TORONTO, ONTARIO- Brookfield Investment Management (Canada) Inc. (the “Manager”), the manager of Brookfield High Yield Strategic Income Fund (the “Fund”) (TSX:BHY.UN), has determined, in accordance with the terms of the Fund’s declaration of trust, to terminate the Fund on or about June 22, 2017.
The Fund was initially created to provide quarterly tax-advantaged distributions, maximize total return to unitholders through distributions and capital preservation and preserve capital for its unitholders by obtaining exposure to a portfolio comprised primarily of North American high yield debt (the “Portfolio”) held by High Yield Strategic Trust. The Fund obtains exposure to the Portfolio through the use of a forward purchase and sale agreement (the “Forward Agreement”) which is to expire pursuant to its terms on June 19, 2017 (the “Forward Termination Date”).
Under the transitional provisions of new tax rules enacted by the Canadian federal government in December 2013, the favourable tax treatment for the Forward Agreement will expire no later than the Forward Termination Date. Following the Forward Termination Date, it will no longer be possible for the Fund to provide its unitholders with exposure to the Portfolio on the originally intended tax-advantaged basis.
As a result of the upcoming Forward Termination Date, loss of the intended favourable tax treatment and scheduled termination date for the Fund, the Manager, in accordance with the terms of the Fund’s declaration of trust, has determined that it would be in the best interests of the Fund to terminate the Fund as soon as possible following the settlement of the Forward Agreement. Following the Forward Termination Date, the Fund will pay to its unitholders a special distribution in an amount necessary to eliminate the Fund’s liability for non-refundable income tax under Part I of the Income Tax Act (Canada), if any. The distribution will be paid in units which will be automatically consolidated immediately after the distribution. Thereafter, after paying, or providing for, all liabilities and obligations of the Fund, all Fund property will be distributed rateably among the unitholders of the Fund on a pro rata basis. Following such distribution, the Fund will terminate.
Following the settlement of the Forward Agreement, the Manager will also terminate High Yield Strategic Trust.
Brookfield Investment Management (Canada) Inc. is the manager of the Fund and Brookfield Investment Management Inc. is the investment manager of the Fund.
Brookfield Investment Management Inc. (the “Firm”) is an SEC-registered investment adviser and represents the Public Securities platform of Brookfield Asset Management. The Firm provides global listed real assets strategies including real estate equities, infrastructure equities, real asset debt and diversified real assets. With more than $14 billion of assets under management as of March 31, 2017, the Firm manages separate accounts, registered funds and opportunistic strategies for institutional and individual clients, including financial institutions, public and private pension plans, insurance companies, endowments and foundations, sovereign wealth funds and high net worth investors. The Firm is a wholly owned subsidiary of Brookfield Asset Management, a leading global alternative asset manager with approximately $250 billion of assets under management as of March 31, 2017.
Source: Brookfield High Yield Strategic Income Fund