PRESS RELEASE
MINT ANNOUNCES INVESTMENT OF FIRST INSTALMENT
Middlefield High Income Trust ("MINT" or the "Fund") is pleased to announce that it has invested the first instalment of the $98 million raised in March.
After the offering closed on March 13th, market conditions turned very favourable for the Fund. Equity and fixed income markets in general, and the income trust sector in particular, weakened coincident with the launch of MINT's investment program. To take full advantage of these developments, funds were invested at a measured pace and on a selective basis.
Substantially all of the first instalment has now been invested in a broadly diversified portfolio at higher cash yields than were available at the time MINT was conceived and marketed. In addition, the Fund has selectively participated in a number of new issues priced to reflect these higher yield levels. To further enhance returns, the Fund will borrow against the second instalment and invest the proceeds in similar quality issues, thereby benefiting from the current large positive spread between investment yields and the rate at which Mint is able to borrow.
The following table provides information on MINT's top ten holdings.
| Issuer |
Asset Class |
Business |
||
| AEC Pipelines, L. P. | Income Fund | oil pipeline | ||
| Algoma Steel Inc. | High Yield Debt | steel production | ||
| ARC Energy Trust | Royalty Trust | oil and gas production | ||
| Greenstone Resources Ltd. | High Yield Debt | gold mining | ||
| H&R Real Estate Investment Trust | R. E. I. T. | office and industrial buildings | ||
| Morrison Facilities Income Fund | Income Fund | gas plant, oil pipeline | ||
| Northland Power Income Fund | Income Fund | cogeneration, electricity and steam | ||
| Realfund Real Estate Investment Trust | R. E. I. T. | shopping centres | ||
| Riocan Real Estate Investment Trust | R. E. I. T. | shopping centres | ||
| Trizec Hahn Corporation | High Yield Debt | office buildings, shopping centres |
As illustrated in the table, the portfolio has been highly diversified in terms of both asset class and type of business. As set forth in the prospectus, funds have been invested in four asset classes: income funds, real estate investment trusts, high yield debt and royalty trusts. Many different types of businesses are represented with no undue concentrations in any one business sector.
Equity investments have been biased toward long-life assets and, while many are resource-related, in most cases the cash flows are not directly tied to commodity prices. In all cases, anticipated distributions are quite stable and many of the issuers have opportunities to grow their cash flows over time on a basis which is accretive to MINT. Finally, high yield debt issuers have been chosen based upon current credit quality as well as the possibility of capital appreciation over time as a result of credit quality improvement.
Looking ahead, the goal is to have the proceeds of the loan against the second instalment substantially fully invested over the next several weeks. The Fund will continue to focus on identifying value and "best of class" issuers and to participate in new issues which meet our quality standards. It is anticipated that the portfolio, once fully invested, will comprise 25 to 30 issuers and will generate an excellent cash return to MINT's unitholders in excess of that anticipated earlier this year.
Unitholders of MINT will be hearing from their investment advisors shortly regarding the Automatic Distribution Reinvestment Plan. The Plan has been designed to provide unitholders with an easy way to reinvest their distributions in MINT and thereby achieve the very significant benefit of compounding the already high level of return. The first quarterly distribution will be declared to unitholders of record as at June 30, 1997. Therefore, it is important that unitholders signify their desire to participate in the Plan as soon as possible.
For further information contact:
Mr. W. Garth Jestley
Director
Middlefield Group
(416)
362-0714
May 28, 1997