Associated Brands Income Fund
TSX : ABF.UN

Associated Brands Income Fund

March 06, 2007 14:35 ET

Associated Brands Income Fund in Negotiations Regarding Possible Going Private Transaction

TORONTO, ONTARIO--(CCNMatthews - March 6, 2007) - Associated Brands Income Fund (TSX:ABF.UN) announced today that it is in negotiations regarding a possible transaction that would result in the acquisition of Associated Brands by a subsidiary of a fund managed by TorQuest Partners and a cash payment to the Fund's unitholders for their Fund units.

Although the terms and conditions of the transaction, including price and transaction structure, have not been finalized, the range for the possible cash purchase price per Fund unit being discussed would be at a premium of approximately 32% to the closing price of the Fund units on the Toronto Stock Exchange on March 5, 2007 of $0.62 per unit.

If the parties conclude acceptable terms for the transaction, the transaction would be subject to a number of closing conditions, including approval by the Fund's unitholders and the receipt of specified third party consents, including from the lender under the Associated Brands' credit facility. The transaction would require the approval of 66 2/3% of the votes cast at a meeting of the Fund's unitholders, as well as the approval of the majority of "minority" holders for purposes of Ontario Securities Commission Rule 61-501 and Regulation Q-27 of the Autorite des marches financiers du Quebec. Units held by TorQuest and its related parties would be excluded from such minority vote.

There can be no assurance that an agreement with TorQuest Partners will be reached or that a going private transaction involving Associated Brands will occur. The entering into of any agreement regarding the transaction by the Fund would be subject to, among other things, the approval of the Fund's board of trustees.

Negotiations on behalf of Associated Brands have been conducted by a special committee of trustees of the Fund and its wholly-owned subsidiary Associated Brands Operating Trust ("ABOT") who are independent of TorQuest Partners.

Based on information provided from TorQuest Partners, funds managed by TorQuest Partners currently hold approximately $10.0 million aggregate principal amount of exchangeable debentures of Associated Brands Holdings Limited Partnership (a subsidiary of ABOT), which are exchangeable for Fund units at various exercise prices, and 892,912 Fund units. In addition, one of the trustees of ABOT is a managing partner of the TorQuest Funds' general partner.

About Associated Brands Income Fund

Associated Brands Income Fund (TSX:ABF.UN), through its operating subsidiaries, is a leading North American manufacturer and supplier of private-label dry-blend food products 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, producing over eleven million cases annually across multiple product categories currently sold to 45 of the 50 largest North American food retailers. Associated Brands plans to build unitholder value by leveraging its solid presence in the U.S. private-label market, expanding its product offerings to current and new customers and adding additional contract manufacturing business, and through accretive acquisitions that meet its strict operating and strategic criteria. More information can be obtained at www.associatedbrands.com.

This press release contains certain forward-looking information and statements. Forward-looking information typically contains statements with words such as "consider", "anticipate", "believe", "expect", "plan", "intend", "may", "likely" or similar words suggesting future outcomes or statements regarding an outlook for, or future changes in, the Fund's financial performance, results of operations or distributions, a possible agreement regarding a going private transaction for the Fund, a possible going private transaction for the Fund or other expectations, future events or performance. Readers should not place undue reliance on forward-looking information and should be aware that forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the entering into of an agreement relating to a going private transaction for the Fund, the completion of such a going private transaction, or actual results, performance or achievements of the Fund to differ materially from those suggested by the forward-looking statements. These factors include, but are not limited to, the failure to reach an agreement relating to a going private transaction for the Fund; the possibility that any conditions to closing under any such agreement may not be satisfied or waived; the possible failure to successfully plan and execute business improvement strategies; restrictions and covenants contained in the Fund's credit agreement and under the terms of its exchangeable debentures; the absence of long term sales contracts; possible failure to develop new product offerings; operating hazards; sensitivity of sales to weather conditions; product liability; compliance with or changes in environmental, health and safety and other regulations and guidelines; changes to income tax legislation; possible declines in vertical industry markets (grocery, foodservice, industrial and contract manufacturing); competition; reliance on key personnel; possible labour action; volatility in commodity prices and other input materials; prices; foreign exchange exposure; exposure to floating interest rates; exposures under derivative financial instruments; the possible failure to expand into the United States; changes in consumer preferences; capital expenditures;

The above list of important factors affecting forward-looking information is not exhaustive, and reference should be made to the other risks discussed in the Fund's filings with Canadian securities regulatory authorities. The Fund undertakes no obligation, except as required by law, to update publicly or otherwise any forward-looking information, whether as a result of new information, future events or otherwise, or the above list of factors affecting this information.

Contact Information

  • Associated Brands Income Fund
    Rob Dougans
    President and CEO
    (416) 503-7012