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Crown Hill Fund Announces Acquisition and Reorganization

^{Published on 2009-06-04 06:38:35, Last Modified on 2009-06-04 06:39:59 - Market Wire}
 

 TORONTO, June 4 /CNW/ - Crown Hill Fund (the "Trust") (TSX: MYT.UN) announced today that it has acquired the management rights to all of the funds in the Citadel Group of Funds, other than CGF Mutual Funds Corporation, effective June 3, 2009, for an aggregate purchase price of $28 million (the "Citadel Acquisition"). The Citadel Group of Funds is comprised of thirteen investment funds (the "Citadel Funds") with approximately $1 billion in assets under administration. The change of the administrator for CGF Mutual Funds Corporation remains subject to notice to the securityholders of each mutual fund class of CGF Mutual Funds Corporation and approval of the applicable securities regulatory authorities. Following the Citadel Acquisition, the Trust announced that it intends to effect a reorganization of the business and affairs of the Trust (the "Reorganization"). The purpose of the Reorganization is to facilitate the merger with the Trust of the Citadel Funds with investment objectives similar to those of the Trust (the "Mergers"). Pursuant to the Reorganization, the Trust and its manager, Crown Hill Capital Corporation ("Crown Hill"), will enter into a joint venture through a new joint venture entity (the "Joint Venture"). The Joint Venture will become the trustee and manager of the Trust. The Joint Venture will also be the trustee and manager of the Citadel Funds until they are merged with the Trust. Under the terms of the Joint Venture, the Trust will be entitled to receive all the management fees earned by the Joint Venture until the Trust recovers all the expenses of the Citadel Acquisition, an initial $4 million return from the Joint Venture plus approximately a 6% return on both such expense recovery amount and $4 million return (collectively, the "Preferred Return"). Once the Trust has received the Preferred Return in full, the Trustee will be entitled to receive management fees from the Joint Venture. Crown Hill believes the Reorganization will result in the following benefits to the Trust: - Increased NAV: As a result of the Trust holding a senior interest in the Joint Venture, and assuming the merger with the Trust of Citadel Funds with an aggregate net asset value of at least $600 million, Crown Hill anticipates an increase in the net asset value of the Trust of approximately $0.50 per Unit for the existing holders of Trust units ("Unitholders"). - Lower General and Administration Costs per Unit: Fixed annual operating costs will be spread across a larger base of assets, which will reduce operating costs per Unit and should improve returns. - Enhanced Liquidity: Following the Mergers, the combined fund will have a larger market capitalization and a greater number of units and Unitholders which is expected to provide greater liquidity to Unitholders. Certain terms of the Reorganization constitute related party transactions under Multilateral Instrument 61-101- Protection of Minority Security Holders in Special Transactions ("MI 61-101"). As such, in order to proceed, the Reorganization must be approved by a majority of the votes cast by Unitholders of the Trust at a special meeting of Unitholders to be held on June 29, 2009 (the "Meeting"). Additional information on the Reorganization and the Meeting will be set out in a notice of special meeting and management information circular that will be mailed to Unitholders of the Trust and filed in accordance with applicable securities laws. The Trust also intends to move its listing to the Canadian National Stock Exchange (the "CNSX"). CNSX is a new stock exchange for trading equity securities. Once listed on the CNSX, the Trust intends to delist from the Toronto Stock Exchange. The listing on the CNSX is intended to facilitate the Mergers pursuant to the permitted merger provisions of the Citadel Funds' declarations of trust without the requirement for Citadel unitholder approval. As at June 2, 2009, the Trust had a net asset value of $5.50 per unit. This release contains forward-looking statements. These statements are based on certain factors and assumptions including, results of operations, performance and effective income tax rates. While Crown Hill considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Several factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to: the timing of and the ability to carry out the Reorganization, including the Mergers and fluctuations in the net asset value. Forward-looking statements are given only as at the date of this release and Crown Hill and the Trust disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. 

For further information: Crown Hill Capital Corporation, Tel: (416) 361-1212