Investment Q&A

Q: I owned 600 shares of AW.UN and was under the impression that the shares would be exchanged 1 for 1 for AW. That is not what appears to have happened. My account indicates I now own 583 shares of AW. iTrade has also changed the apparent purchase price which would suggest that I sold the AW.UN shares and bought the AW shares. Have I misunderstood how this transaction was suppose to take place? Do I have grounds to insist the missing 17 shares be returned?

Q: Good morning. This isn't so much a question as it is to follow up on my question yesterday relating to the tax treatment of 1:1 exchange of share of units of AW.UN to AW.TO for the benefit of other 5i members. My original question, 5i's answer and the answer I received subsequently from AW Investor relations appears below.

Question: My AW.UN shares were exchanged 1:1 for AW Newco. As this was an "exchange" should my broker be showing a capital gain? If there is indeed a capital gain what is the share price that should be used?

5i Answer: The transaction is tax-free, providing unitholders make a Section 85 Election. If new shares were received on a fully 1-for-1 basis (no cash received other than the distribution), the ACB should be the same as it was before. Brokers are inherently bad at these things. One can contact them to change it, but it is better to keep one's own records for CRA purposes.

Following 5i's Answer I reached out to both my broker who referred me to AW Investor Relations.

AW Investor Relations Answer:
"The conversion from units to shares is considered a deemed disposition at a value based on the date of settlement, which varied broker to broker. We have been advised that in the context of the acquisition and disposition of listed securities, the CRA has traditionally taken the position that the acquisition/disposition date for tax purposes is the date of settlement since it is only at that time that taxpayers have the use of the property received (i.e. A&W shares) in consideration for the property they disposed of (i.e., the Fund's units). We are recommending that shareholders with concerns that the delay in settlement caused them to realize a capital gain (on the disposition of their units) that was larger than it would have been had the transaction settled more quickly should consult with their tax advisors as to whether they can reasonably take a different position."

Following AW's response, I sold out of our position in AW "Newco" today for a tax loss at $37.36 to reduce our Capital Gain on AW.UN which had reflected a settlement value of $43.08. We will either reinter in 30 days or move on.

AW's structuring of the sale was, in my opinion, very poorly executed.

Q: My AW.UN shares were exchanged 1:1 for AW Newco.

As this was an "exchange" should my broker be showing a capital gain?

If there is indeed a capital gain what is the share price that should be used?

My broker, TD, has calculated my capital gain based on a share value of $43.08 and used this price as my average cost base for Newco.

How do you suggest I approach TD on this? Is there somewhere where I can conclusively go to get this information to provide them? Banks aren't keen on admitting their errors...

Thanks

Q: Hi,

What entry point would you be comfortable with as it relates to the new A&W food services company. And would you expect pressure on the SP once the hold period on insiders expires?

Q: I enjoyed the steady income stream from A&W together with the relative share price stability in my registered account. Now that A&W has converted and is no longer a royality fund, can you provide 2 or 3 top income fund recommendations to replace it? They can be any sector and Canadian or US.

Q: Why the 8.25% drop in the new company yesterday?
John

Q: Hi I received my new shares of AW from my old AW.UN. For my 355 of AW.UN I now have 345 of AW plus I received $390.48 in cash. I will not get full details until I get my statement at the end of the month. In the mean time the broker has stated " MER - A&W REVENUE ROYALTIES INCOME FUND TRUST UNITS DEFAULT: C$.99472 CASH +.97311 SHS + C$0.1052 DIST PER 1 OLD " Can you help me figure out this logic in layman's terms? Thank you for your better interpretation.

Q: The new AW shares started trading on the TSX and were at $41 dollars and change Monday morning. At this price would you see any upside over the next year or more of a income play given valuation.

Q: I have not received a request on what I want to do with my aw.un shares. Should I have received something from broker? If not when do I have to decide which option I want to choose?

Q: Is there a List of Companies with Monthly Dividends somewhere? Thanks!

Q: Please help me understand On proxy form,I vote to acquire all units of fund for common shares of new co.or cash as the case maybe. On booklet attached with proxy form it statyes:one unit of Aw.un for one share or $37 in cash or combination consideration consisting of 67.5% in shares and balance of 32.5% in cash. In sum what am I getting? Txs for U usual services & views

Q: Hi,

Assuming the conversion from a trust into a corporation, and if you were holding the shares, what would you do as it pertains to the offer @$37 prorated based on the current trust holders choice. At a minimum one will get a third of their units in cash, and the balance is new shares. Would you take the money now and buy back the corresponding shares once the dust has settled? I don’t see the share price maintaining $37 over the short term, if it would, it should already be there.

Your thoughts?

Q: In regards to the restructuring of AW.UN, you recommended one could stay in 100%. Do I need to do anything or will they just change automatically. Will the Dividend be approximately the same? With the $37 price, are they estimating that will be the share price of the new shares? Thank you!

Q: Hello 5i,
I have, below, cut and pasted a segment of a press release:

"A&W Food Services of Canada Inc. ("Food Services") will also receive a similar dividend from Trade Marks on its investment in Trade Marks.

Food Services also announced today that it has declared a dividend in the amount of $1.0 million to its shareholder. The dividend will be paid out of Food Services' available working capital and is separate and distinct from distributions declared by the Fund to unitholders of the Fund..."

I have looked at the Investor Page of the AW.UN website and can find no clarity around what happens to the $1.0 million dividend. I am surmising that it goes into the larger fund for whatever purpose they deem necessary, but will NOT trickle down to individual unitholders. It seems the regular monthly dividend of $0.16 is all that we will receive, as per usual. Does this interpretation seem correct?

This confusion over the 3 entities, and who gives/gets what, goes a long way towards explaining the need for a much simplified corporate structure, imho!!

Thanks for any clarity you can provide!!
Cheers,
MIke

Q: Good Morning

I have to raise some cash for a riff payment
Which would you sell out right AW.UN or BCE
Both are about equal in a in a loss position


Thks
Marcel

Q: Value investor with some growth, 78 years old with good pension. I am slightly overweight in financials as above. I now see that I own both BKCC and HMAX. I do not seem to need both. I intend to sell BKCC and buy AW.UN to take advantage of its current situation. Does this sound like a plan or are there pitfalls?
Thank you

Q: New deal--$37 cash or new share per previous emails.When is the expected closing?What do U recommend? Txs for u usual great services & views

Q: I would like to add to one or two of the above dividend paying companies I hold in my RSP.
I would appreciate your preference ranking... a short comment as well if possible.
Thanks as always
Albert

Q: My husband is 8 years away from retirement and wants to buy dividend stocks to leave mostly alone (not checking daily like me!) - he'll check in on it now and then. This is the list he's come up with - slightly higher positions in BCE, BPF.UN and slightly lower in AW.UN, CAR.UN and OLY, otherwise fairly evenly split. Do you see this a good list for his purposes, and is there anything you would leave off, or add? Any other alarm bells? Thanks!

Q: Why is it not trading near/at $37 offer price?Txs for u usual great services and views