Associated Brands Income Fund
TSX : ABF.UN

Associated Brands Income Fund

September 20, 2005 17:54 ET

Associated Brands Income Fund Announces September 2005 Distribution And Waiver of Credit Agreement Defaults

TORONTO, ONTARIO--(CCNMatthews - Sept. 20, 2005) -

NOT FOR RELEASE OVER U.S. NEWSWIRE SERVICES

Associated Brands Income Fund (TSX:ABF.UN) announced today a distribution of $0.05 per unit for the period from September 1, 2005 to September 30, 2005, payable on October 14, 2005 to unitholders of record on September 30, 2005.

The Fund also announced that it breached two financial covenants in its credit agreement with its lender relating to the ratio of its funded debt (which represents all of the Fund's interest bearing debt and the net present value of its operating lease commitments) to EBITDAR (EBITDA as defined below plus annualized operating lease payments) as at July 30, 2005 and the ratio of its current assets to current liabilities as at July 30, 2005. The Fund's lender has waived these breaches as at July 30, 2005 to and including October 14, 2005.

The waiver by the Fund's lender is effective in respect of the period from July 30, 2005 to and including October 14, 2005. As previously announced, the Fund has reached an agreement in principle in respect of a proposed private placement of $10 million of 9% exchangeable subordinated debentures, subject to conditions which include completion of due diligence and receipt of regulatory and third party approvals. The Fund is in discussions with its lender to obtain revisions to its credit agreement in conjunction with the completion of the proposed private placement, including an extension of such waiver beyond October 14, 2005. The Fund currently expects that the proposed private placement of debentures and related credit agreement amendments will be completed by October 14, 2005. There can be no assurance, however, that such transactions will be completed, and the failure to complete them could have a material adverse impact on the Fund's financial condition and the value of the Fund's units.

The Fund's policy is to pay monthly distributions to unitholders of record on the last business day of each month. The Fund's policy is to pay such distributions on or about the fifteenth day following each month end.

For this cash distribution, U.S.$0.006976 per unit will be considered U.S. source interest income and accordingly subject to U.S. withholding taxes. For registered unitholders who have not delivered valid, completed W8-BEN forms, the U.S. withholding taxes will be 30% of the U.S.$0.006976. For registered unitholders who qualify for a reduced rate of withholding under U.S. law, a valid, completed W8-BEN must be provided to obtain a reduced rate of withholding. For registered unitholders who have provided a valid, completed W8-BEN and who do not hold 10% or more of the Fund, U.S. withholding tax is reduced to zero.

Associated Brands is a leading North American manufacturer and supplier of private label dry-blend food and household products. Since beginning operations in 1985, Associated Brands has grown to become one of the three largest suppliers of a diverse range of private label dry-blend food products in North America. Associated Brands currently produces over eleven million cases of food and household products annually across multiple product categories, selling to 44 of the 50 largest North American food retailers.

FORWARD LOOKING STATEMENTS AND NON-GAAP MEASURES

Certain statements in this press release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Associated Brands Income Fund to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements use such words as "may", "will", "expect", "anticipate", "project", "believe", "plan" and other similar terminology. The risks and uncertainties are detailed from time to time in reports filed by the Fund with the securities regulatory authorities in all of the provinces and territories of Canada. New risk factors may arise from time to time and it is not possible for management to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance and achievements of the Fund to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

EBITDA is not a defined term under GAAP. The Fund defines EBITDA as earnings before interest, income taxes, amortization and translation gains and losses arising on monetary assets and liabilities of the Fund dominated in foreign currency. Management believes that EBITDA is a useful supplemental measure to net earnings, as it provides investors with an indication of cash available for distribution prior to debt service, capital expenditures and income taxes. Investors should be cautioned that EBITDA should not be construed as an alternative to net earnings (loss) determined in accordance with GAAP as an indicator of the Fund's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Fund's method of calculating EBITDA may differ from the methods by which other issuers calculate EBITDA and, accordingly, EBITDA may not be comparable to measures used by other issuers.

Contact Information

  • Associated Brands
    John R. Currie
    Executive Chairman
    (416) 503-7000