Stapled Securities-- The Next Big Thing for Income Trusts? Useful Lessons from the US Experience with Stapled Shares

The Department of Finance has introduced two separate sets of legislation that together attempt to limit demand in the income trust market (though with very different revenue consequences). However, neither the proposed legislation nor the existing Income Tax Act contains an equity recharacterization rule. Consequently, the tax results associated with the standard income trust and royalty trust structures can still be realized with direct holding structures, in which the use of a trust as a pooling mechanism is eliminated and investors hold directly a combination of high-yield junk debt and a specified number of shares of the issuer. Until now, these junk bond structures have been used primarily for cross-border investment into the United States, to avoid the us corporate income tax without any significant loss of non-tax attributes. But the elimination of the foreign property holding restrictions for tax-exempt deferred income plans, such as registered pension plans and registered retirement savings plans, means that there is very little in the way of any tax-law constraint on the acquisition of direct junk bond substitutes by this class of investors in a domestic context. This article highlights the use of stapled securities as a particular direct holding structure that could be used to avoid the application of the department’s latest legislative proposal, which applies dividend tax treatment to targeted income trust structures. The authors suggest that the department will most likely have to modify this draft legislation to specifically address stapled security structures. They illustrate how the us experience with stapled shares, and particularly the congressional legislative response, provides a workable template for the necessary modifications. However, this legislative template would only address the use of stapled securities in intermediated structures. Some form of equity recharacterization rule to address the use of stapled securities in disintermediated structures is also needed to ensure the target effectiveness of the draft legislation

Stapled Securities-- The Next Big Thing for Income Trusts? Useful Lessons from the US Experience with Stapled Shares

The Department of Finance has introduced two separate sets of legislation that together attempt to limit demand in the income trust market (though with very different revenue consequences). However, neither the proposed legislation nor the existing Income Tax Act contains an equity recharacterization rule. Consequently, the tax results associated with the standard income trust and royalty trust structures can still be realized with direct holding structures, in which the use of a trust as a pooling mechanism is eliminated and investors hold directly a combination of high-yield junk debt and a specified number of shares of the issuer. Until now, these junk bond structures have been used primarily for cross-border investment into the United States, to avoid the us corporate income tax without any significant loss of non-tax attributes. But the elimination of the foreign property holding restrictions for tax-exempt deferred income plans, such as registered pension plans and registered retirement savings plans, means that there is very little in the way of any tax-law constraint on the acquisition of direct junk bond substitutes by this class of investors in a domestic context. This article highlights the use of stapled securities as a particular direct holding structure that could be used to avoid the application of the department’s latest legislative proposal, which applies dividend tax treatment to targeted income trust structures. The authors suggest that the department will most likely have to modify this draft legislation to specifically address stapled security structures. They illustrate how the us experience with stapled shares, and particularly the congressional legislative response, provides a workable template for the necessary modifications. However, this legislative template would only address the use of stapled securities in intermediated structures. Some form of equity recharacterization rule to address the use of stapled securities in disintermediated structures is also needed to ensure the target effectiveness of the draft legislation

Portfolio Analysis Tool

Portfolio Analysis Tool (PAT) is a Web-based, client/server computer program that helps managers of multiple projects funded by different customers to make decisions regarding investments in those projects. PAT facilitates analysis on a macroscopic level, without distraction by parochial concerns or tactical details of individual projects, so that managers decisions can reflect the broad strategy of their organization. PAT is accessible via almost any Web-browser software. Experts in specific projects can contribute to a broad database that managers can use in analyzing the costs and benefits of all projects, but do not have access for modifying criteria for analyzing projects: access for modifying criteria is limited to managers according to levels of administrative privilege. PAT affords flexibility for modifying criteria for particular "focus areas" so as to enable standardization of criteria among similar projects, thereby making it possible to improve assessments without need to rewrite computer code or to rehire experts, and thereby further reducing the cost of maintaining and upgrading computer code. Information in the PAT database and results of PAT analyses can be incorporated into a variety of ready-made or customizable tabular or graphical displays

Capacity fade in nickel cadmium and nickel hydrogen cells

Research and operational experience with capacity fade in nickel cadmium and nickel hydrogen cells are summarized in outline form. The theoretical causes of capacity fade are reviewed and the role of cell storage, positive electrodes, and cobalt additives are addressed. Three examples of observed capacity fade are discussed: INTELSAT 5, INTELSAT 6, and an Explorer platform. Finally, prevention and recovery methods are addressed and the current status of Eagle Picher/Hughes research is discussed