What's goin on with energy Trusts

[metalheadrr3]

PWE and HTE both down over 10% ... not reacting to oil since oil stocks are only moderatly lower, they're all still paying huge dividends ... what gives?

[Svenwulf]

just a maybe here:

Ottawa targets income trusts

By TERRY PEDWELL
OTTAWA (CP) - Federal Finance Minister Jim Flaherty has announced tough new rules designed to curb the growing corporate move toward income trusts, but will also affect the savings and investments of millions of Canadians and possibly kill conversion plans by two major corporations.
Flaherty says the trend towards income trusts is worrying, and if left unchecked could shift billions of dollars of the tax burden onto individuals and away from corporations.
In response, the minority Conservative government plans to introduce changes that would tax income trusts more like corporations, but will lower the general corporate tax rate to 18.5 per cent by 2011.
The announcement was one of two bombshells Flaherty dropped after the markets closed Tuesday.
Flaherty also said the government will push ahead with income-splitting for seniors - a major change to the tax system that will mean savings for many retirees. That move may be intended to cushion the tax blow on income-trust investments, which have become increasingly popular in recent years.
Income trusts tend to pay less tax than corporations as they make regular cash distributions to unitholders, shifting the tax burden to those investors. They are immensely attractive to many investors because the distributions they pay are often higher and more regular than dividends paid by corporations.
The minister said the move toward income trusts has been so swift and dramatic that it threatens Canada's economy, as well as government priorities such as health care and tax relief.
"Left unchecked, such corporate decisions would result in billions of dollars in less revenue for the federal government to invest in the priorities of Canadians," Flaherty said at a surprise news conference just after 5 p.m. ET.
The proposed rules would apply a new tax on the money distributed to shareholders by newly formed income trusts, and would tax "certain distributions" of income by trusts at corporate rates.
The rules are expected to apply to any publicly traded income trust other than one that holds passive real-estate investments.
There have been $70 billion worth of corporate conversions to income trusts announced in 2006 alone, including Telus Corp. (TSX:T) and BCE Inc. (TSX:BCE), which announced its plans on Oct. 11.
The planned conversion of telecommunications giant Bell Canada Enterprises into an income trust would have helped it avoid a nasty $800-million tax hit that was looming for 2008.
But Flaherty's announcement may kill those plans and those of others businesses mulling a similar move, as the tax changes are expected to take effect in 2007 for trusts that start trading after October.
Existing income trusts would be given a four-year transition period, ending in 2011, that would allow them to adjust to the new rules.
When pressed on the impact of the changes, Flaherty said the new rules would apply to the two communications giants.
"BCE and Telus will not be able to become income trusts and have the tax benefits that are currently available," he said. "Does that make it clear?"
The moves late Tuesday caught markets by surprise as most Bay Street observers had expected little or no change to the income trust rules, which have been in effect for about two decades.
Some analysts predicted a major selloff of trust units on the Toronto Stock Exchange on Wednesday and expected Telus and BCE to lose a chunk of their value. Canada's second-biggest telecom operator, Telus, for example, has gained about 20 per cent since it announced plans to convert into a trust a few months ago.
"If there's no more details, I can't even guess at what the markets will think although I can't think that it will be positive," said William Holland, chief executive of mutual fund company CI Financial Income Fund. "But you just don't know."
Canada has about 250 trusts - worth about $200 billion - in real estate, oil and gas, telecom, industrial, food processing and manufacturing sectors. They have become a popular investment vehicle but can be risky investments if business conditions deteriorate and companies are forced to cut payments.
Flaherty suggested Tuesday that the current trend towards income-trust conversion could discourage innovation and hamper Canadian companies' ability to compete in the 21st century economy.

more at link:
http://cnews.canoe.ca/CNEWS/Canada/2006/10/31/2187043-cp.html

[metalheadrr3]

Blame Canada I guess.