Advantaged Canadian High Yield Bond Fund (TSX:AHY.UN) has called a special meeting of unitholders to consider Scotia Managed Companies Administration Inc.’s proposal for the continuation of the fund as a closed-end fund.
The meeting will be held on March 8.
When the fund was formed in early 2011, it was contemplated that it would delist the units from the Toronto Stock Exchange and convert to an open-end mutual fund on or about March 31, 2013.
Scotia, the fund’s manager, has determined that it would be in the best interests of unitholders if the fund were to continue as a closed-end fund. Under this proposal, the fund would continue to be listed on the TSX and unitholders would have an annual right to redeem their units at net asset value in December of each year.
By remaining as a closed-end fund, Scotia says the fund will have lower annual expenses and the portfolio will be able continue its use of leverage which is expected to allow the fund to maintain its current level of distributions on the units. In addition, Scotia believes the closed-end structure will allow for more efficient management of the portfolio and reduce transaction costs.
The fund’s declaration of trust currently provides that unitholders have a one-time right to redeem their units at net asset value on March 15, 2013, provided they tender their units for redemption no later than Feb. 15, 2013. Scotia is proposing that the declaration of trust be amended to provide an annual redemption right.
A management information circular setting forth further information about the meeting is expected to be mailed to unitholders and posted to SEDAR on Feb. 15. The proposal requires approval by holders of two-thirds of the outstanding units represented in person or by proxy at the meeting.