The owner of Canada’s only remaining sugar beet processing plant has announced plans to convert from an income trust to a corporation.
Montreal-based Rogers Sugar Income Fund, which processes sugar from beets at Taber, Alta. and operates cane sugar refineries at Vancouver and Montreal, said Monday its board has approved the conversion to a corporate structure effective on or about Jan. 1, 2011.
The fund plans to hold a special meeting of unitholders to approve its plan of arrangement on Sept. 29 in Vancouver.
The plan of arrangement, which also requires court approval, calls for Rogers’ unitholders to swap their units in the fund for common shares of what will become Rogers Sugar Inc., on a one-for-one basis.
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Unitholders will also be asked to approve a stock option plan for the new corporation, under which those who hold options to buy Rogers’ income fund units would automatically exchange those for options to buy shares.
Rogers said it expects the conversion to take place on a tax-deferred basis to unitholders and the fund, and that the new corporation would start to pay quarterly dividends of 0.85 cents per share, with shareholders receiving the first of those in April.
The income fund’s main asset is ownership of all common shares of Lantic, Inc., which owns the Taber, Montreal and Vancouver facilities.
The plants’ products include granulated, icing, cube, yellow and brown sugars, liquid sugars and specialty syrups, sold under the Lantic brand in Eastern Canada and the Rogers brand in the West.
Cane sugar refineries have operated at the company’s Montreal and Vancouver sites since 1888 and 1890 respectively. The company has processed sugar beets in Alberta since 1931.
Rogers had also run the former Manitoba Sugar Co. plant in Winnipeg since the 1950s, but closed that facility in 1997, which effectively ended sugar beet production in Manitoba.
Rogers remains the sole sugar processor operating in Western Canada, supplying over 90 per cent of its demand for refined sugar.
“Continued interest”
Companies that converted to income trusts before 2006 — the year the federal government announced its plans to tax such trusts — aren’t required until 2011 to pay tax on the income they distribute to unitholders.
A number of Canadian ag and food businesses such as Alliance Grain Traders, Village Farms, Ag Growth Industries and Premium Brands have already made moves to shed their income trust status before the new tax structure takes effect.
Vancouver-based Boston Pizza, on the other hand, said last week it plans to stand pat as an income fund, to avoid incurring the “significant administrative and legal costs” of incorporating.
In a release last Thursday, the fund said its trustees believe there will be “continued investor interest and access to capital” in the income trust structure after Jan. 1, 2011.
