Thursday, February 18, 2010

Ponzi scheme Peyto Energy Trust Achieves $1 Billion Cumulative Distributions

Image: NDP Finance Critic and former labour organizer Judy Waslylycia-Leis, proponent of "income trusts are ponzi schemes?" and fellow caucus member, Conservative MP Dean Del Mastro, who together conspired on the Finance Committee to lie to all Canadians about tax leakage in order to destroy $35 billion of Canadians life savings and evaporate $1.5 billion in annual tax revenue from the 51 foreign takovers of Canadian businesses that were income trusts.

In much the same way that the efficiency of a business can be measured by how many “inventory turns” that it can accomplish in a given year, so too can the efficiency of an economy be measured by how many times business earnings can be cycled through the economy within a year. This is what makes corporations so inefficient when compared to income trusts, One hoards capital and deploys it very inefficiently and the other deploys capital vastly more efficiently by returning all excess earnings to its owners who, by definition, are better and more efficient allocators of capital. BCE provides the perfect example and BCE’s management have demonstrated themselves to be serial destroyers of capital, from losing $8 billion on Teleglobe one minute to $800 million on Montreal Trust the next, and ever since an Act of Parliament allowed Bell Canada to become BCE, in the belief that good would come from allowing BCE management to deploy the excess earnings from (then) regulated utility Bell Canada. Instead they blew every cent of those excess earnings on one failed acquisition after another.

Meanwhile the greater social challenge of today remains how is Canada’s looming pension crisis and aging baby boomer generation going to be addresse without sufficient retirement income if the earnings of businesses they own and have invested in are not cycled through their hands, rather than hoarded by corporate CEOs intent on making the next Hail Mary acquisition (like Teleglobe or massive share buyback, the sole purpose of which is to enrich some group of entrenched management by way of their risk free stock options?

The corporate model and its pathetic track record at reinvestment is wholly unsuited to the realities of the day and needs to be put to pasture, so all the real benefits of investing in the Canadian economy accrue to the owners and not the paid help, namely CEOs and senior management., Just ask the owners of Peyto Energy how they are enjoying their (according to the NDP) ponzi scheme income trust investment so far?

Peyto Energy Trust Achieves $1 Billion Cumulative Distribution

CALGARY, ALBERTA--(Marketwire - Feb. 17, 2010) - Peyto Energy Trust
("Peyto") (TSX:PEY.UN) confirms that the monthly distribution with respect
to February 2010 of $0.12 per trust unit is to be paid on March 15, 2010,
for unitholders of record on February 28, 2010. The ex-distribution date is
February 24, 2010.

With the February 2010 distribution payment, Peyto has now achieved a
milestone of $1 billion of cumulative distributions ($9.67/unit).

Peyto began in 1998 as a Canadian junior exploration and production company
with a strategy to create shareholder value by investing in the exploration
and development of new, high quality, long life natural gas reserves in
Western Canada. With a total of $504 million of shareholder and unitholder
capital, Peyto has discovered 1.5 TCFe of natural gas reserves and built a
production base of over 125 MMcfe/d. As one of the lowest cost operators in
the industry, Peyto has generated close to $1.1 billion in earnings over
that time and using the Trust structure has now distributed $1 billion of
that to unitholders. Since converting to a Trust in 2003, the compound
annual total return, including distributions, has been greater than

This financial performance is a testament to the success of the Peyto
strategy and the unwavering commitment to deliver industry leading returns
for unitholders. This success will continue as Peyto focuses on its last
year as a Trust.


Dr Mike said...

I have asked this same question over & over again & have yet to receive even one answer : what is the downside , with proof , of an all income trust economy??

I am sure the general population can live without stock options.

So come on anyone , I need an answer.

Say , where is that Daniel Miller guy , he usually has something to say , albeit sans facts.

Dr Mike Popovich

Anonymous said...

I will like our politicians to debate this fact of $iBillion in distributions from a energy trust called Peyto. Peyto never made the press , no pension bailout , no CEO taking the company to ruins.
The only press is the shutdown of the income trust sector from Harper/Flaherty decision and the basis of tax leakage.
Well this just proves how wrong they were !!!


Anonymous said...

Rosen and Urquy would say that they promised to pay more than a billion so they must be a ponzi scheme.


Anonymous said...


Whereas Manulife is not, since they were only raising new equity from new investors in order to make good on dividends paid to exiting investors.

Hey, isn’t that the definition of a Ponzi Scheme?

Calling Rosen and Urquy!