GRANBY INDUSTRIES INCOME FUND
TSX : GBY.UN

GRANBY INDUSTRIES INCOME FUND
Clarke Inc.

Clarke Inc.

December 21, 2007 18:49 ET

Granby Industries Income Fund Enters Into Support Agreement With Clarke Inc.

TORONTO, ONTARIO--(Marketwire - Dec. 21, 2007) - Clarke Inc. (TSX:CKI)(TSX:CKI.DB)(TSX:CKI.DB.A) ("Clarke") and Granby Industries Income Fund (TSX:GBY.UN) (the "Fund" or "Granby") announced today that they have entered into a support agreement (the "Agreement") in connection with the proposed acquisition by Clarke of all of the units of the Fund. Under the terms of the Agreement, Clarke will offer to acquire, by way of a take-over bid, all of the issued and outstanding units of the Fund (excluding the units currently held by Clarke) at a purchase price of C$0.17 per unit in cash (the "Offer"). The take-over bid circular, containing the full terms of the Offer, will be sent to the Fund's unitholders, together with the Board of Trustee's circular and other related documents in connection with the Offer, on or about January 11, 2008.

The independent members of the Board of Trustees of the Fund have resolved to recommend that unitholders accept the Offer, which represents a premium of approximately 55% to the closing price of the Fund units of $0.11 on the TSX on December 20, 2007. RSM Richter Inc. has provided a valuation and fairness opinion to the Board of Trustees that the consideration under the Offer is fair, from a financial point of view, to the Fund's unitholders.

Clarke currently holds 1,699,182 units of the Fund, representing approximately 23% of the outstanding units of the Fund. Clarke has also taken an assignment of the Fund's $15.75 million term loan and guaranteed the Fund's $7.0 million revolving facility (together, the "Credit Facility"). All amounts owing under the Credit Facility come due on January 31, 2008. Under the Agreement, Clarke has agreed to forebear from exercising any remedies or accelerating the indebtedness under the term facility and to not terminate its guarantee of the revolving facility, in each case until the earlier of February 28, 2008 and termination of the Agreement.

The Offer is subject to certain conditions that are required to be satisfied prior to take-up and payment by Clarke, including, but not limited to, a requirement that at least 66 2/3% of the total number of Fund units, including the units held by Clarke, be tendered to the Offer.

Granby may terminate the Agreement under certain circumstances, including if the Board of Trustees determines in good faith that it has received a Superior Proposal (as defined in the Agreement). If Granby terminates the Agreement in order to accept a Superior Proposal, it must pay a break fee of C$50,000. Clarke will have the right to match any Superior Proposal within five business days of it being made. In addition, Clarke has the right to terminate the Agreement prior to taking-up any units of the Fund if certain transaction expenses incurred by the Fund in connection with the Offer exceed C$400,000.

The Board of Trustees has been advised that Granby Trust has entered into a lock-up agreement with Clarke which provides that, subject to certain terms and conditions, Granby Trust will sell to Clarke all of the Class B limited partnership units of Granby Industries Limited Partnership and associated shares of Granby Industries Inc. owned by Granby Trust, at a price equal to 75% of the consideration offered per Unit under the Offer (based on the current terms of the Offer, $0.1275 per Class B limited partnership unit). Granby Trust is permitted to terminate the lock-up agreement if the Support Agreement is terminated in accordance with its terms.

About Clarke

Clarke is a Halifax-based activist and catalyst investment company with a diversified portfolio of strategic and opportunistic investments, including several wholly-owned subsidiaries operating in the transportation services industry. From time to time, Clarke also participates in joint ventures when they offer the opportunity to create shareholder value. Led by George Armoyan and an entrepreneurial team of professionals focused on uncovering and creating value, Clarke invests in undervalued businesses and participates actively where necessary to enhance performance and increase returns. Clarke's securities trade on the Toronto Stock Exchange (CKI, CKI.DB; CKI.DB.A); for more information about Clarke Inc., please visit our website at www.clarkeinc.com.

About Granby Industries Income Fund

Granby is a leading North American manufacturer of high quality tanks for residential and light commercial storage of heating and other petroleum-based products and is also a leading manufacturer of coated copper tubing. Granby has been operating in the heating and oil storage tank industry for more than 50 years and its primary business is manufacturing replacement residential tanks. Granby Industries has operations in Granby, Quebec, and Oakville, Ontario.

Forward-looking information is based on certain factors and assumptions regarding, among other things, expected storage tank unit volumes, the price of raw materials and the average US/Canadian dollar exchange rate during the year. While Granby considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially from what we currently expect. These factors are described in the Fund's Annual Information Form available on www.SEDAR.com and include, among other things, leverage and restrictive covenants, economic conditions, and seasonality of demand for Granby's products, the risk of increased heating oil costs, which could depress demand for heating oil storage tanks, commodity pricing volatility and foreign exchange risk, regulatory change, interest rate fluctuation, a decline in the housing and major consumer products markets, dependence on key suppliers, reliance on major customers and the risk of increased competition in the coated copper tubing market and the storage tank market.

You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While Granby may elect to, it is under no obligation and does not undertake to update this information at any particular time, except as required by law.

Contact Information

  • Granby Industries Income Fund
    Mr. Paul Antoniadis, CA
    Vice President, Finance & CFO
    450-378-2334 ext. 225
    or
    Clarke Inc.
    Rob Normandeau
    Chief Operating Officer
    902-442-3413
    902-423-4001 (FAX)