As filed with the Securities and Exchange Commission on September 8, 2005
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRIMEWEST ENERGY TRUST
(Exact name of Registrant as specified in its charter)
Alberta, Canada 98-0389391
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
Suite 5100, 150 - 6th Avenue S.W.
Calgary, Alberta, Canada T2P 3Y7
(403) 234-6600
(Address and telephone number of Registrant's principal executive offices)
CT Corporation System
111 - 8th Avenue
New York, New York 10011
(212) 894-8940
(Name, address and telephone number of agent for service)
Copies to:
Dennis Feuchuk, Vice President, Keith R. Chatwin, Esq. Andrew J. Foley, Esq.
Finance and Chief Financial Officer Stikeman Elliott LLP Paul, Weiss, Rifkind,
PrimeWest Energy Inc. 4300 Bankers Hall West Wharton & Garrison LLP
Suite 5100, 150 - 6th Avenue S.W. 888 - 3rd Street S.W. 1285 Avenue of the Americas
Calgary, Alberta, Canada T2P 3Y7 Calgary, Alberta, Canada T2P 5C5 New York, NY 10019-6064
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: |x|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following: |x|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Title of each Proposed Proposed maximum
class of securities Amount to maximum aggregate aggregate offering Amount of
to be registered be registered price per unit(1) price(1) registration fee
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4,000,000
Trust Units(2) Trust Units U.S.$ 28.07 U.S.$ 112,280,000 U.S.$ 13,215.37
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(1) Based on the average of the high and low prices of the trust units of
PrimeWest Energy Trust on September 6, 2005 on the New York Stock
Exchange, and estimated solely for the purpose of calculating the amount
of the registration fee pursuant to Rule 457 under the Securities Act of
1933.
(2) Includes rights to purchase additional trust units pursuant to our Amended
and Restated Unitholders Rights Plan dated as of March 31, 1999 and
amended and restated as of May 5, 2005. No separate consideration is paid
for these rights and, as a result, the registration fee for these rights
is included in the fee for the trust units registered hereby.
PART I
INFORMATION REQUIRED IN THE PROSPECTUS
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PRIMEWEST ENERGY TRUST
4,000,000 Trust Units
DISTRIBUTION REINVESTMENT PLAN
On February 18, 1998, we established a Distribution Reinvestment Plan (the
"Plan") to provide holders of our trust units with a means to reinvest
distributions declared and payable to them as unitholders in additional trust
units of the Trust. The Plan was subsequently amended on May 25, 2000 to
encourage greater participation by providing that reinvested distributions would
be converted to trust units at a 5% discount to the then prevailing market
price. On October 24, 2003 we further amended the Plan to provide for a
"premium" distribution component of the Plan pursuant to which holders of our
trust units could receive, at their election, a cash payment equal to 102% of
the cash distribution otherwise payable on such trust units. Finally, on August
29, 2005, we further amended the Plan to provide, among other things, for the
participation of registered holders of trust units resident in the United States
in the distribution reinvestment component of the Plan.
A participant in the Plan may obtain additional trust units by reinvesting
all of the cash distributions paid on the trust units held by the participant
without paying any brokerage commissions or service charges. Our distributions
are paid on the 15th day of each month, or if such day is not a business day,
the previous business day.
The purchase price of trust units purchased on behalf of participants with
reinvested distributions on trust units is calculated based on the weighted
average trading price for all trust units traded on the Toronto Stock Exchange
during the period ending on the second business day immediately preceding the
applicable distribution date and beginning on the later of the 21st business day
prior to such distribution date and the second business day following the record
date for the determination as to the unitholders entitled to receive such
distribution, less 5%. Our trust units trade on the Toronto Stock Exchange under
the symbol "PWI.UN" and on the New York Stock Exchange under the symbol "PWI".
The weighted average of the high and low trading prices for the trust units on
the Toronto Stock Exchange for the five days preceding September 7, 2005 was
Cdn. $33.73. The closing prices for our trust units on the Toronto Stock
Exchange and on the New York Stock Exchange on September 7, 2005 were Cdn.
$33.74 and U.S. $28.42, respectively.
The distributions paid by us are dependent on cash flow and are therefore
subject to fluctuations in the quantity of petroleum and natural gas substances
produced, prices received for that production, hedging contract receipts and
payments, taxes, our direct expenses, reclamation fund contributions, operating
costs, debt service charges and general and administrative expenses. See
"Special Note Regarding Forward-Looking Statements" on page 8 of this
prospectus. See also "Risk Factors" in
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our annual report on Form 40-F for the fiscal year ended December 31, 2004 filed
March 31, 2005.
We cannot estimate anticipated proceeds from the issuance of trust units
pursuant to the Plan, which will depend upon the market price of our trust
units, the extent of unitholder participation in the Plan and other factors. We
will not pay underwriting commissions in connection with the Plan but will incur
costs of approximately U.S. $63,215.37 in connection with this offering and will
be responsible for the ongoing administrative costs associated with the
operation of the Plan.
Neither the Securities and Exchange Commission (the "SEC") nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offence.
The date of this prospectus is September 7, 2005.
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TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION....................................... 6
DOCUMENTS INCORPORATED BY REFERENCE....................................... 6
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES............................... 7
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS......................... 8
THE TRUST................................................................. 10
USE OF PROCEEDS........................................................... 10
THE PLAN.................................................................. 11
PURPOSE OF THE PLAN.................................................... 11
PARTICIPATION IN THE PLAN.............................................. 11
OPTIONAL TRUST UNIT PURCHASES PURSUANT TO THE PLAN..................... 13
METHOD OF PURCHASE..................................................... 14
PURCHASE PRICE......................................................... 15
FRACTIONAL TRUST UNITS................................................. 15
ADMINISTRATION......................................................... 15
PARTICIPANTS' ACCOUNTS AND REPORTS..................................... 15
TRUST UNIT CERTIFICATES................................................ 16
COMMISSIONS AND ADMINISTRATIVE COSTS................................... 16
RESPONSIBILITIES OF THE TRUST, PRIMEWEST ENERGY INC.
AND THE PLAN AGENT................................................... 17
TERMINATION OF PARTICIPATION........................................... 17
UNITHOLDER VOTING...................................................... 17
AMENDMENTS, SUSPENSION OR TERMINATION OF PLAN AND
PLAN AGENT........................................................... 17
NOTICES................................................................ 18
GOVERNING LAW.......................................................... 18
INCOME TAX CONSIDERATIONS RELATING TO THE PLAN............................ 18
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS............................. 19
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS........................ 20
DESCRIPTION OF TRUST UNITS TO BE REGISTERED............................... 27
EXPENSES.................................................................. 28
INDEMNIFICATION........................................................... 28
LEGAL MATTERS............................................................. 29
EXPERTS................................................................... 29
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and, accordingly, file reports and
other information with the SEC. The reports and other information we file with
the SEC in accordance with the Exchange Act can be inspected and copied, at
prescribed rates, at the SEC's public reference rooms in Washington, D.C. and
Chicago, Illinois. You may obtain information on the operation of the SEC's
public reference rooms by calling the SEC at 1-800-SEC-0330. Our filings are
also electronically available from the SEC's Electronic Document Gathering and
Retrieval System (EDGAR) at www.sec.gov, as well as from commercial document
retrieval services. You may also want to visit our website at
www.primewestenergy.com for further information.
We filed with the SEC a registration statement on Form F-3 relating to our
Plan, together with all amendments and exhibits, of which this prospectus is a
part, under the Securities Act of 1933 (the "Securities Act"). This prospectus
does not contain all of the information set forth in the registration statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the SEC. For further information about us and our trust units you
are encouraged to refer to the registration statement and the exhibits and
schedules which are incorporated by reference. Statements contained in this
prospectus as to the provisions of the Plan are not necessarily complete, and in
each instance reference is made to the copy of the Plan which is included as an
exhibit to the registration statement and each such statement in this prospectus
is qualified in all respects by such reference.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the SEC are specifically incorporated
by reference into this prospectus:
1. Our financial results for the period ended June 30, 2005, as contained in
our Report of Foreign Private Issuer on Form 6-K filed August 4, 2005;
2. Our financial results for the period ended March 31, 2005, as contained in
our Report of Foreign Private Issuer on Form 6-K filed May 6, 2005;
3. Our Management Information Circular dated March 17, 2005, as contained in
our Report of Foreign Private Issuer on Form 6-K filed April 1, 2005;
4. Our Annual Report on Form 40-F for the fiscal year ended December 31, 2004
filed March 31, 2005;
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5. Our Amendment to our Registration Statement on Form 40-F, filed November
14, 2002; and
6. Our Registration Statement on Form 40-F, filed November 12, 2002.
In addition, all subsequent annual reports filed on Form 40-F with the SEC
prior to the termination of this offering are incorporated by reference into
this prospectus. Also, we may incorporate by reference our future reports on
Form 6-K subsequent to the date of this prospectus and prior to the termination
of this offering by stating in those Forms that they are being incorporated by
reference into this prospectus.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained herein or therein or in any other later
filed document which also is incorporated by reference into this prospectus
modifies or supersedes that statement. Any such statement so modified shall not
be deemed, except as so modified, to constitute a part of this prospectus. Any
such statement so superseded shall be deemed not to constitute a part of this
prospectus.
Any person receiving a copy of this prospectus, including any beneficial
owner, may obtain without charge, upon written or oral request, a copy of any of
the documents incorporated by reference herein, except for the exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents. Requests should be directed to our principal executive offices,
Suite 5100, 150 - 6th Avenue S.W., Calgary, Alberta, Canada T2P 3Y7, Telephone
Number: (403) 234-6600.
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
We are an open-end investment trust organized under the laws of Alberta,
Canada and our principal offices are located in Calgary, Alberta, Canada. The
enforcement by investors of civil liabilities under the United States securities
laws may be affected adversely by the fact that we have been organized under the
laws of Canada, that all of the officers and directors of PrimeWest Energy Inc.,
our duly authorized attorney, are residents of Canada, that some or all of the
experts named in this prospectus may be residents of Canada and that all or a
substantial portion of their assets and our assets are located outside of the
United States. As a result, it may be difficult for United States investors to
effect service of process within the United States upon us and upon those
directors, officers or experts who are not residents of the United States or to
realize in the United States upon judgments of courts of the United States,
predicated upon civil liability of such persons under United States federal
securities law or the securities law of any state of the United States. There is
doubt as to the enforceability in Canada against us or against our directors,
officers or experts who are not residents of the United States, in original
actions or in actions for enforcement of judgments of United States courts of
liabilities based solely upon the United States
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federal securities laws or the securities laws of any state within the United
States. We have appointed CT Corporation System, 111 - 8th Avenue, New York, New
York, 10011, as our agent in the United States upon which service of process
against us may be made in any action based on this prospectus.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus, and in certain documents
incorporated by reference into this prospectus, constitute forward-looking
statements. The use of any of the words "anticipate", "continue", "estimate",
"expect", "forecast", "may", "will", "project", "should", "believe", "outlook"
and similar expressions are intended to identify forward-looking statements. In
addition, statements relating to "reserves" or "resources" are deemed to be
forward-looking statements, as they involve implied assessment, based on certain
estimates and assumptions, that the resources and reserves described can be
profitably produced in the future. 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 our forward-looking statements.
We believe the expectations reflected in those forward-looking statements are
reasonable. However, we cannot assure you that these expectations will prove to
be correct. You should not unduly rely on forward-looking statements included
in, or incorporated by reference into, this prospectus. These statements speak
only as of the date of this prospectus or as of the date specified in the
documents incorporated by reference into this prospectus, as the case may be.
In particular, this prospectus, and the documents incorporated by
reference, contain forward-looking statements pertaining to the following:
o the quantity and recoverability of our reserves:
o the timing and amount of future production;
o prices for oil, natural gas and natural gas liquids produced;
o operating and other costs;
o business strategies and plans of management;
o supply and demand for oil and natural gas;
o expectations regarding our ability to raise capital and to add to our
reserves through acquisitions and exploration and development;
o our treatment under governmental regulatory regimes;
o the focus of capital expenditures on development activity rather than
exploration;
o the sale, farming in, farming out or development of certain exploration
properties using third-party resources;
o the objective to achieve a predictable level of monthly cash
distributions;
o the use of development activity and acquisitions to replace and add to
reserves;
o the impact of changes in oil and natural gas prices on cash flow after
hedging;
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o drilling plans;
o the existence, operations and strategy of the commodity price risk
management program;
o the approximate and maximum amount of forward sales and hedging to be
employed;
o our acquisition strategy, the criteria to be considered in connection
therewith and the benefits to be derived therefrom;
o the impact of the Canadian federal and provincial governmental regulation
on us relative to other oil and natural gas issuers of similar size;
o the goal to sustain or grow production and reserves through prudent
management and acquisitions;
o the emergence of accretive growth opportunities; and
o our ability to benefit from the combination of growth opportunities and
the ability to grow through the capital markets.
Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of the risk factors set forth below and
incorporated by reference into this prospectus:
o volatility in market prices for oil and natural gas;
o the impact of weather conditions on seasonal demand;
o risks inherent in our oil and natural gas operations;
o uncertainties associated with estimating reserves;
o competition for, among other things: capital, acquisitions of reserves,
undeveloped lands and skilled personnel;
o incorrect assessments of the value of acquisitions;
o geological, technical, drilling and processing problems;
o general economic conditions in Canada, the United States and globally;
o industry conditions, including fluctuations in the price of oil and
natural gas;
o royalties payable in respect of our oil and natural gas production;
o government regulation of the oil and natural gas industry, including
environmental regulation;
o fluctuation in foreign exchange or interest rates;
o unanticipated operating events that can reduce production or cause
production to be shut-in or delayed;
o failure to obtain industry partner and other third-party consents and
approvals, when required;
o stock market volatility and market valuations;
o OPEC's ability to control production and balance global supply and demand
of crude oil at desired price levels;
o political uncertainty, including the risks of hostilities, in the
petroleum producing regions of the world;
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o the need to obtain required approvals from regulatory authorities; and
o the other factors discussed under "Operational and Other Business Risks"
contained in our Annual Report on Form 40-F for the fiscal year ended
December 31, 2004 incorporated herein by reference.
These factors should not be construed as exhaustive. The forward-looking
statements contained in this prospectus and the documents incorporated by
reference herein are expressly qualified by this cautionary statement. We
undertake no obligation to publicly update or revise any forward-looking
statements.
THE TRUST
We are a Canadian based energy business engaged in the acquisition,
development, exploitation and production of oil and natural gas properties and
the marketing and sale of oil and natural gas. Our trust units are listed on the
Toronto Stock Exchange and the New York Stock Exchange and our market
capitalization as at September 7, 2005 was approximately Cdn. $2.6 billion. Our
operations are currently focused exclusively on western Canada. We have been in
operation since October 1996 and are governed by the laws of the Province of
Alberta.
Our primary purpose is to generate and distribute cash flows to
unitholders at minimal risk and we therefore pursue an acquisition strategy and
development program focused on oil and natural gas properties. We do not
participate in exploration activity because of the higher risks associated with
exploration. As a result, our production is typically more predictable and
stable than traditional exploration and production companies and our operations
not as capital intensive.
We make monthly distributions to our unitholders from the net cash flows
that we receive from our oil and natural gas operations. The amount of that net
cash flow is subject to many factors, including fluctuations in the quantity of
oil and natural gas that we produce, the prices we receive for that production,
hedging contract receipts and payments, taxes, our direct expenses, reclamation
fund contributions, operating costs, debt service charges and general and
administrative expenses. Our monthly distributions currently comprise both a
return on capital and a return of capital.
USE OF PROCEEDS
We have no basis for estimating precisely either the number of trust units
that may be sold under the Plan or the prices at which such trust units may be
sold. The amount of the proceeds that we will receive will depend on the number
of participants in the Plan, the amount of the monthly distributions that we pay
and the amount invested by Canadian participants in additional trust units
through the optional trust unit purchase aspect of the Plan (see "The Plan"
below). We do not expect the amount
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of proceeds that we receive to be material. The net proceeds from the sale of
the trust units will be principally used for general corporate purposes.
THE PLAN
Purpose of the Plan
The purpose of our Plan is to provide holders of our trust units with a
means to receive either, but not both, of the following benefits: (i) reinvest
distributions declared and payable to them as unitholders in additional trust
units of the Trust without paying any brokerage commissions or service charges
and at a 5% discount to the average market price; or (ii) realize an additional
2% on their monthly cash distribution. Of these, only the reinvestment option is
available to residents of the United States.
In addition, regardless of which option a unitholder that is resident in
Canada selects, the Distribution Reinvestment Plan provides such participants
with the opportunity to purchase additional trust units at a 5% discount to the
average market price, up to an annual maximum of Cdn. $100,000. Our
distributions are paid on the 15th day of each month, or if such day is not a
business day, the previous business day, to unitholders of record on the last
day of the immediately preceding calendar month.
We seek to provide a sustainable and predictable stream of distributions;
however the distributions paid by us are dependent on cash flow and are
therefore subject to fluctuations in the quantity of petroleum and natural gas
substances produced, prices received for that production, hedging contract
receipts and payments, taxes, our direct expenses, reclamation fund
contributions, operating costs, debt service charges and general and
administrative expenses. Our policy in respect of distributions is reviewed
periodically in order to establish distribution levels commensurate with cash
flow expectations and internal cash requirements.
Participation in the Plan
You are eligible to participate in the Plan if you are a holder of at
least one trust unit, resident in Canada or the United States and meet the
requirements outlined below. The extent to which you may directly participate in
the Plan will depend on the manner in which you hold your trust units.
If you are a registered owner you may directly enrol in the Plan. If you
are a beneficial owner then, in order to participate in the Plan, you must make
arrangements through your broker, investment dealer, financial institution or
other nominee who holds the trust units on your behalf.
To become a participant, you or your nominee must complete a participation
form authorizing us to forward all cash distributions paid on all trust units
registered in
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your name or in your nominee's name on your behalf, now or in the future, to
Computershare Trust Company of Canada, the plan agent for the Plan (the "Plan
Agent"). The completed participation form should be forwarded to the Plan Agent
at the address set out under "Notices" below. Only residents of Canada and the
United States are currently allowed to participate in the Plan. Unitholders
resident in other jurisdictions shall be allowed to participate in the Plan only
after we determine that participation should be made available to those
unitholders taking into account the necessary steps to comply with the laws
relating to the offering and the sale of trust units in the jurisdictions of
residence of those unitholders. The optional cash payment component and premium
distribution component of the Plan are available only to Canadian residents.
If you are a beneficial owner and wish to participate in either the
premium distribution component or the distribution reinvestment component of the
Plan, then you must determine whether your nominee allows participation in the
Plan. Please note that not all nominees will allow, nor is any nominee required
to allow, your participation in the plan. If you wish to participate and your
nominee does not allow it, it is your responsibility to either transfer your
trust units to a different nominee allowing participation or into your own name
and enroll directly. If you wish to participate and your nominee does allow it,
you must arrange for your nominee to enroll in either the premium distribution
component or the distribution reinvestment component of the Plan on your behalf.
If you choose to enroll in the Plan, your nominee will be required to elect to
participate on your behalf every distribution period.
If the trust units are registered in more than one name, all registered
holders must sign the participation form. In addition, if your total holding is
registered in different names (eg. full name on some trust unit certificates and
initials and surname on other trust unit certificates), a separate participation
form must be completed for each different registration name. If distributions
from all unitholdings are to be reinvested under one account, the registration
names must be identical.
You may obtain a participation form at any time by either providing a
written request to the Plan Agent or by visiting our website at
www.primewestenergy.com. If you are a registered holder, once you have enrolled
in the Plan, you will remain enrolled until you discontinue participation or
until we terminate the Plan. If you are a beneficial holder, your nominee will
be required to elect to participate on your behalf every distribution period.
See "Amendments, Suspension or Termination of Plan and Plan Agent" below.
Your participation in the Plan will commence with the distribution payment
date following the month in which you or your nominee submitted your
participation form, provided that:
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(i) if you are a registered owner of trust units, the Plan Agent received the
form no later than 4:00 p.m. (E.S.T.) on the business day immediately
preceding the distribution record date to which such distribution relates;
(ii) if you are a beneficial owner of trust units resident in Canada, The
Canadian Depository for Securities Limited ("CDS") received the form from
your nominee no later than 4:00 p.m. (E.S.T.) on the second business day
immediately preceding the distribution record date to which such
distribution relates; or
(iii) if you are a beneficial owner of trust units resident in the United
States, The Depository Trust Company ("DTC") received the form from your
nominee no later than 4:00 p.m. (E.S.T.) on the business day immediately
following the distribution record date to which such distribution relates.
If the participation form is not received by the Plan Agent, CDS or DTC,
as applicable, prior to 4:00 p.m. (E.S.T.) on the applicable business day
preceding or following the distribution record date, as the case may be, date to
which such distribution relates, the distribution will be paid to you in the
usual manner and participation in the Plan will commence with the next
distribution.
Any trust units acquired outside of the Plan which are not registered in
exactly the same name or manner as trust units enrolled in the Plan will not be
automatically enrolled in the Plan. If you purchase additional trust units
outside of the plan, you are advised to contact the Plan Agent to ensure that
all trust units you own are enrolled in the Plan.
You may not transfer the right to participate in the Plan to another
person.
Death will not affect your election to participate unless a written notice
of death of a participant is provided to the Plan Agent. Written notice of a
participant's death must be received prior to 4:00 p.m. (E.S.T.) on the business
day immediately preceding a distribution record date to be effective for the
distribution payment date to which it relates. Otherwise, such written notice
will be effective for the distribution payment date following the distribution
payment date to which such distribution record date relates.
Optional Trust Unit Purchases Pursuant to the Plan
Additionally, residents of Canada are eligible to make additional cash
investments through optional cash payments which will be invested in trust units
by the Plan Agent on the same basis as provided in the Plan for distributions.
Participants who are resident in Canada may invest a minimum of $100 per
optional cash payment to a maximum of $100,000 per calendar year. No more than
2% in aggregate of the number (at the commencement of that calendar year) of
outstanding trust units may be purchased by all participants pursuant to
optional cash payments in any calendar year.
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The optional cash payment component of the Plan is available only to
Canadian residents.
Premium Distribution
Where participants elect to receive the premium distribution, the Plan
Agent will pre-sell, through a qualified investment dealer designated by us from
time to time to act as plan broker under the Plan (the "Plan Broker"), in one or
more transactions in the Canadian market, that number of trust units to be
purchased on the distribution payment date with the reinvested distributions of
such participants. The Plan Agent will receive from the Plan Broker, for the
account of such participants, subject to proration in certain circumstances, the
premium distribution in an amount equal to 102% of the distributions that such
participants would have otherwise been entitled to receive on that distribution
payment date. On the distribution payment date the trust units that would
otherwise have been issued to the participant will be issued at the same 5%
discount to the average market price to the Plan Broker. If the prevailing
market prices realized by the Plan Broker are approximately the same as the
average market price, then the difference between the issue price of the trust
units and the price realized on the pre-sales will be approximately 5%. Of this
difference, 2% will be paid to the participant (resulting in the 102% premium
distribution) and the balance (which may be more or less than 3%), if any, will
be retained by the Plan Broker as compensation for its services in connection
with the Plan.
The premium distribution component of the Plan is available only to
Canadian residents.
Method of Purchase
Under the terms of the Plan, if you are a holder of trust units, you may
direct the Plan Agent to reinvest all cash distributions on trust units
registered or held in your name to purchase new trust units. Cash distributions
payable on trust units registered for a participant in the Plan, after deduction
of any applicable withholding tax, will be paid to the Plan Agent and applied
automatically by the Plan Agent on each distribution payment date to the
purchase of trust units for that participant. The Plan Agent will, in the case
of a resident of Canada and depending on the participant's election, either (i)
exchange the additional trust units for the premium distribution, which will be
sent to the participant or its nominee ordinarily at such time as distributions
are paid to unitholders following a distribution payment date, or (ii) credit
the additional trust units to the participant's or its nominee's account.
Residents of the United States who are participants are only entitled to have
the additional trust units credited to their, or their resident nominee's,
account. To the extent proration becomes necessary in certain circumstances, the
trust units purchased from the Trust will be allocated on a pro rata basis to
participants (i) first, to participants electing to
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reinvest distributions under the distribution reinvestment component of the Plan
and (ii) second, from participants electing to receive the premium distribution.
Purchase Price
The Plan Agent shall purchase trust units from the Trust at a purchase
price per trust unit equal to the weighted average trading price of all trust
units traded on the Toronto Stock Exchange during the period ending on the
second business day immediately preceding the applicable distribution date and
beginning on the later of the 21st business day prior to such distribution date
and the second business day following the record date for the determination as
to the unitholders entitled to receive such distribution, less 5%.
Fractional Trust Units
A participant's pro rata entitlement to trust units purchased pursuant to
the Plan may result in the participant holding a fraction of a trust unit. The
Plan Agent will pay a cash adjustment for any such fractional trust unit upon
the withdrawal or termination by the participant of his or her participation in
the Plan or upon termination of the Plan.
Administration
Computershare Trust Company of Canada, as Plan Agent for the participants,
will administer the Plan. Its responsibilities include:
o effecting participation in the Plan by participants upon receipt of a duly
completed participation form;
o setting up an account for each participant as a sub-account of, but
directly linked with, each participant's registered account outside the
Plan;
o receiving eligible funds;
o purchasing and crediting the trust units accumulated under the Plan to
each participant's account;
o reporting monthly to the participants; and
o other duties required by the Plan or necessary or desirable to fulfil the
aims of the Plan.
Participants' Accounts and Reports
The Plan Agent will maintain a separate account for each participant which
will be credited with the trust units allocated to such participant or, if the
participant has elected to receive the premium distribution, mail the premium
distribution to such participant. The Plan Agent will, on a monthly basis,
furnish to each participant not electing to participate in the premium
distribution component of the Plan, a report of the trust units purchased for
such participant (including, in the case of Canadian residents only, trust units
purchased pursuant to optional cash payments) in respect of
- 15 -
each distribution made in the most recently completed month and the cumulative
total of all trust units purchased for that account. If you elect to receive the
premium distribution, then you will not receive a statement of account, as those
trust units purchased with your reinvested distributions are exchanged for the
premium distribution cash payment.
These reports will be the only record for participants of the cost of each
purchase of trust units. All such reports should be retained by participants for
income tax purposes. In addition, each participant will receive annually the
appropriate tax information for recording distribution income. The reinvestment
of distributions under the Plan will not relieve participants of any income tax
applicable to such distributions.
Trust Unit Certificates
Generally, certificates for new trust units purchased through the Plan
will be held for participants and reported on the statement of account. This
service protects against loss, theft or destruction of trust unit certificates.
However, participants who require a trust unit certificate but who do not wish
to terminate participation in the Plan may obtain a certificate for any number
of whole trust units held in their account by written request to the Plan Agent.
A certificate will not be issued for a fraction of a trust unit.
Plan accounts are maintained in the names in which certificates were
registered with the Trust at the time the participant enrolled in the Plan.
Consequently, certificates for whole trust units withdrawn from the Plan will be
registered in exactly the same manner when issued.
Trust units being held for a participant in the Plan may not be pledged,
sold or otherwise disposed of by a participant. The participant who wishes to do
so must request that a certificate for the required number of trust units be
issued before such action may be taken. Certificates will be issued as soon as
practicable and generally within two weeks of receipt by the Plan Agent of a
participant's written request. Both the new certificated trust units and the
trust units remaining in a participant's account will continue to receive either
the premium distribution or additional units pursuant to the reinvestment of
distributions as was elected by such unitholder.
Commissions and Administrative Costs
There will be no commissions, service charges or brokerage charges payable
by participants in connection with the purchase of additional trust units under
the Plan. Administrative costs associated with the operation of the Plan,
including the fees and expenses of the Plan Agent, will be borne by us. The Plan
Agent will be paid fees for its services pursuant to a reinvestment plan agency
agreement between us and the Plan
- 16 -
Agent and the Plan Broker will be paid in the manner set forth under "Premium
Distribution" above pursuant to a premium distribution agency agreement.
Responsibilities of the Trust, PrimeWest Energy Inc. and the Plan Agent
Neither we nor the Plan Agent shall be liable for any act done in good
faith or for any good faith omission to act. Participants should recognize that
neither we nor the Plan Agent can assure a gain or protect against loss as a
result of their holding trust units.
Termination of Participation
Plan participants may, after electing to participate in the Plan,
terminate their participation in the Plan by, in the case of registered
unitholders, providing written termination notice to the Plan Agent no later
than 4:00 p.m. (E.S.T.) on the business day immediately preceding the
distribution record date for the next distribution. If the termination form is
not received by the Plan Agent prior to 4:00 p.m. (E.S.T.) on the business day
immediately preceding the distribution record date to which such distribution
relates, your participation in the Plan will continue in the usual manner and
the termination will be effective for the next distribution. In the case of
beneficial holders, as participation must be renewed on a monthly basis, your
participation may be terminated simply by your nominee not electing to
participate in the Plan on your behalf for a particular distribution.
Upon termination of participation in the Plan, the Plan Agent will as soon
as practicable (and in any event within 20 business days) settle the
participant's account by transferring the participant's trust units to or to the
order of such participant and, if applicable, issue a cheque representing a cash
adjustment for fractional trust units.
Unitholder Voting
For any meeting of unitholders, you will receive proxy materials in order
to vote all trust units held for your account. Your trust units will be voted as
you direct or you may vote by proxy or in person at the meeting of unitholders.
A fractional trust unit does not carry the right to vote.
Amendments, Suspension or Termination of Plan and Plan Agent
The Trust may amend, suspend or terminate the Plan at any time, but such
action shall have no retroactive effect that would prejudice the interests of
participants. Where required, amendments to the Plan will be subject to the
prior approval of the Toronto Stock Exchange. The Trust will notify unitholders
of any amendment, suspension or termination of the Plan in accordance with the
Plan and any applicable securities law requirements.
- 17 -
The Trust, may, in its sole discretion, and upon 90 days' notice to the
Plan Agent, remove the Plan Agent and appoint any other person licensed to carry
on the business of a trustee in Alberta, Canada as the Plan Agent.
Similarly, the Plan Agent may resign as agent under the Plan upon 90 days'
notice to the Trust and upon delivery to the Trust of all documents and monies
being held by the Plan Agent on the Trust's behalf pursuant to the Plan.
Notices
All notices required to be given to participants will be mailed to them at
the address shown on the records of the Plan Agent.
Written communications to the Plan Agent should be addressed to:
Computershare Trust Company of Canada
710, 530 - 8th Avenue S.W.
Calgary, Alberta
T2P 3S8
Attention: Manager, Corporate Trust
Facsimile: (403) 267-6598
Written communications to us should be addressed to:
PrimeWest Energy Inc.
5100, 150 - 6th Avenue S.W.
Calgary, Alberta
T2P 3Y7
Attention: President and Chief Executive Officer
Facsimile: (403) 699-7474
Governing Law
The Plan shall be governed by and construed in accordance with the laws of
the Province of Alberta and the laws of Canada applicable therein.
INCOME TAX CONSIDERATIONS RELATING TO THE PLAN
The following summary of tax consequences is of a general nature only and
is not intended to be legal or tax advice to any particular participant. It is
the responsibility of participants in the Plan to consult their own tax advisors
with
- 18 -
respect to the tax consequences of participation in the Plan in their respective
country of residence.
Canadian Federal Income Tax Considerations
The following is a summary of the principal Canadian federal income tax
considerations generally applicable to a participant in the Plan who, for the
purposes of the Income Tax Act (Canada) (the "Tax Act") and any applicable tax
treaty, and at all relevant times, is not resident or deemed to be resident in
Canada, does not use or hold (and is not deemed under the Tax Act to use or
hold) trust units in, or in the course of, carrying on a business in Canada, and
is not an insurer who carries on an insurance business in Canada and elsewhere
(a "Non-Resident unitholder").
This summary is based upon the current provisions of the Tax Act and the
regulations thereunder (the "Regulations"), the current provisions of the
Canada-United States Tax Convention (1980) (the "Canada-U.S. Tax Treaty") and
our understanding of the current published administrative practices of the
Canada Revenue Agency. This summary also takes into account all specific
proposals to amend the Tax Act and the Regulations publicly announced by or on
behalf of the Minister of Finance (Canada) prior to the date hereof (the
"Proposed Amendments"). This summary does not otherwise take into account or
anticipate any changes in law, whether by judicial, governmental or legislative
action, or in administrative practice, nor does it take into account provincial
or territorial laws of Canada or the tax laws of any foreign country. No
assurances can be given that the Proposed Amendments will be enacted as proposed
or that legislative, judicial or administrative changes will not modify or
change the statements expressed herein after the date of the Plan.
Generally, that portion of the distributions paid by the Trust to a
Non-Resident unitholder that constitutes a portion of the net income of the
Trust for a taxation year that is paid or becomes payable to the Non-Resident
unitholder in that particular taxation year is subject to Canadian withholding
tax under the Tax Act at a rate of 25%, subject to reduction under an applicable
bilateral tax treaty. In the case of a Non-Resident unitholder who is a resident
of the United States for the purposes of the Canada-U.S. Tax Treaty, the rate of
such withholding tax is generally reduced to 15%.
All other distributions paid by the Trust to a Non-Resident unitholder are
subject to a special Canadian withholding tax under the Tax Act at a rate of
15%. This rate generally is not reduced under any of Canada's tax treaties. A
Non-Resident unitholder who disposes of trust units (or units of other mutual
fund trusts similar to the Trust) at a loss (calculated in Canadian dollars and
pursuant to the rules in the Tax Act) may be entitled to obtain a refund of all
or a portion of any such withholding tax paid.
It is not certain, under the Proposed Amendments, whether the amount by
which the fair market value of the trust units received by a Non-Resident
unitholder on a
- 19 -
reinvestment of cash distributions pursuant to the Plan exceeds the amount of
the cash reinvested (that is, the 5% discount) is subject to this new 15%
withholding tax. In the event the Trust determines that it is, the Trust will
withhold such tax and remit it to the Canadian government.
As a consequence of these withholding taxes, the amount that may be
reinvested in the Plan by a Non-Resident unitholder, and the number of trust
units received by a Non-Resident unitholder on a reinvestment of cash
distributions, will be reduced by the amount of the taxes withheld.
Generally, subject to the comments in the next paragraph with respect to
an in specie redemption of trust units, no Canadian taxes will be payable by a
Non-Resident unitholder in respect of a disposition, whether by way of
redemption or otherwise, by the Non-Resident unitholder of trust units, provided
the trust units do not constitute "taxable Canadian property" (within the
meaning of the Tax Act) to the Non-Resident unitholder. Generally, trust units
will not constitute taxable Canadian property to a Non-Resident unitholder at a
particular time provided the Non-Resident unitholder, persons with whom the
Non-Resident unitholder does not deal at arm's length (within the meaning of the
Tax Act), or the Non-Resident unitholder together with such persons did not own
25% or more of the issued trust units at any time during the 60 month period
that ends at that particular time, and provided further that the Trust qualifies
as a "mutual fund trust" under the Tax Act at the time of the disposition.
If a Non-Resident unitholder requests a redemption of his or her trust
units, the Non-Resident unitholder may, as a consequence, receive a direct
interest in the royalty, and shares and notes of PrimeWest Energy Inc. The
Canadian income tax consequences to a Non-Resident unitholder of owning and
disposing of such securities are not described herein. Non-Resident unitholders
are urged to consult their own tax advisors before requesting a redemption of
their trust units.
United States Federal Income Tax Considerations
The following is a general description of the material United States
federal income tax consequences of the ownership and disposition of our trust
units to a unitholder who is a United States person and who holds our trust
units as capital assets (referred to as a "United States unitholder"). This
description is for general information purposes only and is based on the United
States Internal Revenue Code of 1986, as amended (referred to as the "Code"),
Treasury regulations promulgated under the Code, and judicial and administrative
interpretations of the Code and those regulations, all as in effect on the date
of this prospectus and all of which are subject to change, possibly with
retroactive effect. The tax treatment of a United States unitholder may vary
depending upon his particular situation. Some holders (including persons that
are not United States persons, banks, insurance companies, tax-exempt
organizations, financial institutions, persons whose functional currency is not
the U.S.
- 20 -
dollar, persons subject to the alternative minimum tax and broker-dealers) may
be subject to special rules not discussed below. The discussion below does not
address the effect of any state, local or foreign tax law on a United States
unitholder. There can be no assurance that the United States Internal Revenue
Service (the "IRS") will take a similar view as to any of the tax consequences
described in this summary. Purchasers of our trust units are advised to consult
their own tax advisors with respect to an investment in our trust units.
For purposes of this description, a "United States person" means any one
of the following:
o an individual who is a citizen or resident of the United States;
o a corporation (including any entity treated as a corporation for U.S.
federal income tax purposes) organized in or under the laws of the United
States or of any political subdivision of the United States;
o an estate that is subject to United States federal income taxation without
regard to the source of its income; or
o a trust, if a United States court has primary supervision over its
administration and one or more United States persons have the authority to
control all substantial decisions of the trust, or the trust has made a
valid election to be treated as a United States person.
If a partnership (including any entity treated as a partnership or other
pass through entity for United States federal income tax purposes) is a holder
of trust units, the United States federal income tax treatment of a partner in
the partnership generally will depend on the status of the partner and the
activities of the partnership. Partners and partnerships should consult their
tax advisors as to the particular federal income tax consequences applicable to
them.
Our Classification as a Foreign Corporation
Although we are organized as an unincorporated open-end investment trust
under Canadian law, we are classified as a foreign corporation for United States
federal income tax purposes under current Treasury regulations. Accordingly, our
trust units will be treated as shares of stock of a foreign corporation for
United States federal tax purposes. The discussion below reflects this
classification and employs terminology consistent with this classification,
including references to "dividends" and "earnings and profits".
Amount Capable of Inclusion in Income
For United States federal income tax purposes, a United States unitholder
who is a participant in the Plan will be treated as receiving a distribution
equal to the sum of (i) the fair market value as of the distribution payment
date of trust units acquired
- 21 -
pursuant to the Plan, and (ii) any Canadian taxes which we withhold with respect
to the distribution. The amount treated as a distribution will be capable of
inclusion in the United States unitholder's income as a taxable dividend to the
extent of the Trust's current and accumulated earnings and profits, as
determined for United States federal income tax purposes. These dividends will
not be eligible for the dividends received deduction, which is generally allowed
to United States corporate shareholders on dividends received from a domestic
corporation. Any portion of the distribution in excess of the Trust's earnings
and profits will first be treated as a tax-free return of capital to the extent
of the United States unitholder's tax basis in its trust units and will be
applied against and reduce that basis on a dollar-for-dollar basis (thereby
increasing the amount of gain and decreasing the amount of loss recognized on a
subsequent disposition of the units). To the extent that the distribution
exceeds the United States unitholder's tax basis, the excess will constitute
gain from a sale or exchange of the trust units. If, however, the passive
foreign investment company rules apply and any portion of the distribution
constitutes an "excess distribution" to a United States unitholder that has not
made a "QEF election" (both terms as defined below), then that portion would be
subject to tax under other, less favourable rules (discussed below).
A United States unitholder will generally recognize gain or loss upon the
sale or exchange of our trust units equal to the difference (if any) between the
amount the unitholder realizes on the sale or exchange and its adjusted tax
basis in our trust units. Any gain or loss will be capital gain or loss and will
be long-term capital gain or loss if the United States unitholder's holding
period for the units is more than one year at the time of the sale or exchange.
Foreign Currency Gains
Taxable dividends with respect to our trust units that are paid in
Canadian dollars will be included in the gross income of a United States
unitholder as translated into U.S. dollars calculated by reference to the
exchange rate in effect on the day the dividend is received by the unitholder
regardless of whether the Canadian dollars are converted into U.S. dollars at
that time. A United States unitholder who receives a payment in Canadian dollars
and converts Canadian dollars into U.S. dollars at a conversion rate other than
the rate in effect on the day of the distribution may have a foreign currency
exchange gain or loss that would be treated as United States source ordinary
income or loss. United States unitholders are urged to consult their own tax
advisors concerning the United States tax consequences of acquiring, holding and
disposing of Canadian dollars.
In the case of a cash basis United States unitholder who receives Canadian
dollars, or another foreign currency, in connection with a sale, exchange or
other disposition of our trust units, the amount realized will be based on the
U.S. dollar value of the foreign currency received with respect to the units as
determined on the settlement date of the sale or exchange. An accrual basis
United States unitholder may
- 22 -
elect the same treatment required of cash basis taxpayers with respect to a sale
or exchange of trust units, provided that the election is applied consistently
from year to year. This election may not be changed without the consent of the
IRS. If an accrual basis United States unitholder does not elect to be treated
as a cash basis taxpayer, that United States unitholder may have a foreign
currency gain or loss for United States federal income tax purposes because of
differences between the U.S. dollar value of the currency received prevailing on
the date of the sale or exchange of the trust units and the date of payment.
This currency gain or loss would be treated as ordinary income or loss and would
be in addition to gain or loss, if any, recognized by that United States
unitholder on the sale, exchange or other disposition of the units.
Basis and Holding Period
The tax basis of trust units received by a United States unitholder
pursuant to the Plan will equal the fair market value as of the distribution
payment date of those units, and the holding period for those units will begin
on the day after the distribution payment date.
Passive Foreign Investment Company Status
As stated above, the United States federal income tax consequences of
participation in the Plan for a United States unitholder will depend to a
significant extent on whether the Trust is a passive foreign investment company
at any time during the participating unitholder's holding period of our trust
units.
For United States federal income tax purposes, a foreign corporation is
classified as a passive foreign investment company for each taxable year in
which either:
o at least 75% of its gross income is "passive" income (referred to as the
"income test"); or
o at least 50% of the average value of its assets is attributable to assets
that produce passive income or are held for the production of passive
income (referred to as the "asset test").
For purposes of the income test and the asset test, if a foreign
corporation owns directly or indirectly at least 25% (by value) of the stock of
another corporation, that foreign corporation will be treated as if it held its
proportionate share of the assets of the other corporation and received directly
its proportionate share of the income of that other corporation. Also, for
purposes of the income test and the asset test, passive income does not include
any income that is interest, a dividend or a rent or royalty, which is received
or accrued from a related person to the extent that amount is properly allocable
to the income of the related person that is not passive income. For these
purposes, a person is "related" with respect to a foreign corporation if that
person controls the foreign corporation or is controlled by the foreign
corporation or by the
- 23 -
same persons that control the foreign corporation. For these purposes, "control"
means ownership, directly or indirectly, of stock possessing more than 50% of
the total voting power of all classes of stock entitled to vote or of the total
value of stock of a corporation.
Passive income also includes the excess of gains over losses from some
commodities transactions, including some transactions involving oil and gas.
Under recently amended rules (first effective for 2005) net gains from
commodities transactions will not be included in the definition of passive
income if they are active business gains or losses from the sale of commodities.
However, this exception will only apply if substantially all of the
corporation's commodities are stock in trade or inventory of the corporation,
property used in the trade or business of the corporation, or supplies used in
the ordinary course of a trade or business of the corporation.
Both under these rules and definitions, and under rules applicable in
2004, we believe that: (i) neither the Trust nor PrimeWest Energy Inc. was a
passive foreign investment company in 2004; and (ii) under the new rules, none
of the Trust, nor its subsidiaries, PrimeWest Energy Inc. and PrimeWest Gas
Corp. (collectively, the "PrimeWest Subsidiaries") will be a passive foreign
investment company in 2005 or subsequent years. It is, however, likely that the
Trust and/or PrimeWest Energy Inc. were passive foreign investment companies for
taxable years before 2002. We note, however, that passive foreign investment
company status is fundamentally factual in nature, generally cannot be
determined until the close of the taxable year in question and is determined
annually. Consequently, we can provide no assurance that we will not be a
passive foreign investment company for either the current taxable year or for
any subsequent taxable year. United States unitholders are urged to consult
their own tax advisors regarding our possible classification as a passive
foreign investment company and the consequences if that classification were to
occur.
If a United States unitholder participates in the Plan and the Trust was
not a passive foreign investment company at any time during the unitholder's
holding period of our trust units, the United States federal income tax
consequences to the unitholder will generally be as described above. See "Amount
Capable of Inclusion in Income".
Tax Consequences if We Are or Have Been a Passive Foreign Investment Company
During Your Holding Period
If the Trust is classified as a passive foreign investment company, for
any year during which a United States unitholder has held our trust units and
that unitholder has not made a qualified electing fund election or a
mark-to-market election (both as described below), that unitholder will
generally be subject to special rules, regardless of whether the Trust continues
to be a passive foreign investment company, with respect to any "excess
distribution" (as defined below) and any gain realized upon the sale or other
disposition of our trust units. Thus, these rules may apply to a United States
- 24 -
unitholder whose holding period with respect to our trust units began prior to
2002 even if the Trust otherwise is not a passive foreign investment company
thereafter. Under these rules:
o the excess distribution or gain will be allocated rateably over the United
States unitholder's holding period;
o the amount allocated to the current taxable year and any year prior to the
first year in which we are a passive foreign investment company will be
taxed as ordinary income in the current year;
o the amount allocated to each of the other taxable years will be subject to
tax at the highest rate of tax in effect for the applicable class of
taxpayer for that year; and
o an interest charge for the deemed deferral benefit will be imposed with
respect to the resulting tax attributable to each of the other taxable
years.
An "excess distribution", in general, is any distribution on our trust
units received in a taxable year by a United States unitholder that is greater
than 125% of the average annual distributions received by that unitholder in the
three preceding taxable years or, if shorter, that unitholder's holding period
for our trust units. A distribution will not be treated as an excess
distribution for the taxable year during which a United States unitholder's
holding period for our trust units begins. A United States unitholder that
participates in the Plan will generally be treated as having received a
distribution, and some part or all of the distribution may constitute an excess
distribution. Any portion of the distribution deemed received by that unitholder
which does not constitute an excess distribution will be taxable under the rules
described above in "Amount Capable of Inclusion in Income."
A United States person who holds "marketable stock" of a passive foreign
investment company may avoid the imposition of the additional tax and interest
rules described above by making a "mark-to-market" election in the first year of
his holding period with respect to the passive foreign investment company stock.
Our trust units should be treated as "marketable stock" for purposes of making
that election. If a United States unitholder makes a timely mark-to-market
election with respect to our trust units that it owns at the close of its
taxable year, the United States unitholder would include as ordinary income in
that taxable year any excess of the fair market value of the United States
unitholder's trust units as of the close of such year over its adjusted basis in
the units. Any mark-to-market loss is treated as an ordinary deduction, but only
to the extent of prior ordinary income included pursuant to the election. The
electing United States unitholder's basis in our trust units would be adjusted
to reflect any such income or loss amounts. Any gain or loss on the sale of our
trust units would be ordinary income or loss, except that any loss will be an
ordinary loss only to the extent of the previously included net mark-to-market
gain. An election to mark-to-market applies to the year for which the election
is made and the following
- 25 -
years unless the passive foreign investment company stock ceases to be
marketable or the IRS consents to the revocation of the election.
The mark-to-market rules do not appear to prevent the application of the
excess distribution rules in respect of stock of the PrimeWest Subsidiaries in
the event that either or both corporations were considered a passive foreign
investment company. For purposes of the passive foreign investment company
rules, if the Trust were classified as a passive foreign investment company,
United States unitholders would be deemed to own an interest in any passive
foreign investment company that is treated as being owned directly or indirectly
by the Trust. Thus, if the Trust were classified as a passive foreign investment
company and either or both of the PrimeWest Subsidiaries were also so
classified, United States unitholders would be deemed to own an interest in any
PrimeWest Subsidiary that was so classified. Accordingly, if the Trust and a
PrimeWest Subsidiary were considered passive foreign investment companies, and a
United States unitholder made a mark-to-market election with respect to the
Trust, the United States unitholder may remain subject to the excess
distribution rules described above with respect to its indirectly owned
PrimeWest Subsidiary stock. If a timely "QEF election" (as defined below) were
made by a United States unitholder, the rules described in this paragraph would
not apply.
Alternatively, if a United States unitholder were able to make a timely
qualified electing fund election (referred to as a "QEF election"), that holder
would be able to avoid the additional tax and interest rules described above and
instead would be required to include in income each year such holder's share of
the Trust's net ordinary income and capital gains, if any. Generally, in order
to avoid taxation under the excess distribution rules, the QEF election must be
made in a timely filed federal income tax return of a United States unitholder
for the first taxable year of the United States unitholder during which the
Trust was (at any time) a passive foreign investment company. A QEF election
cannot, however, be validly made unless the Trust agrees to provide certain
United States tax basis information and meet certain other requirements. The
Trust has not yet determined whether it will provide that information or meet
those requirements. Therefore, we can provide no assurance that United States
unitholders will be in a position to make a timely QEF election. United States
unitholders who purchase our trust units are urged to consult with their own tax
advisors regarding the possible availability of a QEF election.
Foreign Tax Credits
Regardless of whether the distribution to a United States unitholder under
the Plan is subject to tax under the passive foreign investment company rules or
as described in "Amount Capable of Inclusion in Income", any tax withheld by
Canadian taxing authorities with respect to the distribution under the Plan may,
subject to a number of complex limitations, be claimed as a foreign tax credit
against a United States unitholder's United States federal income tax liability
or may be claimed as a deduction
- 26 -
for United States federal income tax purposes. The limitation on foreign taxes
eligible for credit is calculated separately with respect to specific classes of
income. For this purpose, dividends the Trust distributes with respect to trust
units will be "passive income" or, in the case of certain United States
unitholders, "financial services income" for taxable years beginning before
January 1, 2007. For taxable years beginning after December 31, 2006, dividends
generally will be "passive category income" or "general category income" for
purposes of computing the foreign tax credit allowable to a United States
unitholder. Because of the complexity of those limitations, each United States
unitholder should consult its own tax advisor with respect to the amount of
foreign taxes that may be claimed as a credit.
United States Information Reporting and Backup Withholding
Dividends on our trust units paid within the United States or through some
U.S.-related financial intermediaries are subject to information reporting and
may be subject to backup withholding, currently at a 28% rate, unless the holder
is a corporation or other exempt recipient or provides a taxpayer identification
number and certifies that no loss of exemption from backup withholding has
occurred. Information reporting requirements and backup withholding may also
apply to the cash proceeds of a sale of our trust units.
Backup withholding is not an additional tax. Amounts withheld under the
backup withholding rules may be credited against a United States unitholder's
U.S. tax liability, and a unitholder may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for
refund with the IRS.
DESCRIPTION OF TRUST UNITS TO BE REGISTERED
The trust units to be offered by this prospectus will be offered to our
unitholders pursuant to participation in the Plan. The trust units are currently
listed on the Toronto Stock Exchange under the symbol "PWI.UN" and the New York
Stock Exchange under the symbol "PWI".
The holders of trust units are entitled to one vote for each such trust
unit at all meetings of unitholders and are entitled to receive monthly
distributions of distributable income on the trust units. All trust units share
equally in all distributions, carry equal voting rights at meetings of
unitholders and have a right of redemption on terms set out in the declaration
of trust.
The following table sets forth the price range and trading volume of the
trust units (adjusted to give effect to the consolidation of the trust units on
a four-to-one basis on August 16, 2002) as reported by the Toronto Stock
Exchange and the New York Stock Exchange (from the initial date of listing on
the New York Stock Exchange of November 19, 2002) for the periods indicated:
- 27-
Toronto Stock Exchange New York Stock Exchange
----------------------------- -----------------------
High Low High Low
------------- ------------- ------------ --------
2000
Full Year ......... CDN $ 37.20 CDN $ 25.20 - -
2001
Full Year ......... 42.16 23.80 - -
2002
Full Year ......... 29.40 23.68 US $ 17.76 15.62
2003
First Quarter ........... 27.34 24.48 17.96 16.05
Second Quarter .......... 27.76 23.40 20.60 15.97
Third Quarter ........... 26.80 25.19 19.29 18.08
Fourth Quarter .......... 28.15 25.06 21.48 19.30
Full Year ......... 28.15 23.40 21.48 15.97
2004
First Quarter ........... 28.35 22.70 22.14 17.31
Second Quarter .......... 26.80 22.18 20.44 16.00
Third Quarter ........... 26.70 22.69 21.16 16.70
Fourth Quarter .......... 28.33 25.06 22.98 20.85
Full Year ......... 28.35 22.18 22.98 16.00
2005
First Quarter ........... 32.00 26.15 26.60 21.30
March ................ 32.00 27.01 26.60 22.00
Second Quarter 31.68 28.35 25.59 22.50
April ................ 30.58 28.35 25.08 22.71
May .................. 29.93 28.57 24.15 22.50
June ................. 31.68 29.50 25.59 23.64
July ................. 34.95 30.86 28.45 25.15
August ............... 35.29 31.17 29.47 25.80
September 1-7 ........ 34.30 33.05 28.97 27.65
EXPENSES
The expenses in connection with the issuance and distribution of the trust
units being offered are as follows:
Securities and Exchange Commission Registration Fee ......... U.S. $ 13,215.37*
Legal Fees and Expenses ..................................... $ 50,000
Blue Sky Fees and Expenses .................................. $ 0.00*
Stock Exchange Listing Fees ................................. $ 0.00
Printing Fees ............................................... $ 0.00*
Total ....................................................... U.S. $ 63,215.37*
*Estimated
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Trust
pursuant to the
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applicable provisions of the Business Corporations Act (Alberta) or our by-laws,
the Trust has been informed that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable.
LEGAL MATTERS
The validity of the trust units being offered by this prospectus will be
passed upon for us by Stikeman Elliott LLP, Calgary, Alberta. Stikeman Elliott
LLP have, in addition, reviewed the statements made herein as to matters of
Canadian tax law and as to the enforceability in Canada of liabilities under the
federal securities laws of the United States. The statements made in this
prospectus as to matters of United States tax law have been reviewed for us by
Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, New York.
EXPERTS
The consolidated financial statements incorporated into this registration
statement by reference to the Trust's Annual Report on Form 40-F for the year
ended December 31, 2004, have been so incorporated in reliance upon the report
of PricewaterhouseCoopers LLP, independent chartered accountants, as experts in
auditing and accounting.
Certain information relating to our reserves incorporated by reference
into this prospectus has been calculated by us and audited and opined on, as at
December 31, 2004, by Gilbert Laustsen Jung Associates Ltd., independent
petroleum engineering consultants retained by us, and has been so included in
reliance on the opinion and report of Gilbert Laustsen Jung Associates Ltd.,
given upon the authority of said firm as experts in reserve engineering. The
partners of Gilbert Laustsen Jung Associates Ltd., as a group beneficially own,
directly or indirectly, less than 1% of our trust units.
- 29 -
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. Indemnification of Directors and Officers
Section 124 of the Business Corporations Act (Alberta) provides as follows:
124(1) Except in respect of an action by or on behalf of the corporation
or body corporate to procure a judgment in its favour, a corporation may
indemnify a director or officer of the corporation, a former director or
officer of the corporation or a person who acts or acted at the
corporation's request as a director or officer of a body corporate of
which the corporation is or was a shareholder or creditor, and the
director's or officer's heirs and legal representatives, against all
costs, charges and expenses, including an amount paid to settle an action
or satisfy a judgment, reasonably incurred by the director or officer in
respect of any civil, criminal or administrative action or proceeding to
which the director or officer is made a party by reason of being or having
been a director or officer of that corporation or body corporate, if
(a) the director or officer acted honestly and in good faith with
a view to the best interests of the corporation, and
(b) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, the
director or officer had reasonable grounds for believing that
the director's or officer's conduct was lawful.
(2) A corporation may with the approval of the Court indemnify a person
referred to in subsection (1) in respect of an action by or on behalf of
the corporation or body corporate to procure a judgment in its favour, to
which the person is made a party by reason of being or having been a
director or an officer of the corporation or body corporate, against all
costs, charges and expenses reasonably incurred by the person in
connection with the action if the person fulfils the conditions set out in
subsection (1)(a) and (b).
(3) Notwithstanding anything in this section, a person referred to in
subsection (1) is entitled to indemnity from the corporation in respect of
all costs, charges and expenses reasonably incurred by the person in
connection with the defence of any civil, criminal or administrative
action or proceeding to which the person is made a party by reason of
being or
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having been a director or officer of the corporation or body corporate, if
the person seeking indemnity
(a) was substantially successful on the merits in the person's
defence of the action or proceeding,
(b) fulfils the conditions set out in subsection (1)(a) and (b),
and
(c) is fairly and reasonably entitled to indemnity.
(4) A corporation may purchase and maintain insurance for the benefit of
any person referred to in subsection (1) against any liability incurred by
the person
(a) in the person's capacity as a director or officer of the
corporation, except when the liability relates to the person's
failure to act honestly and in good faith with a view to the
best interests of the corporation, or
(b) in the person's capacity as a director or officer of another
body corporate if the person acts or acted in that capacity at
the corporation's request, except when the liability relates
to the person's failure to act honestly and in good faith with
a view to the best interests of the body corporate.
(5) A corporation or a person referred to in subsection (1) may apply to
the Court for an order approving an indemnity under this section and the
Court may so order and make any further order it thinks fit.
(6) On an application under subsection (5), the Court may order notice to
be given to any interested person and that person is entitled to appear
and be heard in person or by counsel.
Section 5 of the bylaws of PrimeWest Energy Inc., the duly authorized attorney
of the Trust, contains the following provisions with respect to indemnification
of PrimeWest Energy Inc.'s directors and officers:
5.01 Limitation of Liability No director or officer for the time being of
the Corporation shall be liable for acts, receipts, neglects or defaults
of any other director or officer or employee, or for joining in any
receipt or act for conformity, or for any loss, damage or expense
happening to the Corporation through the insufficiency or deficiency of
title to any property acquired by the Corporation or for or on behalf of
the Corporation or for the insufficiency of deficiency of any security in
or upon which any of the moneys of or belonging to the Corporation shall
be
- 31 -
placed or invested, or for any loss or damage arising from the bankruptcy,
insolvency or tortuous act of any person, firm or corporation including
any person, firm or corporation with whom or with which any moneys,
security or effects shall be lodged or deposited, or for any loss,
conversion, misapplication or misappropriation of or any damage resulting
from any dealings with any moneys, securities or other assets of or
belonging to the Corporation or for any other loss, damage or misfortune
whatsoever which may happen in the execution of the duties of his
respective office or trust or in relation thereto unless the same shall
happen by or through his failure to exercise the powers and to discharge
the duties of his office honestly, in good faith and with a view to the
best interest of the Corporation and to exercise the care, diligence and
skill that a reasonably prudent person would exercise in comparable
circumstances.
5.02 Indemnity The Corporation shall, to the maximum extent permitted
under the Act, indemnify a director or officer, a former director or
officer, and a person who acts or acted at the Corporation's request as a
director or officer of a body corporate of which the Corporation is or was
a shareholder or creditor, and his heirs and legal representatives,
against all costs, charges and expenses, including any amount paid to
settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to
which he is made a party by reason of being or having been a director or
officer of the Corporation or such body corporate, including (without
limitation) any such action by or on behalf of the Corporation or such
body corporate to procure a judgment in its favour, and the Corporation
shall use its reasonable best efforts to obtain any approval or approvals
necessary for such indemnification.
Item 9. Exhibits
4.1 Declaration of Trust dated as of the 2nd day of August, 1996,
restated as of November 6, 2002 and amended as of May 6, 2004
between PrimeWest Energy Trust and Montreal Trust Company of
Canada
4.2 Unitholder Rights Plan Agreement dated as of March 31, 1999
between PrimeWest Energy Trust and The Trust Company of Bank
of Montreal, as rights agent, as amended and restated as of
May 5, 2005, between PrimeWest Energy Trust and Computershare
Trust Company of Canada
- 32 -
Item 9. Exhibits
5.1 - Opinion of Stikeman Elliott LLP as to the legality of the
securities being registered
8.1 - Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP
regarding tax matters
23.1 - Consent of PricewaterhouseCoopers LLP
23.2 - Consent of Gilbert Laustsen Jung Associates Ltd.
23.3 - Consent of Stikeman Elliott LLP (contained in Exhibit 5.1)
23.4 - Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP
(contained in Exhibit 8.1)
24.1 - Power of Attorney (included on the signature pages to this
Registration Statement)
Item 10. Undertakings
The undersigned Registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
registration statement:
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(2) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this registration statement;
(3) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change in such information in the registration
statement;
provided, however, that the undertakings set forth above in paragraphs (i)(1)
and (i)(2) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference into this registration statement.
- 33 -
(ii) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(iii) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(iv) To file a post-effective amendment to the registration statement to
include any financial statements required by Item 8A of Form 20-F at the start
of any delayed offering or throughout a continuous offering. Notwithstanding the
foregoing, a post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Securities Act or
Rule 3-19 of Regulation S-K if such financial statements and information are
contained in periodic reports filed with or furnished to the SEC by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference into this registration statement.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual reports pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee's benefit plan
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference into this registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
- 34 -
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Calgary, Province of Alberta, Canada on September 8,
2005.
PRIMEWEST ENERGY TRUST by its
duly authorized attorney, PRIMEWEST
ENERGY INC.
By: /s/ Dennis G. Feuchuk
----------------------------------
Name : Dennis G. Feuchuk
Title: Vice President, Finance and
Chief Financial Officer
POWERS OF ATTORNEY
Each person whose signature appears below constitutes and appoints Donald
A. Garner and Dennis G. Feuchuk his true and lawful attorneys-in-fact and
agents, acting together, with full powers of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments, including, without limitation, post-effective amendments to
this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the SEC, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on September 8, 2005.
Signature Title
- --------- -----
/s/ Donald A. Garner President and Chief Executive Officer
- ---------------------------------------- (Principal Executive Officer)
Donald A. Garner
- 35 -
/s/ Ronald J. Ambrozy Vice-President, Business Development
- ----------------------------------------
Ronald J. Ambrozy
/s/ Dennis G. Feuchuk Vice President, Finance and Chief
- ---------------------------------------- Financial Officer (Principal
Dennis G. Feuchuk Financial Officer and Principal
Accounting Officer)
/s/ Timothy S. Granger Chief Operating Officer
- ----------------------------------------
Timothy S. Granger
/s/ Harold P. Milavsky Director
- ----------------------------------------
Harold P. Milavsky
/s/ Barry E. Emes Director
- ----------------------------------------
Barry E. Emes
/s/ Harold N. Kvisle Director
- ----------------------------------------
Harold N. Kvisle
/s/ Michael W. O'Brien Director
- ----------------------------------------
Michael W. O'Brien
/s/ Kent J. MacIntyre Director
- ----------------------------------------
Kent J. MacIntyre
/s/ W. Glen Russell Director
- ----------------------------------------
W. Glen Russell
/s/ James W. Patek Director
- ----------------------------------------
James W. Patek
/s/ Peter Valentine Director
- ----------------------------------------
Peter Valentine
- 36 -
Pursuant to the requirements of Section 6(a) of the Securities Act, the
undersigned has signed this Registration Statement solely in the capacity of the
duly authorized representative of the Registrant in the United States on
September 8, 2005.
PRIMEWEST ENERGY (USA) INC.
By: /s/ Dennis G. Feuchuk
---------------------------------
Name : Dennis G. Feuchuk
Title: Vice President, Finance and
Chief Financial Officer
- 37 -
INDEX TO EXHIBITS
Sequential
Exhibits Page Number
-------- -----------
4.1 Declaration of Trust dated as of the 2nd day of August, 1996, restated as of -
November 6, 2002 and amended as of May 6, 2004 between PrimeWest
Energy Trust and Montreal Trust Company of Canada
4.2 Unitholder Rights Plan Agreement dated as of March 31, 1999 between -
PrimeWest Energy Trust and The Trust Company of Bank of Montreal, as rights
agent, as amended and restated as of May 5, 2005, between PrimeWest Energy
Trust and Computershare Trust Company of Canada
5.1 Opinion of Stikeman Elliott LLP as to the legality of the securities being -
registered
8.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP regarding tax matters -
23.1 Consent of PricewaterhouseCoopers LLP -
23.2 Consent of Gilbert Laustsen Jung Associates Ltd.
23.3 Consent of Stikeman Elliott LLP (contained in Exhibit 5.1)
23.4 Consent of Paul, Weiss, Rifkind, Wharton & Garrison LLP (contained in
Exhibit 8.1)
24.1 Power of Attorney (included on the signature pages to this Registration
Statement)
- 38 -