SAGE RESPONDS TO RECENT MARKET PRICE WEAKNESS
The purpose of this press release is to provide an update on Sage High Yield Debt Trust ("SAGE") in light of recent weakness in the market price of its instalment receipts. While the broad market for corporate bonds has declined recently, we are not aware at this time of any materially adverse fundamental changes with respect to the individual securities making up the SAGE portfolio.
The instalment receipts are currently trading in the range of $3.00, which compares with a net asset value of approximately $6.00. This price level represents a discount to NAV of approximately 50% on an instalment receipt basis and 23% on a fully paid basis. There is no new information to explain the recent increase in this discount, particularly in light of the mandatory buyback obligation. Pursuant to this obligation, SAGE must purchase units in the market whenever they are offered at a discount to NAV exceeding 7.5% after the second instalment is paid on October 28, 1998.
We continue in the view that SAGE is well positioned in the current uncertain environment based upon the quality of the companies in the portfolio as measured by such factors as management, the stability of cash flows, and their competitive positions within their industries. The spread widening which has produced declines in the market value of these bonds reflects general conditions in the corporate bond market at this time. Investors should bear in mind that, unlike equities, the value of bonds at maturity is fixed. We believe that all bonds within the SAGE portfolio, which is summarized on the reverse, will be repaid in full at maturity or, if called, earlier.
SAGE trades on the Toronto Stock Exchange under the symbol "BBB.IR".
For further information, contact:
Mr. W. Garth Jestley
Director
September 2, 1998
| STATEMENT OF INVESTMENT
PORTFOLIO As at June 30, 1998 |
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| BUSINESS | % WEIGHT | ||
| HIGH YIELD DEBT | |||
| Celestica International Inc. 10.5% due December 31, 2006 | Electronics Manufacturing | 8.7% | |
| MDC Communications Corp. 10.5% due December 1, 2006 | Printing and Communications | 8.5% | |
| Scott Paper Limited 10% due June 6, 2007 | Paper Products | 7.9% | |
| Anchor Lamina Inc. 9.875% due February 1, 2008 | Tool and Die Manufacturing | 7.9% | |
| TrizecHahn Corporation 7.95% due June 1, 2007 | Real Estate | 7.5% | |
| Tembec Inc. 8.3% due January 30, 2003 | Forest Products | 7.3% | |
| Norampac Inc. 9.375% due February 1, 2008 | Corrugated Packaging | 6.5% | |
| Consumers International Inc. 10.25% due April 1, 2005 | Glass Manufacturing | 5.7% | |
| Sealy Mattress Company 9.875% due December 15, 2007 | Manufacturing and Sales | 5.6% | |
| Trench Electric S.A. 10.25% due December 15, 2007 | Distribution Equipment | 5.3% | |
| Finlay Enterprises Inc. 9% due May 1, 2008 | Retail | 5.3% | |
| Millar Western Forest Products Ltd. 9.875% due May 15, 2008 | Forest Products | 5.3% | |
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| Total | 81.5% | ||
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| HIGH YIELD EQUITY | |||
| Associated Freezers Income Trust | Refrigeration Warehousing | 7.6% | |
| Westshore Terminals Income Fund | Coal Handling Facility | 4.7% | |
| Koch Pipelines Canada L.P. | Oil Pipeline | 3.2% | |
| Pembina Pipeline Income Fund | Oil Pipeline | 3.0% | |
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| Total | 18.5% | ||
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| 100% | |||
TRUST PROFILE
Sage High Yield Debt Trust closed its initial public offering in October 1997. The primary objective of the Trust is to provide unitholders with a high level of sustainable income while preserving capital. To achieve this objective, SAGE invests primarily in high yield debt securities supplemented with high yield equities. Unitholders of SAGE can acquire additional units by participating in the Distribution Reinvestment Plan. The Plan enables unitholders to reinvest their quarterly distributions in additional units of SAGE thereby achieving the benefit of compounding returns. SAGE is fully RRSP eligible.
| Head Office | Directors and Officers | ||||||||||||||||||||||||
| 1 First Canadian Place | Murray J. Brasseur, Director | ||||||||||||||||||||||||
| 58th Floor | W. Garth Jestley, President and Director | ||||||||||||||||||||||||
| P.O. Box 192 | James S. Parsons, Director | ||||||||||||||||||||||||
| Toronto, Canada M5X 1A6 | Raymond R. Pether, Director | ||||||||||||||||||||||||
| Anthony P. Traub, Secretary-Treasurer and Director | |||||||||||||||||||||||||
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