Chesswood Income Fund

Chesswood Income Fund

March 23, 2010 09:00 ET

Chesswood Income Fund Announces Results for Fiscal 2009 & Proposed Conversion to Dividend Paying Corporation

TORONTO, ONTARIO--(Marketwire - March 23, 2010) - Chesswood Income Fund ("Chesswood" or the "Fund") (TSX:CHW.UN) announced today results for the year-ended December 31, 2009.

The Fund's income before taxes and unrealized foreign exchange or swap amounts totalled $5.2 million in 2009, compared to $2.7 million in 2008.

"We believe that 2009 will mark a watershed year for Chesswood and our largest business, Pawnee Leasing Corporation." said Barry Shafran, CEO of the Fund and Pawnee.

"The beginning of the year marked the end of a market correction that began in late 2008, in which we saw the departure of many of our more recent competitors. While we had long anticipated a correction in our market segment, we were surprised by the extent of that correction." added Shafran. "In late 2008 we added another product to our suite of existing "B" products, in a limited and controlled roll out. This new product – lower risk based – allowed us to leverage our current origination channel and lease administration resources to gain a foothold in a market significantly larger than our core market. We believe that this new product provides us with another avenue for profitable and incremental growth. During 2009 we were able to reach our targets for this program and move past the roll out stage."

"With an improvement in both earnings and portfolio delinquency, we are hopeful that the year also saw us distance ourselves from the challenging metrics of 2008." said Shafran.

Financial Highlights For The Fund For The Year Ended December 31,
(in CDN $000's) 2009   2008
Income Before Taxes, Goodwill Impairment      
  Unrealized Foreign Exchange/Swap Amounts $5,172   $2,687
Net Income (Loss)1 $3,065   ($12,830)
Adjusted EBITDA2 $6,886   $4,204
Distributable Cash2,3 $3,866   $4,871
Total Distributions2 $2,764   $3,809
1 - goodwill impairment in 2008 of $14.8 million.      
2 - see "Non GAAP Measures", below.      
3 - distributable cash in 2009 reflects a non-cash adjustment      
  for higher future tax expense at Pawnee      

Non GAAP Measures

References to Adjusted EBITDA and Distributable Cash are not recognized measures under Canadian GAAP and do not have standard meanings under Canadian GAAP. Accordingly, these measures may not be comparable to similar measures presented by other issuers.

Please refer to Chesswood's Management Discussion and Analysis for the year-ended December 31, 2009 for additional information concerning these measures and a reconciliation of these measures to the Fund's consolidated net income for the period.

Proposed Conversion

Chesswood intends to seek Unitholder approval for the conversion of the Fund from an income trust to a growth-oriented, dividend paying corporation at its annual general and special meeting to be held May 13, 2010. It is contemplated that the proposed conversion be completed on or about December 31, 2010.

About Chesswood Income Fund 

The Fund is a financial services trust with operating businesses in both Canada and the U.S.

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This press release contains forward-looking statements that involve a number of risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.


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