessary to support our growth initiatives,” added Mr. Bulbuck.
Boyd Group Income Fund’s policy is to pay monthly distributions to unitholders of record on or around the last business day of the month. Holders of units who are non-residents of Canada will be subject to withholding taxes in respect of any distributions made by Boyd Group Income Fund.
About The Boyd Group Inc.
The Boyd Group Inc. is the largest operator of collision repair centres in North America. The Company operates locations in the four Western Canadian provinces under the trade name Boyd Autobody & Glass, as well as in eleven U.S. states under the trade names Gerber Collision & Glass and True2Form. The Company also operates Gerber National Glass Services, an auto glass repair and replacement referral business with approximately 3,000 affiliated service providers throughout the United States. For more information on The Boyd Group Inc. or Boyd Group Income Fund, please visit our website at www.boydgroup.com.
About The Boyd Group Income Fund
The Boyd Group Income Fund is an unincorporated, open-ended mutual fund trust created for the purposes of acquiring and holding certain investments, including a majority interest in The Boyd Group Inc. and its subsidiaries. The Boyd Group Income Fund units trade on the Toronto Stock Exchange (TSX) under the symbol BYD.UN
For further information, please contact:
President & CEO
Tel: (204) 895-1244 (ext. 223)
Tel: (416) 815-0700 or toll free 1-800-385-5451 (ext. 242)
VP & CFO
Tel: (204) 895-1244
Caution concerning forward-looking statements
Statements made in this press release, other than those concerning historical financial information, may be forward-looking and therefore subject to various risks and uncertainties. Some forward-looking statements may be identified by words like “may”, “will”, “anticipate”, “estimate”, “expect”, “intend”, or “continue” or the negative thereof or similar variations. Readers are cautioned not to place undue reliance on such statements, as actual results may differ materially from those expressed or implied in such statements. Factors that could cause results to vary include, but are not limited to: the economic downturn; loss of key customers; fluctuations in cash distributions; dependence on the Fund’s operating subsidiary to pay its interest obligations; loss of services of key senior management personnel; damage to the Company’s brand; variation in the number of insurance claims; margin pressure; management of credit and refinancing risks; responding to changes in the market environment; technology risks; the management of key supplier relationships; capital expenditures; competition from established competitors and new entrants in the businesses in which the Company operates; employee relations; the ability to complete acquisitions of collision repair facilities and other businesses and to integrate these acquisitions successfully; the ability to identify start-up locations and reach anticipated profitability levels; potential discovery of undisclosed liabilities associated with acquisitions; energy costs; weather conditions; operational and infrastructure risks including possible equipment failure and performance of information technology systems; fluctuations in operating results and seasonality; ability to expand into the United States; insurance coverage of sufficient scope to satisfy any liability claims; environmental risk; interest rate fluctuations and general economic conditions; quality of corporate governance; pending and proposed legislative or regulatory developments including the impact of changes in laws, regulations and the enforcement thereof; quality of internal control systems; fluctuations in foreign currencies; fluctuations in the cost of benefit plans; impact of government owned insurance; and the possible impacts from public health emergencies, international conflicts and other developments including those relating to terrorism; and the Fund’s success in anticipating and managing the foregoing risks.
We caution that the foregoing list of factors is not exhaustive and that when reviewing our forward-looking statements, investors and others should refer to the “Risk Factors” section of the Fund’s Annual Information Form, the “Risks and Uncertainties” and other sections of our Management’s Discussion and Analysis of Operating Results and Financial Position and our other periodic filings with Canadian securities regulatory authorities. All forward-looking statements presented herein should be considered in conjunction with such filings.