Toronto-based LOGiQ Asset management Ltd. announced plans to implement some changes to the previously proposed fund mergers of Aston Hill Corporate Funds Inc. as well as merge two existing funds.
Changes to LOGiQ’s proposed mergers come in response to this week’s federal budget, which proposed an amendment to the Income Tax Act that would impact how mutual fund corporations are treated. The amendment proposes that if a mutual fund corporation is made up of more than one corporate class, it can be merged into multiple trusts on a tax-deferred basis.
Read: Feds to extend rules governing mutual fund mergers
As a result, LOGiQ no longer plans to move forward with the mergers of Aston Hill High Income Class, Aston Hill Strategic Yield Class and Aston Hill Total Return Class into Aston Hill Strategic Yield Fund, as was announced on March 15. As such, it has cancelled the unitholder meeting for the affected funds.
Instead, the firm has announced new mergers for each affected fund into its corresponding trust. (A full list of the proposed changes is available in the company’s news release.)
Affected shareholders will receive the equivalent of amount of units to the “series of shares” they currently hold in their terminating fund.
These new mergers are expected to take effect on or about May 31.
Meanwhile, the merger of Aston Hill Canadian Total Return Fund and Aston Hill U.S. Conservative Growth Fund into Aston Hill Total Return Fund will proceed as initially planned — although all proposed mergers hinge on unitholder approval.
In addition, LOGiQ plans to fold Voya High Income Floating Rate Fund into the Voya Floating Rate Senior Loan Fund.
LOGiQ cites reduced costs, increased economies of scale, a larger asset base and more liquidity as its reasons for pursuing the merger.
As well, if the merger goes as planned, those who hold Class U units under Voya High Income Floating Rate Fund — the fund to be terminated — will now see those units listed on the Toronto Stock Exchange.
Those who prefer to opt out of the merger can redeem their units for cash at the net asset value. They have the option of waiting until the unitholder meeting results have been shared before deciding how to proceed.
The merger, which is also contingent on unitholder approval, is expected on or about July 14. Unitholder meetings for both funds are scheduled for on or about May 2.
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