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Canadian Business Trusts: A New Organizational Structure

2006· article· en· W1981924904 on OpenAlexaboutno aff
Paul Halpern, Øyvind Norli

Bibliographic record

VenueJournal of applied corporate finance · 2006
Typearticle
Languageen
FieldBusiness, Management and Accounting
TopicCorporate Insolvency and Governance
Canadian institutionsnot available
Fundersnot available
KeywordsBusinessLeveraged buyoutFinanceEquity (law)Capital structureDebtRestructuringCash flowStrategic business unitFinancial systemPrivate equity

Abstract

fetched live from OpenAlex

The focus of this paper is a subset of income trusts called business trusts, a Canadian financial innovation that has experienced remarkable success in the Canadian market, but not in the U.S. At theendof2005, there were more than 170 business trusts (most of them in Canada, but a handful in the U.S.) with an aggregate market value of over $90 billion. Like income trusts generally, which include REITs and oil & gas trusts, business trusts are designed in large part to avoid taxation at the corporate level by distributing a substantial proportion of a business's operating cash flow. The business trust structure provides investors (called “unit holders”) with what amounts to a combination of subordinated, high-yield debt and high-yielding equity. But unlike the subordinated debt in most highly leveraged transactions (HLTs), the “internal” debt in a business trust unit is effectively “stapled” to the equity part of the security. And this kind of “strip financing” (which was a common practice in U.S. LBOs during the‘80s) means that, besides providing stable cash-generating companies with a tax-minimizing way of paying out excess cash, the business unit structure also limits the “financial distress costs” associated with HLTs. In the event of financial trouble, the unit holders are likely to be much more cooperative than ordinary subordinated debt holders in restructuring interest payments since the benefits of so doing accrue to the equity portion of their units. The original income trust structure has also been used by a number of U.S.-based companies that listed their shares on the TSX. But, in the attempt to make the securities suitable for listing on the AM EX, and in response to auditor demands intended to address potential IRS concerns, the instruments were modified in ways that sacrificed one of the important benefits of the original structure. The changes were designed to make the subordinated debt issued as part of a package with equity look more like external, third-party debt. And in so doing, the low-cost restructuring feature built into the Canadian version was lost, and the U.S. trusts failed to gain acceptance.

Fetched live from OpenAlex and de-inverted. Abstracts are not stored in this database: the inverted indexes are 8.6 GB of the frame’s 9.3 GB of text, and the host has 13 GB free.

How this classification was reachedexpand

Full frame machine prediction

Teacher imitation

Not calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.

metaresearch head score (Codex)0.005
metaresearch head score (Gemma)0.016
Version: metacan-v3-hybrid-931329e0061cValidation status: machine_predicted_unvalidated
Candidate categoriesnone
Consensus categoriesnone
DomainCandidate signal: none · Consensus signal: none
Study designCandidate signal: Not applicable · Consensus signal: none
GenreCandidate signal: Other · Consensus signal: Other
Teacher disagreement score0.855
Threshold uncertainty score0.991

Distilled classifier scores by category (both heads)

CategoryCodexGemma
Metaresearch0.0050.016
Meta-epidemiology (narrow)0.0000.001
Meta-epidemiology (broad)0.0000.001
Bibliometrics0.0060.008
Science and technology studies0.0230.011
Scholarly communication0.0130.005
Open science0.0030.007
Research integrity0.0020.003
Insufficient payload (model declined to judge)0.0180.002

Machine scores (provisional)

The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.

Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.

Opus teacher head0.008
GPT teacher head0.156
Teacher spread0.148 · how far apart the two teachers sit on this one work
Validation statusscore_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from it

Classification

machine, unvalidated

Machine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.

The models applied no category: nothing in the taxonomy fit this work.
Study designNot applicable
Domainnot available
GenreOther

How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".

Quick stats

Citations17
Published2006
Admission routes1
Has abstractyes

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