Pembina Completes Corporate Conversion

(All financial figures are in Canadian dollars.)

CALGARY, Oct 1 /CNW/ - The Board of Directors of Pembina Pipeline Corporation announced today the closing of the Plan of Arrangement pursuant to which Pembina Pipeline Income Fund (the "Fund") has converted into a dividend-paying corporate entity carrying on business as Pembina Pipeline Corporation ("Pembina").

Pembina's common shares and convertible debentures will commence trading on the Toronto Stock Exchange ("TSX") on Tuesday, October 5, 2010 under the symbols "PPL" and "PPL.DB.B", respectively. The Fund's trust units and convertible debentures (TSX: PIF.UN, PIF.DB.B) will be de-listed by the TSX that same day. 

Under the Plan of Arrangement, investors received one common share in Pembina in exchange for each trust unit held in the Fund. Convertible debentures of the Fund have become direct obligations of Pembina. As such, holders of the outstanding series of Pembina convertible debentures, namely the 7.35% convertible unsecured subordinated debentures due December 31, 2010, will be entitled to receive common shares in Pembina on the same basis that they were entitled to receive trust units of the Fund prior to the closing of the Plan of Arrangement. This is expected to be a tax-deferred reorganization; however investors should consult with financial advisors regarding potential tax consequences of the exchange. Pursuant to the Plan of Arrangement, all outstanding securities of the Fund have been cancelled and the Fund has been dissolved. 

The decision to convert to a corporate entity resulted from a Government of Canada decision in 2006 that introduced legislation designed to change the taxation of income trusts. By converting to a corporation, Pembina has avoided the imposition of specified-investment flow through ("SIFT") tax applicable beginning in 2011. Pembina expects conversion may provide greater access to capital markets, improved liquidity and greater flexibility to pursue growth and expansion.

"Completing corporate conversion is a key step in Pembina's growth strategy as it supports our financial plans to increase cash flow by expanding our businesses and service offerings," said Bob Michaleski, Pembina's President and Chief Executive Officer. "As a corporation we intend to maintain our highly competitive dividend while also working to grow the long-term value of our shares."

Based on certain assumptions, Pembina expects to maintain its current level of cash distributions as a dividend of $1.56 per share per year (payable monthly at $0.13 per share per month) through 2013 (see Forward-Looking Statements and Information below). Eligible Canadian investors may benefit from an enhanced dividend tax credit afforded to the receipt of dividends, as compared to distributions of income, depending on individual circumstances. Dividends paid to eligible U.S. investors should qualify for the reduced rate of tax applicable to long-term capital gains.

Pembina transports crude oil and natural gas liquids produced in Western Canada, owns and operates oil sands pipelines and has a growing presence in the midstream and gas services sectors.

Forward-Looking Statements and Information

This document contains certain forward-looking statements and information that are based on Pembina's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements and information can be identified by terminology such as "plans," "expects," "will," "may," "intend" and similar expressions.

In particular, this document contains forward-looking statements and information, including certain financial outlook, pertaining to the trading of Pembina's common shares and convertible debentures and delisting of the Fund's securities on the TSX, resulting access to capital markets, improved liquidity and future growth and expansion, the ability of Pembina to maintain its current level of cash dividends to its equity holders through 2013, and the tax treatment of dividends. These forward-looking statements are being made by Pembina based on certain material factors and assumptions that Pembina has made in respect thereof including those discussed under the section entitled "Forward-Looking Statements and Information" in the Fund's management's discussion and analysis for the six months ended June 30, 2010, which can be found under the Fund's SEDAR profile at www.sedar.com.

Although Pembina believes the expectations and material factors and assumptions reflected in these forward-looking statements and information are reasonable as of the date hereof, there can be no assurance that these expectations, factors and assumptions will prove to be correct. Readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements and information.

None of the forward-looking statements described above are guarantees of future performance and are subject to a number of known and unknown risks and uncertainties, including, but not limited to: the impact of competitive entities and pricing; reliance on key industry partners, alliances and agreements; the strength and operations of the oil and natural gas production industry and related commodity prices; the continuation or completion of third- party projects; regulatory environment and inability to obtain required regulatory approvals; tax laws and treatment; fluctuations in operating results; lower than anticipated results of operations and accretion from Pembina's business initiatives; reduced amounts of cash available for dividends to Shareholders; the ability of Pembina to raise sufficient capital (or to raise capital on favourable terms) to complete future projects and satisfy future commitments, including the construction of the Nipisi and Mitsue Pipelines and related facilities; construction costs of the Mitsue and Nipisi Pipelines and related facilities, construction delays; labour and material shortages; and certain other risks detailed from time to time in Pembina's public disclosure documents available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements and information contained in this document speak only as of the date of this document. Pembina does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws. The forward-looking statements and information contained in this document are expressly qualified by this cautionary statement.  Management of the Fund approved the financial outlook contained herein as of the date of this news release.  The purpose of the financial outlook contained herein is to give the reader an indication of the potential effects on investors of the completion of the Plan of Arrangement.  Readers should be aware the information contained in the financial outlook contained herein may not be appropriate for other purposes.

For further information:

Glenys Hermanutz
Vice President, Corporate Affairs
Pembina Pipeline Corporation
[phone]
1-888-428-3222
e-mail:  [email protected]