Associated Brands Income Fund
TSX : ABF.UN

Associated Brands Income Fund

March 31, 2006 11:32 ET

Associated Brands Income Fund Provides Update on Defaults Under Credit Facility and Exchangeable Debentures

TORONTO, ONTARIO--(CCNMatthews - March 31, 2006) -

NOT FOR RELEASE OVER U.S. NEWSWIRE SERVICES

Associated Brands Income Fund (TSX:ABF.UN) announced today that interest due on March 30, 2006 on the exchangeable debentures issued by Associated Brands Holdings Limited Partnership has not been paid, in accordance with the terms of a subordination agreement between the Fund, its bank and the holders of the exchangeable debentures and the Fund's waiver and consent agreement with its bank. The waiver and consent agreement with the Fund's bank was entered into on March 6, 2006, following the Fund's default under certain covenants in its credit agreement with the bank, which also resulted in a default under the terms of the exchangeable debentures. Under the subordination agreement and the waiver and consent agreement, interest on the exchangeable debentures is not permitted to be paid without the consent of the Fund's bank. As such consent was not provided, the interest payment on the exchangeable debentures has not been made, resulting in a further default under the exchangeable debentures.

The credit agreement and the terms of the exchangeable debentures provide the bank and the debenture holders, respectively, with certain rights and remedies during the continuance of a default, including the right to accelerate the debt due under the credit agreement and the exchangeable debentures, respectively, and the right to realize upon security that has been granted by the Fund's subsidiaries. The ability of the holders of the exchangeable debentures to exercise such rights is subject to the provisions of the subordination agreement. As part of its turn around plan, the Fund is continuing discussions with the bank and the debenture holders with respect to the Fund's ongoing credit relationships with such parties.

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

Certain statements in this press release may include "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.

Contact Information

  • Associated Brands Income Fund
    Rob Dougans
    President and Chief Executive Officer
    (416) 503-7012