TERRAVEST INCOME FUND
TSX : TI.UN

TERRAVEST INCOME FUND

January 22, 2007 07:00 ET

TerraVest Income Fund Announces 2007 Distribution Level and Unitholder Rights Plan

EDMONTON, ALBERTA--(CCNMatthews - Jan. 22, 2007) - TerraVest Income Fund (TSX:TI.UN) announced today that it has declared a cash distribution of $0.08333 per Unit, effective with the distribution to be paid on February 15, 2007 to Unitholders of record on January 31, 2007. The ex-distribution date is January 29, 2007. The Fund has reduced its monthly distribution by approximately 27.5% to $1.00 per Unit per year.

The change in monthly distributions to Unitholders is consistent with the Fund's stated policy of establishing equal monthly payments for a 12-month period that will, in the aggregate, amount to less than 90% of the Distributable Cash forecasted to be generated by its income producing businesses.

"The Fund's new level for its monthly distributions to Unitholders was established by its independent trustees after reviewing Management's 2007 forecast for Distributable Cash," said Dale Laniuk, President and Chief Executive Officer. "With the lack of certainty for our energy related businesses, Management recommended reducing monthly distributions. The Fund expects that cash available from its energy related businesses will be lower in 2007 than 2006 as a result of the expected reduction in exploration and development drilling. This reduction for the energy businesses is expected to be partially offset by improved performance during 2007 by other businesses in the portfolio."

TerraVest also announced that the Exchange Ratio for the Exchangeable Shares of TerraVest Industries Inc. has increased from 1.33651 to 1.35444 effective January 31, 2007. Further information about TerraVest's exchangeable shares and the calculation of the Exchange Ratio can be found at http://www.terravestindustries.com/invinfo_cash.htm. There are currently 1,411,112 Exchangeable Shares outstanding.

TerraVest also announced today implementation of a unitholder rights plan (the "Plan"). The Plan is designed to ensure that all of TerraVest's unitholders (the "Unitholders") are treated fairly in the event that a take-over bid is made for the trust units of TerraVest and that sufficient time and rights are available for TerraVest's board of trustees and all Unitholders to fully evaluate any offer and pursue options to maximize Unitholder value.

The rights issued to Unitholders under the Plan will entitle the holders thereof to acquire trust units of TerraVest at a 50% discount to market upon a person or group acquiring 20% or more of the trust units of TerraVest. However, the rights are not exercisable in the event of a "Permitted Bid." A Permitted Bid is a take-over bid made by way of a circular to all Unitholders, which remains open for at least 60 days and otherwise complies with customary Permitted Bid requirements. These requirements are designed to ensure that TerraVest is in a position to effectively pursue options to any take-over bid for the trust units of TerraVest.

The rights will not be exercisable and will not trade separate and apart from the trust units at any time prior to a person or group acquiring, or announcing an intention to acquire (in a manner that does not constitute a Permitted Bid), 20% or more of the trust units of TerraVest.

The Plan is effective immediately and has conditionally been approved by the Toronto Stock Exchange, but is subject to approval by Unitholders at their next meeting, and in any event within six months following the initial adoption of the Plan.

The Plan was not adopted in response to, or in anticipation of, any specific effort to acquire control of TerraVest.

The Fund expects to announce its 2006 results on March 15, 2007.

TerraVest Income Fund is an income trust whose Units trade on the Toronto Stock Exchange. It holds investments in six businesses:

- RJV is one of the largest providers of wellhead processing equipment for the natural gas industry in western Canada.

- Stylus is one of Canada's leading made-to-order upholstered furniture manufacturers.

- Don Park is one of Canada's largest manufacturers and suppliers of heating, ventilation and air conditioning (HVAC) products.

- Diamond is a market leader in providing well servicing to the oil and natural gas sector in south-western Saskatchewan, with a growing presence in Alberta.

- Beco is one of Canada's largest designers, manufacturers and importers of home textile products.

- Ezee-On manufactures heavy-duty equipment for large acreage grain farms and livestock operations.

Certain statements contained in this news release constitute forward-looking statements, including in respect of performance of the businesses and cash available. Although Management believes that the expectations represented in such forward looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties including those discussed in our MD&A and other filings made with securities regulators.

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