Pembina sets a conversion date

Article Excerpt

PEMBINA PIPELINE INCOME FUND $18.17 (Toronto symbol PIF.UN; Units outstanding: 163.5 million; Market cap: $3.0 billion; SI Rating: Extra Risk; Dividend yield: 8.6%) owns nine pipeline systems in western Canada. It also owns the Syncrude, Horizon and Cheecham pipelines, which transport crude oil from the Alberta oil sands, and a 50% interest in the Fort Saskatchewan Ethylene Storage Limited Partnership. Pembina will convert to a dividend-paying corporation on October 1, 2010. It will then trade as Pembina Pipeline Corporation under the symbol “PPL”. Pembina aims to keep paying $0.13 a month, at least through 2013 (it now yields 8.6%). The fund believes that cash flow from its $440-million Nipisi and Mitsue pipelines, which it expects to start up in mid-2011, will let it maintain its payout. As well, Pembina has tax losses that it can use to delay taxation under Ottawa’s new income-trust tax until 2012. Pembina Pipeline Income Fund is still a buy. buy…