PrefBlog

STRATA Income Fund has announced:

Based upon a review of various factors, we have reduced the distribution for STRATA Income Fund (the “Fund”) to $0.05 per capital unit payable on February 13, 2009 to unitholders of record on January 31, 2009. Among the more important considerations were distribution cuts by a number of oil and gas royalty trusts in response to the recent correction in oil and gas prices, the global economic slowdown including its impact on corporate revenues and earnings, and corporate conversions accompanied by distribution cuts by a number of income trusts. These factors have caused COMPASS Income Fund (“COMPASS”), the sole underlying investment of the Fund, to reduce its distributions and STRATA to follow suit.

Notwithstanding the current challenging economic environment, we believe there are some very positive developments occurring which we shall consider in determining future distribution levels of COMPASS and of the Fund. More specifically, Middlefield’s oil and gas consultant, Groppe Long and Littell, is currently forecasting a significant recovery in energy prices with crude oil expected to average US$85 per barrel in 2009. In addition, we expect that the various economic stimulus packages and interest rate cuts will begin to take effect in the second half of 2009, thereby improving business prospects.

It should be noted that the Fund will be maturing on November 30, 2009, at which time the preferred securities, which are currently yielding 6.0% per annum, will be repaid in full at the original subscription price of $10.00 plus accrued interest. In addition, those holding STRATA capital units will have the option to receive the net asset value at maturity or exchange their capital units for units of COMPASS.

The capital units and the preferred securities trade on the Toronto Stock Exchange under the symbols STW.UN and STW.PR.A, respectively.

STW.PR.A was last mentioned on PrefBlog when its Stealth Redemption was confirmed. STW.PR.A is tracked by HIMIPref™ and is included in the HIMIPref™ InterestBearing subindex

This entry was posted on Thursday, January 22nd, 2009 at 10:51 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.