TORONTO, ONTARIO -- (Marketwire) -- 10/06/11 -- Income STREAMS III Corporation (the "Company") is providing an update on the impact of a September 21, 2011 Moody's Investor Services downgrade of the ratings of Bank of America Merrill Lynch which has been one of the counterparties to the Capital Yield share repayment forward agreement since July 2001 (the Company's inception). This downgrade has had no impact on the market value of the Capital Yield share repayment forward agreement. This forward agreement is one of two entered into by the Company which collectively are designed to achieve the repayment objective of $25 per Capital Yield share on the Company's termination date of December 1, 2013.
As a result of this downgrade to a level below an "approved credit rating" within the meaning of such term in National Instrument 81-102 Mutual Funds, the Company in compliance with its regulatory obligations has exercised its contractual rights to terminate this forward agreement effective October 4, 2011. As a result of the termination, the Company has received cash proceeds equal to the current market value of this forward agreement.
The termination event has had no effect on the Company's net asset value. As at September 30, 2011 the net asset value per unit (one Capital Yield share and one Equity Dividend share) was $32.94. Net assets attributable to each Capital Yield share were $24.47.
After analysis which factored in the current low interest rate environment and the costs and credit considerations associated with replacing and maintaining a forward agreement with a new counterparty, the Company has decided that a more effective alternative of achieving the Capital Yield share repayment objective would be to reinvest the cash proceeds into Government of Canada treasury bills with a similar term. The combination of Government of Canada treasury bills and the other continuing forward agreement with another financial institution are considered by the Company as the most cost effective method of achieving the $25 per Capital Yield share repayment objective on December 1, 2013.
Income STREAMS III
416-304-4443 or Toll Free at 1-877-4-Quadra (1-877-478-2372)
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