Forest & Marine Financial Limited Partnership

Forest & Marine Investments Ltd.

Forest & Marine Investments Ltd.
Forest & Marine Investment Trust

April 29, 2005 19:26 ET

Forest & Marine Investments Ltd.: John Hitchcock Appointed as President and Credit Facility Update


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: FOREST & MARINE FINANCIAL LIMITED PARTNERSHIP

AND FOREST & MARINE INVESTMENTS LTD.

TSX VENTURE SYMBOL: FME

AND FOREST & MARINE INVESTMENT TRUST

APRIL 29, 2005 - 19:26 ET

Forest & Marine Investments Ltd.: John Hitchcock
Appointed as President and Credit Facility Update

NANAIMO, BRITISH COLUMBIA--(CCNMatthews - April 29, 2005) - Forest &
Marine Investments Ltd. (TSX VENTURE:FME) -

Appointment of President

The Company is pleased to advise that John Hitchcock has been appointed
by the Board as President of the Company. Nigel Burridge resigned as
President but remains in his position as Chief Financial Officer of the
Company. Mr. Burridge also remains as an officer and director of Forest
& Marine Financial Corporation and Treesea Holdings Inc.

John Hitchcock stated that "we wish to extend our gratitude to Nigel for
his leadership during his tenure as President of the Company".

Credit Facility

The Partnership advises that it has entered into a forbearance agreement
with its credit facility lenders, CIT Business Credit Canada Inc.
("CIT"). Pursuant to this agreement, CIT has agreed to continue to
provide the Partnership access to the credit facilities under the
financing agreement with CIT (the "Financing Agreement"), and to
forbear, until July 25, 2005 (the "Forbearance Period") provided that no
new default occurs, from exercising its acceleration and enforcement
remedies under the loan documents as a result of certain covenant
breaches in order to permit the Partnership an opportunity to take one
or more actions in order to remediate the breaches.

The Partnership is not in compliance with the following provisions of
the Financing Agreement:

(i) the Financing Agreement requires the Partnership to ensure that at
all times the aggregate of all Loan Accounts Receivable in respect of
which interest is overdue for more that seventy five (75) days is less
than an amount equal to 15% of the aggregate of all Loan Accounts
Receivable. The Partnership has advised that the aggregate of all Loan
Accounts Receivable in respect of which interest is overdue for more
than seventy-five (75) days is approximately $30,000,000, and that, as a
result, the total of these overdue Loan Accounts Receivable is in excess
of the amount permitted under the Financing Agreement by approximately
$15,000,000.

(ii) the Financing Agreement requires that the Partnership ensure that
at all times the aggregate of all Loan Accounts Receivable in respect of
which principal or interest is overdue for more than seventy-five (75)
days is less than the greater of (i) $35,000,000, or (ii) 35% of the
value of all Loan Accounts Receivable. The Partnership has advised that
the aggregate of all loan Accounts Receivable in respect of which
principal and/or interest is overdue for more than seventy-five (75)
days is approximately $5,700,000 more than 35% of the value of all such
Loan Accounts Receivable.

(iii) the Financing Agreement provides that, except as may be otherwise
agreed to from time to time by the Lender and the Partnership in
writing, after giving effect to the extension of credit requested to be
made by the Partnership, the aggregate outstanding balance of the
Revolving Loans and outstanding Letters of Credit owing by the
Partnership will not exceed the lesser of (i) the Line of Credit or (ii)
the Borrowing Base. Based upon the most recent Borrowing Base
calculations provided by the Partnership to the Lender, the Partnership
is experiencing a Borrowing Base shortfall of approximately $3,500,000,
and the Partnership has not remedied this Borrowing Base shortfall as
required by the Financing Agreement. Nevertheless, the Partnership is
requesting continued access to the credit facilities contemplated by the
Financing Agreement.

The Borrowing Base is equal to the sum of (a) 50% of the Partnership's
aggregate outstanding Eligible Accounts Receivable less (b) any
applicable Availability Reserves. Eligible Accounts Receivable is
specifically defined within the Financing Agreement and essentially
includes all current and satisfactory loan accounts receivable within
the Partnership's loan portfolio. The Availability Reserve includes
certain fixed deductions for related party loans as well as a
discretionary amount which CIT may reasonably from time to time require
based on market conditions and the like.

The covenant breaches referenced above result primarily from two
accounts failing to meet CIT's margin requirement due to circumstances
not within the customers' or the Partnership's control. Arrears of
interest on one of these accounts has now been brought up to date and
this account is now eligible for margining purposes. The other account
involves a loan to a company facing a logging blockade situation which
will require Government intervention to resolve. These two accounts
alone represented $12 million of the accounts with principal and/or
interest overdue more than 75 days. Several other accounts in the
overdue category have since made payments and now qualify for margin
purposes.

In consideration of CIT's agreement to forbear as set above, during the
Forbearance Period, the rate of interest applicable to all prime rate
loans will be equal to the Canadian Imperial Bank of Commerce prime rate
plus 2%. In addition, the Partnership will pay to CIT a non-refundable
forbearance fee in an amount equal to $100,000 and will be subject to
reporting and other financial requirements as set out in the forbearance
agreement.

The Forest & Marine Group of companies includes the Partnership, Forest
& Marine Financial Corporation as general partner, the Company, the
Trust, Forest & Marine Capital Ltd., Forest & Marine Insurance Services
Ltd., Treesea Holdings Inc., and Staffordshire Trust Company
(collectively, the "Forest & Marine Group").

Through the Partnership, the Forest & Marine Group is engaged primarily
in the financing of heavy mobile equipment, helicopters, tugs and barges
utilized in the forest products and marine industries, as well as other
non-forestry related businesses such as supermarkets and food
distribution, feeder airlines, commercial fishing and processing and
wholesale glass distributors. All business is conducted by the
Partnership.

The Forest and Marine Group have extensive knowledge of the forestry and
marine industries; its primary focus is to provide funding to
independent logging contractors and marine operators. The Forest and
Marine Group's geographic target markets are communities on Vancouver
Island, the Queen Charlottes and throughout coastal British Columbia.
Its customers employ in excess of 3,000 people. The Forest and Marine
Group has provided specialized credit facilities for this niche market
since 1983.

ON BEHALF OF:

FOREST & MARINE FINANCIAL LIMITED PARTNERSHIP (the "Partnership")

by its General Partner, Forest & Marine Financial Corporation

FOREST & MARINE INVESTMENTS LTD. ("the Company")

FOREST & MARINE INVESTMENT TRUST ("the Trust")

by its Manager, Forest & Marine Financial Corporation

per:

John Hitchcock, Director


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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Forest & Marine Investments Ltd.
    John Hitchcock
    Director
    (250) 753-0141
    (250) 753-0173 (FAX)
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of the contents of this news
    release.