C.A. Bancorp's offer to acquire a 50% interest in the management of PRT Forest Regeneration Income Fund's (TSX:PRT.UN) operating subsidiary has thrown PRT's strategic direction into question.
If accepted, the offer from the Toronto-based merchant bank would likely result in the Victoria-based trust diversifying its assets and income base.
Trustees noted in a letter to unitholders that the deal would be more in the interests of management than trust unitholders because it would change the fund from a predictable forest seedling business to a higher risk collection of businesses.
Under the proposal, Bancorp would identify new acquisition targets. It would also be responsible for negotiations, due diligence, legal issues and acquisition pricing. PRT management would remain responsible for the existing business.
Areas of investment interest for Bancorp include alternative energy, fibre and newsprint recycling, reclamation and other agriculture and forestry sectors.
Two significant PRT unitholders who together own 28% of the fund have agreed to the Bancorp proposal, but trustees have not endorsed the proposed change in direction because it would have an impact on the fund's profits and monthly distributions.
A June 26 unitholders' meeting has been scheduled to decide on the proposal.
PRT unit price during the past week: between $9.25 and $9.36; 52-week high: $11.94; 52-week low: $7.76.