Aeroplan Income Fund, which runs the Aeroplan loyalty rewards program, said Friday it plans to reorganize into a corporation by June 25.
Unitholders of the fund must still vote on the move, which requires at least two-thirds of them to support it. If approved, the change will see one unit of the fund exchanged for one common share.
The fund has operated as a trust since parent company ACE Aviation Holdings Inc., which also owns Air Canada, started spinning it off in June 2005.
"The reorganization will be a major milestone in our evolution as the global leader in loyalty management," said Rupert Duchesne, the president and chief executive officer of Aeroplan, said in a release
"This change in structure will be fundamental in helping us achieve our strategic objectives over the coming years, mainly through increased flexibility to pursue attractive growth and acquisition opportunities as well as through unrestricted access to capital markets and foreign investors," Duchesne said.
The fund said the conversion plan won't affect its May and June cash distributions of seven cents per unit.
If the conversion goes ahead, Aeroplan said the dividend will be set at 12.5 cents per common share per quarter, or 50 cents a share per year. The fund currently pays out 84 cents per unit per year.
Aeroplan said it has been reviewing its options since Finance Minister Jim Flaherty announced changes to the way income trusts would be taxed back on Oct. 31, 2006. The changes eliminate some of the tax advantages that trusts enjoy over corporations.
