Trimac: The last income fund story you’ll ever read

CALGARY – – As predicted by industry watchers, the last of the big trucking companies operating as an income trust fund has gone corporate.

Calgary-based bulk hauler Trimac announced this week that come Jan 1, 2011, "it is expected that units of the fund will be exchanged for Class A Common Shares of a new corporation, to be known as Trimac Transportation Ltd (New Trimac)."

Trimac, owned largely by the McCaig family, is the 13th-largest for-hire carrier in Canada according to the Today’s Trucking Top 100.

And now it’s now the last of the great big fleets to change from income-trust to corporate status, following taxation changes foisted on the industry four years ago.

Under the new law, the changes would be fully in place by Jan. 1, 2011.

After the Feds announced that income trusts would no longer have tax advantages over corporations, one by one carriers TransForce, Mullen, ATS, and Contrans all switched back to corporate status.

And as long ago as 2008, RBC Capital Markets predicted a similar fate for Trimac.

RBC’s Walter Spraklin said there is a "high likelihood in [RBC’s] opinion" that the McCaig family which founded the carrier will make an offer to take the company private.

Spracklin based the prediction on a number of factors, including: A drop in Trimac Income Trusts’ unit price; a small public float of shares not already owned by the McGaigs; and of course, the impending change on how trusts are taxed, starting in 2011.