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CHEMTRADE LOGISTICS LIKELY TO REDUCE 2006 DISTRIBUTIONS DUE TO RAW MATERIAL AND ENERGY COST ESCALATIONS RESULTING FROM U.S. HURRICANES
TORONTO, December 12, 2005 - Chemtrade Logistics Income Fund (TSX: CHE.UN) said today that based on current input costs and recent forecasts the Fund expects that distributions for 2006 would likely be in the range of $1.50 to $1.65 per unit as opposed to its current rate of $1.84 per unit.
In the Fund’s third quarter report, management said it was unable to forecast clearly input costs, and therefore earnings for 2006, because of escalating raw material and energy costs resulting from the effects of Hurricanes Katrina and Rita. President and Chief Executive Officer of Chemtrade, Mark Davis, said, “Although there continues to be a great deal of uncertainty about the full impact on our operations of these higher costs, we now believe our 2006 distributable cash per unit will likely be lower than 2005. Despite earning approximately $7 million more in distributable cash than we have paid out in distributions since inception to September 30, 2005, our practice has been to pay distributions at a rate that we believe is sustainable. In the current climate of higher costs we believe it is prudent to announce now our expectation of lower distributable cash per unit, and therefore lower distributions to unitholders, in 2006.” Mr. Davis said the Fund expects to be able to announce in February the precise level of monthly distributions per unit going forward. Also, in setting its 2006 distribution rate the Fund plans to adopt a monthly distribution policy at a new higher monthly rate and abandon its previous policy of paying additional quarterly distributions to supplement the monthly distributions.
Monthly distributions for December 2005 and January 2006 payable at the end of January and February 2006 respectively, will remain unchanged at $0.1133 per unit. There will be no supplemental distribution in February 2006.
Chemtrade is one of the world’s largest suppliers of sulphuric acid, liquid sulphur dioxide (SO2) and sodium hydrosulphite (SHS), and a leading processor of spent acid, particularly in the U.S. Gulf Coast region. Chemtrade is also a leading regional supplier of sulphur and sodium chlorate; one of only two North American producers of phosphorous pentasulphide; and also produces zinc oxide at three North American locations.
Certain statements contained in this news release constitute forward-looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Fund believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In particular, this news release contains forward-looking statements pertaining to distributable cash and distributions per unit. The actual results could differ materially from those anticipated in these forward-looking statements. The Fund does not undertake any responsibility to publicly update or revise any forward-looking statements. Further information can be found in the disclosure documents filed by Chemtrade Logistics Income Fund with the securities regulatory authorities, available at www.sedar.com.
For further information:
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Mark Davis
President and CEO
Tel: (416) 496-4176
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Victor Wells
Vice President, Finance & CFO
Tel: (416) 496-4177
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