Distribution & Tax Information
Cash Distribution Policies
The Fund’s policy is to make equal monthly distributions to unitholders, based on estimated annual distributable cash flow. Distributions are paid on the 15th of each month (or the closest business day following) to unitholders of record on the last business day of the preceding month.
View recent distributions
Subordination Feature
At the Fund's inception, the vendor of the Coast business retained an indirect 35% interest in the Fund, held in the form of exchangeable units of Coast Wholesale Appliances LP. These units were initially subordinated to the Fund units until certain prescribed EBITDA and distribution targets were met. The conditions for removal of the subordination were met during 2007 and the subordination was removed on March 24, 2008. The units are now exchangeable on a one-for-one basis for units of the Fund at the option of the holder.
Tax Treatment of Cash Distributions
A component of the cash distributions of the Fund is taxable in the hands of the unitholder, unless held in a tax-deferred account. Of the distributions paid in 2009, 99.0% represented income and 1.0% a return of capital (2008, 92.9% income and 7.1% return of capital). The capital portion of the distributions will not be included in the taxable income of a unitholder, but will reduce the adjusted cost base of their units. Prospective purchasers of units should consult their own tax advisors for advice with respect to the tax consequences to them, having regard to their particular circumstances.
Conversion to Corporation
The Fund has obtained the approval of unitholders and the Supreme Court of British Columbia to convert to a publicly traded corporation on or before January 1, 2011. Common shares of the new public entity, Coast Wholesale Appliances Inc. (Coast Inc.), will trade on the Toronto Stock Exchange under the symbol “CWA”. Unitholders will receive shares of Coast Inc. on a one-for-one basis for each unit of the Fund held. Similarly, CWAL will receive one share of Coast Inc. for each combined exchangeable unit of Coast Wholesale Appliances LP and special voting unit of the Fund held.
The Fund expects to continue to pay unitholders a monthly cash distribution up to the November 2010 distribution payable on December 15, 2010. Beginning in 2011, Coast Inc. is expected to pay monthly dividends equal to approximately 50% of net income. These dividends should provide most investors who hold the shares directly with an after-tax return similar to, and in some cases better than, what they currently receive in distributions from the Fund, depending on their respective tax bracket.