商業(yè)信托ppt

1、,,,,,商業(yè)信托,1.1 Trusts in GeneralTrust BasicsA Canadian StoryTypes of Trusts1.2 Business TrustsInvestor RiskGovernance & Structure Taxes!,1.3 Recent EventsPre-HalloweenMassacre & ReasonsSince ThenGo

2、ing ForwardDeal Finding3 Trusts,Agenda,Trust Basics,Just what IS a trust?Term refers to: legal entity (FTE)capital structureownership vehicleCompany/entityshare “units” traded on exchanges like stockStructured

3、 to facilitate (tax-friendly) profit transfer to ownersBased on CFs of underlying businessesMonthly/Q’ly distributions, usu higher vs stock divs (10-20% /yr)Holds income-producing assetsCharacteristics: stable CFs, l

4、imited capital maintenance, mature cyclesorigin: American PTP/LLPs,Trust Basics,How does a trust work?,,,,,Operating entity (Corp, Operating Trust, Ltd Partnership),Unit Trust / Income Trust,Unitholders,equity, debt,

5、royalty interest, lease,interest, royalty or lease pmts, divs, return of capital,$ for units,$ distributions,A Canadian Story,Once upon a time…American Publicly Traded Partnerships (PTPs) LLPs w/ publicly traded unit

6、sPurpose: to combine tax advantages of partnerships withliquidity of public companies,A Canadian Story,A TSX Timeline…,A Canadian Story,A rapid rise,A Canadian Story,A rapid riseTripled numbers in just 5 years54 co

7、nversions to income trusts from 2002-Sep 200636 between 2004-2006 alone,A Canadian Story,A rapid riseTripled numbers in just 5 years54 conversions to income trusts from 2002-Sep 200636 between 2004-2006 aloneVolume

8、s gone wild! Everyone’s in!Taking the cake, dominating the pie(s),A Canadian Story,A rapid rise,All your friends are doing it!,A Canadian Story,,,,,,,,,,,,,,,,,And THEN what happened?,A Canadian Story,Types of Trusts,3

9、Major TypesBusiness trustsEnergy/Royalty trustsREITsConsider: Conversion #s,Investor Risk,Potential sacrifice of growthNo guaranteesPerformance volatilityOvervaluation – return of capitalLiability,Governance,T

10、rusts not covered by Canadian Business Corporations ActRights of investors set out in declaration of trust (not standardized)Guidance provided by the Canadian Securities Administrators (CSA) and provincial regulatory b

11、odies (Ontario Securities Commission)National Policy 41-201 Income Trusts and Other Indirect OfferingsNational Policy 58-201 Corporate Governance GuidelinesNational Instrument 58-101 Disclosure of Corporate Governance

12、 Practices,Governance Issues,Disclosures of distributable cashOften incorporates significant estimates and assumptionsNot standardized (GAAP)Guidance provided by the CSAPotential for conflicts of interestOne-third o

13、f Canada’s largest income trusts did related-party transactions valued at more than 1% of trust’s total revenue20 percent are operated by outsiders under a management contractSource: Report on Business review of trust

14、governance (based on 2005 data),Structure,Unitholders provide financing to and receive distributions from trustTrust uses funds to invest in assets which provide return,TRUST,UNITHOLDERS,CORPORATION,Cash Distributions

15、(Income & ROC),Trust Units,Equity/Debt, RoyaltyInterest, Lease,Interest/Royalty/Lease Payments,Dividends, ROC,Tax Treatment,Income trusts structured as mutual fund trustsIncome not distributed:Federal rate: 29%

16、 (Top personal rate)Average combined federal-provincial income tax rate on mutual fund trusts: 45%Until 2011, income distributed is deductible (for trusts existing prior to Nov. 1, 2006),Tax (Corporation),TOTAL TAXES P

17、AID = $42.85,Tax (Trust-Previous),TOTAL TAXES PAID = $18.12,Changes for the future,In 2011:FTEs taxed more like corporationsDistributions (like dividends) not deductibleUnitholders treated more like shareholders:,Issu

18、es & events,Government loses tax revenue?No retained earningsTax Fairness PlanOther issues,Loss of tax revenue?,Federal Finance Minister Jim Flaherty:governments loses $1 billion a year in lost revenue.  Alb

19、erta: losed $450 million a yearQuebec: would have lost $150 million annually if the conversions of “certain large corporations” had gone aheadAs a result, a tax is imposed on income trustHowever, not everyone agree,Tr

20、ust industry dispute,Trust industry disputes figuresTax impact on investors: loses $ 40 billion overnight Tax leakage figures “grossly exaggerated” and keep changingIndustry: tax revenue will eventually come in when

21、RRSP investors or pension plan members start drawing incomeFlaherty rejected all arguments for the future of Canada: tax revenue drain from income trust could have derailed future tax cuts for Canadians,Oct 31, 2006,Tax

22、 Fairness PlanCreating a level playing field between income trusts and corporations. Stop the trend of corporate tax avoidance Stop shifting any future tax burden onto hardworking individuals and families,Tax fairnes

23、s plan,A Distribution Tax on income trustA reduction in corporate tax of 0.5% as of January 1, 2011An increase in the Age Credit Amount by $1000 from $4,066 to $5,066 effective January 1, 2006. Permitting income split

24、ting for pensioners beginning in 2007,Distribution Tax,SIFT Tax Rates: Distributed Non-Portfolio Earnings, 2007-2011,Table from http://www.fin.gc.ca/news06/06-061e.html,Tax Fairness Plan,AdvantagesOver $ 1 billi

25、on of new tax relief annually for CanadiansSignificantly enhancing the incentives to save and invest for family retirement security.,Misallocation of capital,Income trusts do not have retained earnings for capital expen

26、ditureCanadian industry competitiveness is in danger,Impact: Tax Fairness Plan,Impact: Tax Fairness Plan,S&P Income Trust VS S&P 500,S&P Income Trust VS S&P Capped REIT S&P Income T

27、rust VS S&P Capped Energy Trust,Impact: Tax Fairness Plan,Going Forward,Deal FindingNoise and the newsChanged investor profilesTax shieldingReturn to fundamentals,,,,,,··:TSX:.. IPL.UN,,Snapshot,Jan 2

28、007: Market Snapshot ($b)Market Cap$1.8Debt $0.7Enterprise Value$2.5Mar 2007: Equity (Unit) Snapshot,D/A = .7/2.5 27%Cash Yield9.3%,1yr Chart,IPL only,1yr vs. Market,IPL vs. S&P/TSX 60,1yr vs. Industry,

29、IPL vs. S&P Income Trust index,5yr Chart,IPL only,5yr vs. Market,IPL vs. S&P/TSX 60,5yr vs. Industry,IPL vs. S&P Income Trust index,Operations,Four major categoriesConventionalOil SandsNGL extractionSimo

30、n Storage,Ops: Conventional,Conventional Gathering BusinessBusiness: 201,400 b/d of crude transported in 20054 000 km of pipeline875 000+ barrels of storage160 producer owned batteries, 20 truck terminals (S AB, SW

31、SK) to AB/SK market hubs,Ops: Oil Sands,Oil Sands Transportation BusinessCold Lake Pipeline System sole transporter of area’s bitumenCapacity: 435 000 b/d of bitumen blend Expansion potential: $-effective to 705 000

32、b/dBusiness ownership: 85% IPL, 15% CNRProducers’ heavy bitumen blended w/ diluent (transported by IPL from Strathcona region)Blended product then shipped to major terminalling hubs (Edmonton or Hardisty, AB),Ops: NG

33、L,NGL Extraction BusinessNear AB natural gas export pointsCochrane & Empress II Plants50% ownership: Empress V Plant (facing $36m upgradeProcess pipeline quality natural gas, remove Natural Gas Liquids (ethane, p

34、ropane, butanes, pentanes-plus)Applications:Direct use as energy product or feedstock for petrochemical and crude oil refining industriesNGL stream fractionated to produce specification ethane product and mix of prop

35、ane, butane, pentanes-plus.,Ops: Simon,Recognized leader in the bulk liquid storage, handling 250+ products for range of firmsHigh integration withoperations of major regional oil refining and petrochemical complexess

36、upply & distro networks of several major domestic industries.,Simon Storage Ltd.Multi-site operator of bulk liquid storage, handling, distroUK, Germany, IrelandOwns/operates 9 deep water storage terminals configu

37、red to handle, blend, store petroleum productscombined bulk liquid capacity: 8m barrels from 599 tanksreceives/distributes products via ship, rail, truck, pipeline,Structure,Management,David W. Fesyk, President & C

38、EO (Nov 1997)Genl partner since IPL’s inceptionPositions1991-2002: Senior Exec at various affiliates of Koch Industries (petroleum, pipelines, other commodities)Director, South Saskatchewan Pipeline Company.Esso Pe

39、troleum Canada & various geological consulting firms (experience in upstream & downstream sectors of oil/gas)BackgroundBSc, Arizona State UMBA, U of Calgary,Management,John F. Driscoll, Director & Board

40、Chairman (Oct 2002)PositionsFounder, President, Chairman, CEO, Sentry Select Capital Corp.Founder, Chairman of NCE Resources GroupChairman, Strategic Energy Fund, Endev Energy, CA Bancorp.President, J.F. Driscoll I

41、nvestment (investment mgmt, consulting)Background35+ yrs diversified business experience BSc Boston College Business SchoolMember, CFA InstituteFounded numerous public partnerships, public & private energy and

42、 investment-related companies.,Strategy,Consistent growth across key metrics$ values in millions,Strategy,Conventional: Strategic AnalysisMoves 17% total western Cdn conventional volumesGrowing demand from US market

43、Strong source of stable CFs,Oil Sands: Strategic AnalysisAccess massive oil sands depositsMoves 27% total oil sands volumesServices major regional producers (Encana, Canadian Natural Resources, Imperial Oil),Strategy,

44、NGL: Strategic AnalysisIPL processes 40% of AB’s exported natural gasDiversified mix of NGL productsStable consumers/demand (Dow, Nova Chem, BP),Simon Storage: Strategic AnalysisLong-life infrastructure assetsGeogra

45、phic diversification, mature marketsStable political/regulatory environmentsFee-based CFs; no commodity price exposure,Strategy,Cash Distributions & CF Sources,2006 Q1-Q3 data,Per unit, Jan 2007 data,Financials,Hig

46、hlightsRevenues annual record: $1 011.0m (+9% vs. 2005) OCF annual record: $205.4m (+34% vs. 2005) Total $ distributions annual record: $160.8 (+17% vs. 2005)CAPX (Growth + Sustaining) fully funded by Net income, OCF

47、,,,,,From section Cash Distributions to Unitholders,EOY Balance Sheet,,,,,,,,,,,,Current ratio: 1.01,EOY Income Stmt,,,,,,OCF = EBIT + Dep – Taxes = 134.9m + 70m – 4m = 201.6m,EOY Liquidity,Liquidity and Capital Resource

48、s,From section Cash Distributions to Unitholders,OCF = 201.6mFCF = OCF -ΔNWC -CAPX,,,132.8m,FCF2005 = 144.7m,,Debt rating: BBB,,OCF = 201.6mCapX = 65.6m? FCF = 132.8m+E vs -D$_$ = ^_^,,,,FCF – Distro= 132.8 –

49、 160.8 = -28,,EOY CF Stmt,Quick n’ Dirties,Key Ratios: IPL vs. Industry,Current News,Current NewsFeb 7: $0.07/unit monthly distribution maintained for Mar 15 payoutQ3 increased annualized rate = $0.84/unit maintained t

50、hrough Q4Feb 22: Q4 resultsall-time annual records: revenues, OCF, total $ distributions2006 payout ratio (distributions/net income) for Q4 = 89.7% (vs. 91.8% in 2005Q4, 78.3% in 2006, 90.0% in 2005)Mar 5: Acquisiti

51、on of Corridor Pipeline System from US energy firm Kinder Morgan (KMI) for $760m (cash $275m + debt $485m)Our Friend Flaherty“On Oct 31, the Government of Canada announced the Tax Fairness Plan which [REALLY SCREWED U

52、S] and upon implementation … distributions to Class A unitholders may be adversely affected.”Tax liability (31.5% hit in 2011): no significant tax shields availablerecapture threat (capital gains vs. previously deduct

53、ed CCA)Equity limitation: $2b for next 4 yrs,Conclusion,HighlightsStrong portfolio of long-life infrastructure, diversified, contract CFsOil sands exposure, potential upside from natural gas developmentsRecord of inc

54、reasing distributions via acquisitions & organic growthExperienced mgmt sticking to tried & true strategy that worksCaveatsJan 2006: $142.2m new equity (15m units) to cover Simon acq debtFinancing limitation

55、s: BBB rating & equity limits2006 growth largely dependent on European Simon business2006 margin gains largely dependent on NGL’s propane+ prices,Conclusion,,moderate buy,Precision Drilling Trust,Edward Rodriguez,P

56、D.UN at a Glance,Units outstanding: 125.76 millionMarket Cap: $3.29 billionEmployees: 6500,PD.UN - Since Nov. 7/05 (Daily),,Precision Drilling (5-yr),,PD.UN vs. Indexes (1-yr),,Background,Based on Calgary, ABCanada

57、’s largest drilling contractor (29% market share)Dominates in the Western Canada Sedimentary Basinoil sands, heavy oil, conventional oil, coal bed methane, deep gas and shallow gaschallenging geography and weather con

58、ditionsBalanced rig offering with particular weighting in deep drilling40% market share in rigs with > 3600m depth capacity,Early History,1951: Precision Drilling Ltd. begins operations as an oil-and-gas contractor.

59、1969: Precision Drilling Ltd. is incorporated and acquires the affiliate Precision Drilling Co. Ltd.1984: Precision Drilling Ltd. purchases 3 rigs from Capri Drilling.1987: In a reverse takeover, Cypress Drilling Ltd.

60、 acquires Precision Drilling Ltd. and begins operation as Precision Drilling (1987) Ltd.,PDT Overview,Precision Drilling Trust is about much more than . . . precision drilling,Business Segments,,,70% of Revenue,30% of Re

61、venue,Contract Drilling Services,244 drilling rigs (29% market share)Precision Drilling – land drilling servicesLRG Catering – camp and catering servicesRostel Industries – manufacture and refurbishment of drilling an

62、d service rig equipmentColumbia Oilfield Supply – procurement and distribution of oilfield supplies,Completion and Production Services,237 service rigs (22% market share)Precision Well Servicing – well servicing (for c

63、ompletions, workover, maintenance and abandonment work on any well)Live Well Servicing – rig-assist snubbing (for under-balanced drilling)Precision Rentals – oilfield rentalsTerra Water Systems – wastewater treatment,

64、On-site Example,,,,CampLRG Catering,Tank FarmPrecision Rentals,Drilling RigPrecision Drilling,Fluid Handling TanksPrecision Rentals,,,Misc. Tubular ProductsPrecision Rentals,Wellsite Office &Accommodation - P

65、recision Rentals,Service RigPrecision Well Servicing/Live Well Service,Specialty Equipment (blowout preventer)Precision Rentals,Organizational Structure,,Management,Hank B. SwartoutChairman, Director and Chief Execut

66、ive OfficerFrom 1985 to 2005 was also PresidentOther Positions:Highpine Oil & Gas Limited, directorHarvest Energy Trust, directorU. of Wyoming - B.Sc. - Hons. Pet.Eng,Management,Gene C. StahlPresident and Chi

67、ef Operating OfficerWorked for Precision since 1993Rig worker, marketing, Investor Relations OfficerIn 2003, led consolidation and rebranding of companies which became Precision RentalsSelected in 2005 for current po

68、sition,Directors & Trustees,W.C. DunnSince 1992Background: EnergyBrian A. FeleskySince 2005Background: Tax and Trust law, energyRobert J. S. GibsonSince 1996FinanceFrederick W. PheaseySince 2002Backgrou