Tree Island Wire Income Fund
TSX : TIL.UN

Tree Island Wire Income Fund

December 18, 2009 19:57 ET

Tree Island Announces Filing of Final Prospectus For Rights Offering

VANCOUVER, BRITISH COLUMBIA--(Marketwire – Dec. 18, 2009) -

NOT FOR DISTRIBUTION THROUGH U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S.

Tree Island Wire Income Fund ("Tree Island" or the "Fund") (TSX:TIL.UN) announced that it has received a receipt dated December 17, 2009, for a final short form prospectus (the "Prospectus") filed with the securities regulatory authorities in each of the Provinces of Canada (the "Eligible Jurisdictions"), relating to its previously announced offering (the "Offering") of rights to unitholders of the Fund. The Fund is seeking to raise up to $10 million in gross proceeds from the Offering.

Under the terms of the Offering, unitholders of record on December 30, 2009 are entitled to receive one right ("Right") for each unit held. For every 221.12489 Rights held, a holder thereof is entitled to subscribe for $100 principal amount of 10% second lien convertible debentures (the "Debentures"). The conversion price of the Debentures will be $0.50 per unit of the Fund, subject to adjustment in certain events. The exercise of Rights and the payment for Debentures must be completed prior to 5:00 p.m. (Vancouver time) on January 27, 2010 (the "Expiry Date"). Unitholders who fully exercise their Rights are entitled to subscribe pro rata for additional Debentures, if available, that are not otherwise subscribed for on or before the Expiry Date.

The units of the Fund are expected to commence trading on the TSX on an ex-rights basis at the opening of trading on December 24, 2009, meaning that units purchased on or following that date will not be entitled to receive Rights under the Offering. At that time, the Rights will be posted for trading on the TSX on a "when-issued" basis. Trading of the Rights will continue until noon (Toronto time) (the "Expiry Time") on the Expiry Date.

The TSX has conditionally approved the listing of the Debentures and will list the units issuable upon the conversion of the Debentures including any Debentures issued in lieu of cash interest payments. The approval of the listing of the Debentures is subject to the Fund fulfilling all of the listing requirements of the TSX.

The Offering is being made to unitholders of the Fund in the Eligible Jurisdictions. The Prospectus, together with Rights certificates, will be mailed to registered unitholders in the Eligible Jurisdictions beginning on or about January 6, 2010. Registered unitholders resident in jurisdictions other than the Eligible Jurisdictions will not be mailed Rights certificates unless they are able to establish to the Fund through Valiant Trust Company (the "Subscription Agent") on or before January 17, 2010, that they qualify as approved eligible holders, as will be more particularly described in a letter to such unitholders. Unitholders who own their units through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials and instructions from their intermediary. The Subscription Agent will attempt to sell the Rights of unitholders resident in jurisdictions other than the Eligible Jurisdictions who do not qualify as approved eligible holders prior to January 17, 2010, for the account of such unitholders prior to the Expiry Time on the Expiry Date on such date(s) and at such price(s) as the Subscription Agent will determine in its sole discretion.

As previously announced, pursuant to an investment agreement dated August 13, 2009, as amended, among the Futura Corporation ("Futura"), Marret Asset Management Inc. ("Marret") on behalf of certain investment funds managed by Marret, Arbutus Distributors Ltd. ("Arbutus" and, collectively with Futura and Marret, the "Investors") and the Fund, the Investors have agreed to purchase a minimum of $1,787,389 and a maximum of $3,250,000 aggregate principal amount of Debentures under the Offering (the "Rights Offering Commitment"). Each of the Investors may, but shall not be required to, purchase Debentures under the Offering in excess of the Rights Offering Commitment to the extent such Debentures are available. 

Unitholders and purchasers of Rights are encouraged to read the Prospectus carefully and consult their own legal and financial advisors to determine their rights and entitlements under the Offering.

The Fund intends to use the entirety of the net proceeds of the Offering for working capital purposes, including the reduction of the amount of indebtedness under the Fund's revolving credit facilities. Net proceeds from the Offering will therefore further increase the availability under the revolving credit facilities.

This press release should be read together with, and is qualified in its entirety by, the more detailed information contained in the Prospectus which is available on SEDAR at www.sedar.com

No U.S. Registration or Sales

The securities offered will not be or have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state, and may not be offered or sold in the United States or to, or for the account or benefit of, any U.S. Person (as defined in Regulation S of the Securities Act) or person in the United States. The Prospectus is not being sent to or circulated in the United States or to, or for the account or benefit of, a U.S. Person or person in the United States without registration unless an exemption from registration is available. The Fund may offer or sell the Debentures in the United States to certain accredited investors in transactions that comply with the exemption from registration set forth in Regulation D under the Securities Act.

Fund Profile

The Fund was launched on November 12, 2002, with the completion of an Initial Public Offering. The Fund holds a 100% ownership interest in Tree Island Industries Ltd. (the "Company"). The Fund's performance depends entirely on the performance of the Company.

Tree Island Profile

Headquartered in Richmond, British Columbia, Tree Island Industries Ltd. produces wire products for a diverse range of construction, agricultural, manufacturing and industrial applications. Its products include bright wire, stainless steel wire and galvanized wire; a broad array of fasteners, including packaged, collated and bulk nails; stucco reinforcing products, engineered structural mesh, fencing and other fabricated wire products. The Company markets these products under the Tree Island and TI Imports brand names. Tree Island also owns and operates a Hong Kong-based trading company that provides internationally sourced products to the Company and its customers worldwide.

Forward-Looking Statements

Certain statements contained in this press release constitute "forward looking statements". These statements relate to future events or future performance and include, but are not limited to, statements regarding the timing to file the preliminary short form prospectus in respect of the Rights Offering. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", and similar expressions are often used to identify forward looking statements.

By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific. In evaluating these statements, readers should specifically consider risks which may cause actual results to differ materially from any forward looking statement. These risks include, but are not limited to, risks relating to the possibility that the Rights Offering may not be completed.

The forward looking statements contained herein are based upon certain assumptions considered reasonable at the time they were prepared. Such assumptions include, but are not limited to, assumptions regarding: (i) general economic conditions, (ii) the Fund's future business prospects and opportunities, and (iii) the outcome of the proposed Rights Offering. Should one or more of the risks or uncertainties identified herein materialize, or should the assumptions underlying the forward looking statements prove to be incorrect, then actual results may vary materially from those described herein. Readers are cautioned not to place undue reliance on forward looking statements. Except as required by applicable securities laws, the Fund does not assume any obligation to update the forward looking statements contained herein.

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