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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks
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To: Cogito Ergo Sum who wrote (4254)9/19/2002 8:36:44 AM
From: David Alon  Read Replies (2) of 11633
 
From todays globe,
Can cash keep on truckin'?

Last time anyone checked, trucking was a cyclical industry. When the economy is humming and goods are on the move, the folks driving 18-wheelers make money. When consumers stop buying and manufacturing slows, the big rigs fall idle.

Given the dynamics of the industry, it seems logical to expect the cash thrown off by a trucking company to rise and fall. But potential volatility hasn't stopped investors from stepping up for the latest in a line of trucking income trusts.

TransForce, formerly a moribund stock that spent most of the past decade trading between $2 and $4 -- got final approval yesterday to become an income trust. As such, it's now worth $8.50 a unit to the investing public.

This transformation raised $102-million for the company, money earmarked for paying down debts amassed in recent acquisitions. National Bank Financial and Scotia Capital led the deal.

TransForce's various subsidiaries have 3,100 rigs on the road. The extra cash these truckers generate will now go to unitholders. How reliable is this cash flow?

The company's track record offers few clues. As TransForce picked off smaller trucking firms, it boosted cash generated off operations -- the money available to unitholders -- to $40.7-million last year from $10.1-million in 1998. But we haven't seen the fleet's performance through a full economic cycle.

TransForce joins Contrans Income Fund, hatched in July, as trucking trusts that look to a cyclical industry to fulfill their promise of a steady stream of cash.
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