CALGARY, ALBERTA--(Marketwire - Sept. 29, 2008) - EnerVest Diversified Income Trust, (TSX: EIT-UN.TO) ("EnerVest") is pleased to announce that it:
- will endeavor to continue to operate as an income generating investment vehicle through the impending rule changes to trust taxation to be imposed after December 31, 2010; - intends to modify its investment strategy, as approved by unitholders at the special meeting in July 2007, to focus on a broader range of income producing investment vehicles in various industries and geographic regions, and reduce its reliance on conventional royalty trusts and business trusts which will be impacted by tax rule changes coming into effect in 2011; - intends to continue to provide its investors with a $0.07 per unit per month distribution for the next 12 months, representing a cash on cash yield of 16.4% based on the closing price of EnerVest units as of September 25, 2008; - has appointed Jacob Roorda as President and Chief Executive Officer; and - has filed a preliminary short form prospectus for a treasury offering of its units to be issued in connection with an exchange offering (the "Exchange Offer"), enhanced by the preferential distribution of discounted warrants available to existing Unitholders of record on the Warrant Record Date (the "Warrant Offer"), as described below; - has received approval of the normal course issuer bid for the next 12 months. Investment Strategy and Distribution Guidance: EnerVest announces that it will continue to pursue its objective for Unitholders of maximizing monthly distributions relative to risk and maximizing net asset value while maintaining and expanding a diversified investment portfolio. However, in light of impending taxation rules to be implemented for "SIFT" trusts in 2011, EnerVest intends to modify its investment strategy, as approved by unitholders at the special meeting in July 2007, to include a broader range of income producing investment vehicles in various industries and geographic regions, and reduce its reliance on conventional royalty and business trusts. Following a review of the portfolio with the Investment Advisor, Cypress Capital Management Ltd., EnerVest also feels sufficiently confident to announce that it intends to continue to offer the $0.07 per unit monthly distribution for the next 12 months, representing a cash on cash yield of 16.4% based on the closing price of EnerVest units on September 25, 2008. The exchange offer and warrant offering described below should significantly complement the investment strategy by attracting a broader class of assets to the portfolio, and the raising of cash to target new investments for the portfolio. Given recent market conditions, EnerVest believes that current investment prices represent good value, providing an opportunistic time to build the portfolio. EnerVest has also renewed its normal course issuer bid. The Investment Manager believes that from time to time it may be in the best interest of unitholders to purchase units for cancellation. This purchase of units will increase the proportionate interest of, and be advantageous to, all remaining unitholders. Any purchases made by EnerVest may also afford increased liquidity to those unitholders of EnerVest who may wish to dispose of their units. Appointment: EnerVest announces that Mr. Jacob Roorda has accepted the role of President and Chief Executive Officer, replacing Mr. Kevin Wolfe, who has resigned to pursue other business opportunities. Mr. Roorda brings almost 30 years of energy and financial industry experience, including as president of a successful oil and natural gas royalty trust, a co-founder of a group of mutual funds and as a senior partner of an investment banking firm. He has also held senior roles in corporate finance, equity research, business development and oil and natural gas operations. Enhanced Exchange Offering: EnerVest has filed a preliminary short form prospectus for a treasury offering of its units to be issued in connection with an exchange offering (the "Exchange Offer"), described below. EnerVest is offering to issue EnerVest units in exchange for securities of selected royalty, income and real estate investment trusts, limited partnerships and corporations, ("Issuer Securities") all of which are listed on the Toronto Stock Exchange (the "TSX"). A listing of the Issuers is set out below. Coincident with the Exchange Offer, EnerVest also announces that it will issue Warrants to subscribe for EnerVest units to existing Unitholders of record at the close of business on the day immediately following the expiry of the rescission rights under the (final) short form prospectus (the "Warrant Record Date"), likely occurring in early November 2008. The number of warrants issued to existing Unitholders will vary with the size of the Exchange Offer. At the minimum Exchange Offer of $50 million, 0.025 Warrants will be issued for each EnerVest unit held on the Warrant Record Date (one whole Warrant for each 40 EnerVest units then held). One Warrant will entitle the holder to purchase one EnerVest Unit at a price 20% below the EnerVest Exchange Price as announced on or about October 17, 2008. At the maximum Exchange Offer of $500 million, 0.25 Warrants will be issued for each EnerVest unit held on the Warrant Record Date (one whole Warrant for each 4 EnerVest units then held). The Warrant Exercise Date will be that day which is 21 clear days after the Warrant Record Date or, if such day is not a business day, the immediately succeeding business day and upon exercise the holders of these units acquired through the Warrant offering will be entitled to one month's distribution of $0.07 per unit upon exercise. Exchange Offer: The Exchange Offer is open to all holders of Issuer Securities until 4:00 p.m. EST on October 16, 2008 (the "Deposit Date"). The Exchange Offer may be accepted only by means of a book-entry deposit through CDS Clearing and Depository Services Inc. Security holders of an Issuer who wish to accept the Exchange Offer must request their investment advisor or nominee to effect the transaction for them. Some nominees may require an earlier deadline for receiving instructions concerning a deposit. The Exchange Ratio for the Issuer Securities of each Issuer will be determined by dividing the respective weighted average trading price of such Issuer Securities on the TSX during the period of three consecutive trading days ending on the Deposit Date by the weighted average trading price of the EnerVest Units on the TSX during the same period. The Exchange Ratios will be announced in a press release issued by EnerVest on or about October 17, 2008 and disclosed in a final short form prospectus to be filed shortly thereafter. The maximum number of Securities of any particular Issuer which EnerVest will own subsequent to the Exchange Offer will amount to less than 10% of the outstanding Issuer Securities of such Issuer. This Exchange Offer does not constitute a takeover bid with respect to any of the Issuers. EnerVest Diversified Management Inc., the manager, and/or its parent will reimburse EnerVest for the costs of the offering including fees paid to the dealer manager and the soliciting dealers and this obligation will be evidenced by a promissory note in favour of EnerVest. The potential benefits of participating in the Exchange Offer include the following: LOWER RISK: Unitholders who participate will gain diversification over a broad range of issuers and timely opportunity for holders of certain royalty trusts, income trusts, real estate investment trusts, corporations and limited partnerships, debt and other high yielding securities to participate in a diversified, highly liquid, actively managed portfolio of high quality securities with no cash outlay; HIGH YIELD: The current yield on EnerVest's units is approximately 16.4%, based on the closing price of EnerVest units as of September 25, 2008. EnerVest's portfolio is actively managed to maximize monthly cash distributions relative to risk and maximize the underlying net asset value over the life of EnerVest. EXPERIENCED MANAGEMENT: The Investment Manager is Cypress Capital Management Ltd. ("Cypress"), a portfolio manager providing active, proven and experienced investment management. PERFORMANCE: EnerVest provided annual compounded returns (capital appreciation plus average trading value of rights issued plus distributions) of 8.84% -0.66% and 10.19% for the one three and five years ended August 31, 2008, respectively. Furthermore, EnerVest enjoys a management expense ratio ("MER") of 1.34% excluding interest and issue costs, for the year ended December 31, 2007, one of the lowest of the major diversified closed end trusts. STABILITY OF DISTRIBUTION: EnerVest intends to continue its current monthly distribution of $0.07 per EnerVest Unit for each of the next 12 months, reflecting a yield of approximately 16.4% based on the closing price of an EnerVest Unit on the TSX on September 25, 2008; COMMITMENT: EnerVest's intention of maintaining its status as an income producing fund up to and following the implementation of the new tax rules for "SIFT" trusts in 2011, by diversifying its portfolio holdings to include non-income trust securities such as preferred shares, corporate bonds and high yield debt. INCOME TAX ADVANTAGES: Current holders of Issuer Securities can optimize their specific tax needs by realizing either taxable capital gains or capital losses through the Exchange Offer. In addition, since its inception to December 31, 2007, EnerVest's distributions have been 49.7% non-taxable and are estimated to be 25% non-taxable for 2008. NO INITIAL DIRECT FEES: The Exchange Offer enables current holders of units or other securities of the identified Issuers to acquire EnerVest units at no direct cost or brokerage commission. Furthermore, the manager and/or its parent has agreed to reimburse fees payable to the dealer manager and soliciting dealers incurred by EnerVest. ENHANCED LIQUIDITY: EnerVest units are publicly traded on the TSX and have significant liquidity. As at August 31, 2008 the daily average trading volume for 2008 was 549,356. Warrant Offer: As described above, EnerVest also announces that it will issue Warrants to subscribe for EnerVest units to existing Unitholders in conjunction with the Exchange Offer on the Warrant Record date, likely occurring in early November 2008. The number of warrants issued to existing Unitholders will vary with the size of the Exchange Offer. At the minimum Exchange Offer of $50 million, 0.025 Warrants will be issued for each EnerVest unit held on the Warrant Record Date (one whole Warrant for each 40 EnerVest units then held). One Warrant will entitle the holder to purchase one EnerVest Unit at a price 20% below the EnerVest Exchange Price as announced on or about October 17, 2008. At the maximum Exchange Offer of $500 million, 0.25 Warrants will be issued for each EnerVest unit held on the Warrant Record Date (one whole Warrant for each 4 EnerVest units then held. The Warrant Exercise Date will be that day which is 21 clear days after the Warrant Record Date or, if such day is not a business day, the immediately succeeding business day and upon exercise the holders of these units acquired through the Warrant offering will be entitled to one month's distribution of $0.07 per unit, payable upon exercise. The potential benefits to Existing Unitholders who participate in the Warrant Offer include the following: EFFICIENT PURCHASE: Existing Unitholders will have the ability to invest incrementally in a discounted fashion, in the growth and recovery that the manager anticipates will follow from current weak market conditions. Unitholders could realize an annual yield of 20.5%, assuming the purchase price of an EnerVest Unit which is at a 20% discount to the trading price on September 25, 2008. MARKET OPPORTUNITY: Existing Unitholders will benefit from EnerVest's purchase of securities in the Exchange Offer, securities targeted with strong fundamentals and market values that are expected to be trading at a discount to their underlying value and to facilitate the diversification of EnerVest's investments pursuant to its stated portfolio management strategy; STABILITY OF DISTRIBUTION: EnerVest intends to continue its current monthly distribution of $0.07 per EnerVest Unit for each of the next 12 months, reflecting a cash on cash yield of approximately 20.5% for each warrant exercised at 20% discount to the closing price of an EnerVest Unit on the TSX on September 25, 2008; COMMITMENT: EnerVest's intention of maintaining its status as an income producing fund up to and following the implementation of the new tax rules for "SIFT" trusts in 2011, by diversifying its portfolio holdings into non-income trust securities such as preferred shares, corporate bonds and high yield debt. For additional information, please see a copy of the Preliminary Short Form Prospectus dated September 26, 2008 which will be available on the EnerVest and SEDAR websites, or contact the EnerVest Investor Relations department at 1-800-459-3384. EnerVest is an actively managed, closed-end trust which invests in a diversified portfolio of income, royalty and real estate investment trusts, limited partnerships, and corporations or other securities. EnerVest's objectives are to maximize monthly distributions relative to risk and maximize net asset value while maintaining and expanding a diversified investment portfolio. EnerVest currently has 301,117,272 units outstanding, a net asset value of approximately $1.8 billion and a daily average trading volume of approximately 549,356 units for the first eight months of 2008.EnerVest Exchange Offer List of Issuers INCOME FUNDS ------------ Oil & Gas --------- Conventional Oil & Gas ---------------------- Advantage Energy Income Fund ARC Energy Trust Baytex Energy Trust Bonavista Energy Trust Bonterra Energy Income Trust Canadian Oil Sands Trust Crescent Point Energy Trust Daylight Resources Trust Enerplus Resources Fund Freehold Royalty Trust Harvest Energy Trust NAL Oil & Gas Trust Paramount Energy Trust Pengrowth Energy Trust Penn West Energy Trust PEYTO Energy Trust Progress Energy Trust Provident Energy Trust Trilogy Energy Trust True Energy Trust Vermilion Energy Trust Zargon Energy Trust Energy Services --------------- Black Diamond Income Fund Cathedral Energy Services Trust EnerFlex Systems Income Fund Energy Savings Income Fund Mullen Group Income Fund Phoenix Technology Income Fund Precision Drilling Trust Savanna Energy Services Stoneham Drilling Trust Pipeline & Utilities -------------------- Energy ------ AltaGas Income Trust Enbridge Income Fund Fort Chicago Energy Partners L.P. Inter Pipeline Fund Keyera Facilities Income Fund Pembina Pipeline Income Fund Utilities --------- EPCOR Power L.P. Gaz Metro Limited Partnership Great Lakes Hydro Income Fund Innergex Power Income Fund Macquarie Power & Infrastructure Income Fund Northland Power Income Fund Algonquin Power Income Fund Business Trusts --------------- Diversified Financials ---------------------- CI Financial Income Fund Davis & Henderson Income Fund DirectCash Income Fund First National Financial Income Fund Morneau Sobeco Income Fund New Flyer Industries Inc. (IDS) Healthcare ---------- CML Healthcare Income Fund Industrials & Other ------------------- Ag Growth Income Fund Armtec Infrastructure Income Fund Badger Income Fund Bird Construction Income Fund GMP Capital Trust IBI Income Fund Superior Plus Income Fund Vicwest Income Fund Wajax Income Fund Materials --------- Labrador Iron Ore Royalty Income Fund Noranda Income Fund TimberWest Forest Corp. Media & Entertainment --------------------- Cineplex Galaxy Income Fund Gamehost Income Fund Yellow Pages Income Fund Telecommunication Services -------------------------- Bell Aliant Regional Communications Income Fund Transportation -------------- Contrans Income Fund Jazz Air Income Fund Livingston International Income Fund TransForce Income Fund Westshore Terminals Income Fund Real Estate Investment Trusts ----------------------------- Allied Properties REIT Altus Group Income Fund Boardwalk REIT Calloway REIT Canadian Apartment Properties REIT Canadian REIT Chartwell REIT Cominar REIT Crombie REIT Dundee REIT H&R REIT InnVest REIT Morguard REIT Northern Property REIT Primaris Retial REIT Retrocom Mid-Market REIT RioCan REIT EQUITIES -------- Banks / Financial Services -------------------------- AGF Management Ltd. Bank of Montreal Bank of Nova Scotia (The) Canadian Imperial Bank of Commerce Canadian Western Bank DundeeWealth Inc. Great-West Lifeco Inc. Home Capital Group Inc. IGM Financial Inc. Industrial Alliance Insurance and Financial Services ING Canada Inc. Manulife Financial Corporation National Bank of Canada Power Corporation of Canada Power Financial Corporation Royal Bank of Canada Sun Life Financial Inc. Toronto-Dominion Bank (The) Consumer Products ----------------- Saputo Inc. Gildan Activewear Inc. Tim Hortons Inc. Energy Services --------------- Trinidad Drilling Ltd. Industrials ----------- Russel Metals Inc. Oil & Gas --------- Canadian Natural Resources Corp. EnCana Corp. Nexen Inc. Petro-Canada Talisman Energy Inc. Pipeline & Utilities -------------------- TransCanada Corporation Enbridge Corporation Real Estate ----------- Brookfield Properties Corporation First Capital Realty Inc. Telecommunications & Media -------------------------- Astral Media Inc. BCE Inc. Cogeco Cable Inc. Corus Entertainment Inc. Manitoba Telecom Services Inc. Rogers Communications Inc. Shaw Communications Inc. TELUS Corporation Thomson Reuters Corp. CONVERTIBLE DEBENTURES ---------------------- Oil & Gas --------- Baytex Energy DB BonaVista Energy DB BonaVista Energy DB-A Daylight Energy DB-B Harvest Energy DB Harvest Energy DB-A Harvest Energy DB-D Harvest Energy DB-F Harvest Energy DB-G NAL Energy DB Progress Energy DB Provident Energy DB-A Industrials ----------- Western Canadian Coal DB Pipeline & Utilities -------------------- Northland Power DB REITs ----- Cominar DB-CThe Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.ContactsEnerVest Diversified Management Inc.
Investor Relations: Kristie Allen or Linda Koroluk
(403) 571-5550 or Toll Free: 1-800-459-3384
(403) 571-5554 (FAX)
Email: info@enervest.com
Website: www.enervest.com
President & Chief Executive Officer
Jacob Roorda
(403) 571-5550 or Toll Free: 1-800-459-3384
Chief Operating Officer
Jane Depraitere
(403) 571-5550 or Toll Free: 1-800-459-3384
Calgary, Alberta, T2P 3V4
Suite 2800, 700-9th Avenue S.W.
(403) 571-5550 or Toll Free: 1-800-459-3384
(403) 571-5554 (FAX)
136.40 (1.48%)
