HALIFAX, NS, Oct. 15, 2024 /CNW/ – Killam Apartment REIT (TSX: KMP.UN) (“Killam” or the “REIT“) is pleased to announce that its Board of Trustees has unanimously approved a proposed internal reorganization that will be accomplished by way of a plan of arrangement (the “Arrangement“). The Arrangement will be subject to unitholder approval at a special meeting of Killam to be held on November 21, 2024 (the “Meeting“).
The Arrangement will simplify Killam’s organizational structure by eliminating Killam Properties Inc. (“KPI“), a wholly-owned subsidiary of the REIT, so that Killam Apartment Limited Partnership will hold its entire investment in Killam Apartment Subsidiary Limited Partnership (“Killam SLP“) directly, rather than partially through KPI. In the existing structure, KPI is allocated its share of income and capital gains as a partner of Killam SLP. The Arrangement is expected to reduce or eliminate potential corporate taxation in respect of income and capital gains allocated to KPI, thereby increasing future cash flow for distribution to the REIT. The Arrangement is also expected to reduce the complexity of accounting and legal reporting and of income tax compliance inherent in Killam’s existing structure. The REIT has received an advance income tax ruling of the Canada Revenue Agency in connection with the Arrangement.
The proposed Arrangement will not result in a change to Killam’s strategy, portfolio or operations. After completing the Arrangement, unitholders will continue to hold the same number, type and percentage of outstanding units as they held immediately before the Arrangement and the total number of units outstanding immediately following the Arrangement will be the same as before. The REIT’s trust units (“Trust Units“) will continue to be listed on the TSX and retain the same CUSIP number.
The Arrangement will be effected pursuant to a plan of arrangement under the Canada Business Corporations Act and is subject to the approval of 66⅔% of the votes cast by holders of the Trust Units and special voting units of the REIT (the “Special Voting Units“), voting together as a single class (Special Voting Units are associated with Class B limited partnership units of Killam Apartment Limited Partnership (“Exchangeable Units“), which is controlled by the REIT. The Exchangeable Units are intended to be economically equivalent to and exchangeable for Trust Units on a one-for-one basis and are accompanied by Special Voting Units of the REIT that provide their holders with equivalent voting rights to holders of Trust Units). Trustees and officers of Killam, who control collectively 3.72% of Killam’s Trust Units and Special Voting Units, have indicated their intention to vote in favour of the Arrangement. In addition to the requirement for unitholder approval, the completion of the Arrangement will be contingent on all necessary third party, court and regulatory approvals, including the approval of the Toronto Stock Exchange.
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