As of January 2011 certain tax advantages related to income distributed to unit-holders of publicly-traded Income Trusts ended in Canada as a result of the specified investment flow through (SIFT) rules. Real Estate Income Trusts (REITs) are exempt from these rules.
Cross-Border Income Trusts
In 2010, Bennett Jones lawyers helped create Cross-Border Income Trusts (CBITs) in response to the SIFT rules, which do not apply to business income arising outside of Canada. In November of 2010, Eagle Energy Trust went public with a $169-million IPO. Bennett Jones lawyers acted for Eagle Energy Trust. The firm also acted for Parallel Energy Trust in the spring of 2011 with respect to its $393-million IPO, Argent Energy Trust in respect of its $244-million IPO and Crius Energy Trust in respect of its $100-million IPO. As an energy retailer, Crius Energy Trust is the first CBIT with US assets outside of the oil and gas industry. It is also the first CBIT with a retained interest in the US operating company.
To date, Bennett Jones lawyers have acted for the issuer or underwriters on almost every CBIT that has come to market. Our expertise and understanding of this new vehicle combined with our bench strength have allowed us to earn a leading position in CBIT transactions.
Bennett Jones' CBIT success is an outgrowth of the firm's robust tax, securities and M&A practices. The firm has been involved in half of the ten largest Canadian business IPO deals since January of 2010 (excluding REITS), including MEG Energy Corporation (C$700 million) (acted for issuer), SMART Technologies (US$660 million) (acted for issuer), Gibson Energy (C$568 million) (acted for issuer), Parallel Energy Trust (C$393 million) (acted for issuer) and Argent Energy Trust (C$244 million) (acted for issuer).
Bennett Jones has extensive experience in advising clients with respect to transactions involving REITs, including conversions to and from corporations, tax-efficient reorganizations, domestic and cross-border acquisitions, and corporate finance and lending transactions.
Our clients include publicly-traded trusts, special committees of independent trustees, acquirers, underwriters, financial advisors, creditors and other stakeholders. With a multi-disciplinary team of lawyers drawn from our M&A, corporate finance, tax, employment and other practice areas, we offer a full range of legal services and solution-based advice to participants and stakeholders in the income trust sector.