Gateway Casinos Income Fund

Gateway Casinos Income Fund

June 05, 2006 08:25 ET

Gateway Reviews Voting Results Relating to Cascades Acquisition

BURNABY, BRITISH COLUMBIA--(CCNMatthews - June 5, 2006) -

Attention Business/Financial Editors:

Gateway Casinos Income Fund (the "Fund") (TSX:GCI.UN) today announced that in response to an inquiry from a Unitholder, the Fund initiated and has now completed a review of the procedures used by the scrutineer, a nationally recognized trust company, at the Fund's recent annual and special meeting held on May 17, 2006. The review was undertaken in relation to Unitholder approval of the acquisition of Cascades Langley Casino and Hotel, which closed on May 19, 2006. The Unitholder inquiry was received by the Fund during the week following the closing of the Cascades acquisition.

The Fund has determined that there were errors made by the scrutineer in connection with the tabulation of votes. These errors included a failure to record certain negative proxies, which had they been included, could have resulted in the resolution not passing. There was, however, another tabulation error which could have offset the impact of these negative proxies depending upon the manner of its resolution. Unitholder approval of the acquisition was required under OSC Rule 61-501, AMF Regulation Q-27 and TSX policies, on a disinterested basis, because the acquisition was considered a related party transaction. The Fund has advised the regulatory authorities of this matter and expects to have further dialogue with them with respect to the issues raised by the Fund's review.

The Trustees of the Fund, including the independent trustees who have considered this matter separately with the assistance of legal counsel, are of the view that the determination of the results at the meeting made by the Chair of the meeting was made in good faith and was based upon the advice provided to him by the scrutineer. Accordingly, the Trustees have concluded that the results of the vote to acquire the Langley Casino and Hotel continue to be valid.

The Trustees of the Fund also considered the resulting transactions involving a number of third parties which were completed in reliance upon the voting results, including the extension of the Fund's 5.35% Convertible Extendible Unsecured Subordinated Debentures (TSX: GCI.DB), as well as the options available to the Fund. The Trustees have unanimously concluded that, in the circumstances, it is not in the interests of the Fund to take further action with respect to this matter.

Dave Gadhia, Chief Executive Officer of Gateway Casinos commented "The Trustees are very disappointed that the tabulation of the votes at the meeting was not accurate. Based on the reported vote, the transaction closed. In addition to the anticipated immediate accretion from this acquisition, Gateway's Trustees and management are committed to delivering strong performance from this valuable asset as it matures, which should benefit of Unitholders in the years to come."

About the Fund

The Fund is an unincorporated open-ended limited purpose trust established under the laws of British Columbia, which operates the Burnaby Casino in Greater Vancouver, B.C., the Cascades Casino in Langley, B.C., the Palace Casino in Edmonton, Alberta and the Lake City Casinos in Kamloops, Kelowna, Penticton and Vernon, B.C. Headquartered in Burnaby, B.C., the Fund is one of the largest casino operators in Western Canada.

Forward Looking Statements

This news release contains forward looking statements which reflect the Trustees' beliefs with respect to the matters contained herein. The forward looking statements typically contain words such as "should", "anticipated", "believes", "could", "continue", "circumstances" or similar expressions suggesting future outcomes or events. Such forward looking statements reflect the Trustees' current beliefs and are based on information currently available to them. Forward looking statements involve significant risks and uncertainties and a number of factors could cause actual results to differ materially from the results discussed in the forward looking statements. Although the forward looking statements contained in this news release are based upon the Trustees' belief as to reasonable assumptions, the Fund cannot assure that actual results will be consistent with these forward looking statements.

To find out more about Gateway Casinos Income Fund (TSX:GCI.UN), visit our website at

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