Newport Partners Income Fund

May 16, 2006 16:31 ET

Newport Partners Income Fund to Raise $75 Million to Continue Investment Program

TORONTO, ONTARIO--(CCNMatthews - May 16, 2006) -


Newport Partners Income Fund ("Newport")(TSX:NPF.UN) today announced that it has entered into an agreement with a syndicate of underwriters led by RBC Capital Markets to issue to the public 8,155,000 trust units ("the Units") for $9.20 per Unit for gross proceeds of $75,026,000.

Newport will file a preliminary short form prospectus relating to the issuance of the Units with securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada. Final closing of the offering, which is subject to regulatory approval, is expected to take place on or about June 6, 2006.

Newport will use the net proceeds of the offering to retire debt owing under its credit facility, to continue its investment program and for general corporate purposes. For its fiscal year 2006, Newport is targeting to invest $100 - $150 million in well- established, cash flowing businesses at accretive prices between five and six times historical distributable cash flow. Year to date, Newport has invested $57.0 million for two new operating partnerships and two tuck-in investments that in total are expected to generate approximately $11.5 million of distributable cash flow for Newport over the next twelve months.

"Consistent with our investment program to date, we expect to use the equity being raised to finance potential investments which will be accretive to Newport and which are expected to deliver an attractive return on capital for unitholders," explained Mr. Peter Wallace, President & CEO. "We are pleased to have strengthened our capital structure with this financing and expanded our capacity for execution."


Newport is an unincorporated, open-ended, limited purpose trust created to hold an indirect interest in NPY, a limited partnership established to invest in securities of private businesses and distribute available cash flows to the limited partners. Newport trades on the TSX under the symbol NPF.UN.

Newport is an asset manager that uniquely partners with leading entrepreneurs of well-established, cash-flowing private businesses that represent a diverse cross-section of the Canadian economy. Newport unitholders participate in the cash flows, growth and diversification of the underlying businesses through monthly distributions. Newport provides access to growth capital and strategic and financial advice for its operating partnerships, and investment oversight and management for unitholders. Newport has indirect ownership interests in 13 operating partnerships in four business segments. Newport management and the operating partners have a long track record in the entrepreneurial market in Canada and own approximately 39% of all outstanding units.

Non-GAAP Measures

Distributable cash flow is not a standard measure under GAAP and is generally used by Canadian income funds as an indicator of financial performance. The method of calculating Newport's distributable cash flow may differ from similar computations as reported by other similar entities and, accordingly, may not be comparable to distributable cash flow as reported by such entities. Newport's method of calculating distributable cash flow is disclosed in the Summary Financial Table included in its management's discussion and analysis for the period ended December 31, 2005. Management believes that distributable cash flow is a useful supplemental measure that provides investors with information on cash available for distribution. Newport has a policy of paying a set monthly distribution that is based on historical, current and prospective performance. The operating partnerships of Newport experience seasonality and, as a result, there is variability in the generation of distributable cash and the distribution of cash in certain individual quarters.

Investors are cautioned that distributable cash flow is a non-GAAP measure which is not an alternative to measures under GAAP and should not, on its own, be construed as an indicator of Newport's or NPY's performance or cash flows, a measure of liquidity or as a measure of actual return on the trust units.

Certain statements in this news release may include "forward-looking" statements that relate to future events or future performance and reflect management's expectations and assumptions regarding the growth, results of operations, performance and business prospects and opportunities of Newport and the operating partnerships in which it holds an ownership interest (the "Operating Partnerships"). Such forward-looking statements reflect management's current beliefs and are based on information currently available to management of the Newport and the Operating Partnerships. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the future operating results and economic performance of Newport and the Operating Partnerships are forward-looking statements. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking statements. In evaluating these statements, prospective purchasers should specifically consider various factors, including the risks outlined under "Risk Factors" in Management's Discussion and Analysis, which may cause actual events or results to differ materially from any forward-looking statement. Although the forward-looking statements are based on what management of Newport and the Operating Partnerships consider to be reasonable assumptions based on information currently available to it, there can be no assurance that actual events or results will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this news release, and Newport does not assume any obligation to update or revise them to reflect new events or circumstances.

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