November 3, 2008 / 8:22 PM / in 9 years

UPDATE 1-Teranet makes no recommendation on Borealis bid

TORONTO, Nov 3 (Reuters) - Canadian land registry operator Teranet Income Fund TF_u.TO has decided to stand by its prior decision not to make a recommendation to its unitholders on a revised bid from Borealis, as quarterly results showed the fund’s ability to generate returns.

Although Teranet said it was “disappointed” that Borealis amended its offer, the fund said it would leave it up to unitholders to decide whether to accept the reduced, unsolicited offer from Borealis, the investment arm of the Ontario Municipal Employees Retirement System pension fund.

Last week, Borealis Infrastructure Management Inc lowered its offer to C$10.25 a unit from its C$11.00 bid on Sept. 4.

Units of Teranet were unchanged at C$9.50 on the Toronto Stock Exchange on Monday afternoon.

Teranet, which holds a monopoly on the electronic land registry system in the province of Ontario, reported a 5 percent increase in third-quarter revenue to C$74.6 million ($63 million).

It said adjusted earnings before income tax, depreciation and amortization rose to C$55.5 million from C$53.3 million.

“We are disappointed that Borealis has re-priced its offer for the fund,” said Chairman Jon Hagan.

“While we recognize market conditions have become more challenging in recent months, our business remains solid. As evidenced by our record third-quarter results, Teranet continues to have a strong, high-margin business with very stable cash flows and a solid platform for growth.”

Teranet had held out for a white knight offer just as global equity markets were in a freefall, but no new bidders emerged as it conducted an auction process.

The trust, which was spun off by the Ontario government in 2003, was said to be coveted for its steady cash flow. A large portion of the fund’s revenue comes from its exclusive rights to access Ontario’s electronic land registry, which it holds until 2017. Teranet collects a fee every time a home in Canada’s most populous province changes hands or is registered.

$1=$1.18 Canadian Reporting by Ka Yan Ng; editing by Rob Wilson

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