Business & Finance
Business and Finance
Business and Finance 
Wed, January 19, 2011
Tue, January 18, 2011
TORONTO, Jan. 18 /CNW/ - (TSX: MNF) - NexGen Financial Limited Partnership ("NexGen") announced today that it is proposing separate meetings of the Class A and Class B shareholders of Macquarie NexGen Global Infrastructure Corporation (TSX Stock Symbol "MNF") to consider the merger of MNF into NexGen Canadian Balanced Growth Tax Managed Fund (the "NexGen Fund"), an open-end mutual fund managed by NexGen. The merger is being proposed to address the economic inefficiencies of operating MNF which has significantly decreased in size primarily due to redemptions since its initial public offering. The proposed merger is expected to provide shareholders of MNF with the following benefits:
- Lower Costs - As a result of the size of the NexGen Fund (approximately $118 million) and the corporate structure of MNF, the management expense ratio (being the total costs divided by the average net asset value) of the NexGen Fund is substantially less than that of MNF. Accordingly, shareholders of MNF are anticipated to realize significant cost savings.
- Enhanced Liquidity - An investor in the NexGen Fund is entitled to redeem all or any portion of his shares daily at the applicable net asset value (with no discount). Accordingly, shareholders of MNF will experience enhanced liquidity in respect of their investment and no discount to the net asset value per share will be applied on redemption.
- Continued Distributions - Shareholders of MNF will receive shares of the Return of Capital Class of the NexGen Fund in exchange for their shares of MNF. Currently, such NexGen Fund shares receive a fixed monthly dividend at a rate of $0.75 annually ($0.0625 per security monthly or 7.5% annually) per security (based upon a $10 net asset value per share) compared to a fixed monthly dividend at a rate of $0.36 annually ($0.03 per security monthly or 3.6% annually) for MNF. The distribution is comprised of return of capital for tax purposes. At December 31, 2010, the net asset value per share of the NexGen Fund was $9.45.
Additional details respecting the differences between MNF and the NexGen Fund are contained in the management information circular.
The board of directors of MNF has approved the proposed merger. Details regarding the proposed merger will be contained in a management information circular which is expected to be mailed to MNF shareholders in early February. The circular will be available on [ www.sedar.com ] and posted on NexGen's website. In addition to the approval of the MNF's shareholders, the merger is also subject to the receipt of all applicable regulatory approvals. Under the merger proposal, shareholders of MNF will receive shares of the NexGen Fund, the number to be based upon the relative net asset values of the MNF and NexGen Fund shares. The proposed merger is expected to be a deferred taxable transaction for shareholders of MNF. Shareholders of MNF are encouraged to read the circular in its entirety and consult with their advisors regarding the proposed merger. The meeting date is on March 28, 2011 with an effective share exchange date of April 15, 2011.
"Given MNF assets have dropped to $23 million, it is no long cost effective to maintain MNF as a TSX listed security. We believe the proposed merger is the best way to provide existing investors with a similar investment which provides tax efficient monthly income and liquidity" said Laurie Munro, President and Chief Executive Officer of NexGen Financial Limited Partnership.
Cautionary Statement on Forward Looking Information
This press release may include forward looking statements within the meaning of securities laws. Forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from what is currently expected. Accordingly, readers should not place undue reliance on forward looking statements.