December 8, 2009 / 12:06 AM / 8 years ago

UPDATE 1-CanWel to buy building materials firm; raise C$50 mln

* To pay C$20 mln cash, 10.2 mln shares for Broadleaf

* To sell 13.2 mln subscription receipts for C$50 mln

* Announces conversion to corporation

* Expects to start paying qtrly cash div of C$0.10/shr

Dec 7 (Reuters) - Canada's CanWel Building Materials Income Fund CWX_u.TO said it would buy Broadleaf Logistics Co, a supplier of specialty building materials, in a cash-and-stock deal to boost its product lines and plans to raise C$50 million by selling subscription receipts.

The fund, which is converting into a dividend-paying corporation to be called CanWel Holdings Corp, said it would pay C$20 million in cash and 10.25 million shares of the new company to buy Broadleaf from owner Rudy Holding II S.A R.L.

CanWel, a distributor of building materials and related products, would also issue a promissory note of $18.5 million as part of the deal.

"We will be integrating the Broadleaf business with our building materials division, the new CanWel-Broadleaf division," CanWel Chairman Amar Doman said in a statement.

The fund said it would raise about C$50 million ($47.39 million) by selling 13.2 million subscription receipts at C$3.80 apiece to GMP Securities, to fund the deal and repay debt.

CanWel said after converting to a corporation, it expects to start paying quarterly cash dividends of 10 Canadian cents a share.

Units of the fund, that have gained 50 percent in the last three months, were up 4 Canadian cents at C$4.10 Monday morning on the Toronto Stock Exchange. (Reporting by Ashutosh Joshi in Bangalore; Editing by Deepak Kannan)

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