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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Seeker of Truth who wrote (7773)	10/4/2004 11:43:22 AM
From: mark calgary	Respond to of 11633

Malcolm- the exchangable shares usually come into being upon a takeover or restructure for an E&P to a trust. What they represent is basicaly the opportunity to NOT convert your shares into the new entity and delay the tax event of the capital gain that is probably staring you in the face. Conversion to exchangables is usually limited to some arbitrary figure. The conversion to exchangeable shares from your exisitng ones are limited by this arbitrary figure, and are usually prorated. eg. You have 1000 shares of company x. It converts to a trust. The exchangeable ratio is set at no more than 30 percent of shares tendered. More than 30% want the exchangeable shares - you included - you would love to have all exchangeables because you have a large capital gain, and you wish to defer it. You would be prorated on the absolute demand for the shares, divided by the number that you wish to convert. The risk you are taking, is that the value of those shares might drop, the reward is that you defer the cap gains hit. It is the larger shareholders who normally take advantage of this type of situation, because they are a little more sophisticated, and probably have a bigger pile of pennies, and can assume the risk better than most of us who would just want to collect our gain and go on our merry way. The tax consequences can be huge on a large pile of stock - even if you just hold until January 1 of the next year. Mark

To: Seeker of Truth who wrote (7773)	10/4/2004 5:22:00 PM
From: LTBH	Respond to of 11633

Exchangeable Shares; a Current Example Starpoint and E3 are combining and then converting to a trust. Here is a short lift from their PR with the exchangeable share option discussed: Plan of Arrangement Pursuant to the Arrangement, shareholders of both StarPoint and E3 will receive shares of NewCo, and, at their election, either units of the Trust, which will pay monthly cash distributions, or exchangeable shares which may be exchanged into units of the Trust. Specifically, shareholders of the respective companies will receive: For each StarPoint common share owned: a) 0.2500 units of the Trust and 0.1111 shares of NewCo, or b) 0.2500 exchangeable shares and 0.1111 shares of NewCo. For each E3 common share owned: a) 0.1100 units of the Trust and 0.0488 shares of NewCo, or b) 0.1100 exchangeable shares and 0.0488 shares of NewCo. Luck Networm