Plazacorp -- summary under MFC Conversion to MFT

Background

Plazacorp, which is a TSX-listed mutual fund corporation in the business of retail property ownership and development, wishes to convert under a New Brunswick plan of arrangement to a s. 108(2)(a) mutual fund trust (so that following the conversions transactions occurring effective January 1, 2014, its remaining assets will be nominal) and to eliminate subsidiary (non-personal trust) subtrusts, including KEYreit (a REIT previously acquired by it) and Plazacorp Operating Trust and four "Direct Subtrusts." Plazacorp converted on December 11, 2002 into a mutual fund corporation from a normal public corporation.

Transaction overview

Plazacorp will settle a new trust (REIT) with modest assets, and distribute the units of REIT to its public shareholders, who thus will now hold assets of a "good" mutual fund trust, albeit with nominal assets. Next, Plazacorp will merge into REIT under s. 132.2, so that REIT is now the successor to substantially all its assets. However, it will not be released under its covenant under convertible debentures, although they also will be assumed by REIT. In order to eliminate the Direct Subtrusts, KEYreit and Plazacorp Operating Trust, the Direct Subtrusts will transfer their assets to Trust A (a new subtrust of Plazacorp) in reliance on the no-disposition rule in s. 248(1) – disposition, (f), and then there will be s. 107.4 transfers of assets by Trust A to KEYreit, and (following the 1st merger) by KEYreit to a further new subtrust of REIT (REIT #2), followed by a de minimis distribution of REIT #2's units by REIT to the REIT unitholders (in order to qualify REIT #2 as a mutual fund trust). REIT #2 then will be merged into REIT under s. 132.2. The same steps will then be repeated to first eliminate Plazacorp Operating Trust, then a subtrust of Plazacorp Operating Trust.

For more detailed summary, see above under MFC Conversion to MFT.