Brascan Adjustable Rate Trust I

Brascan Adjustable Rate Trust I

April 21, 2008 09:13 ET

Brascan Adjustable Rate Trust Announces Meeting of Unitholders

TORONTO, ONTARIO--(Marketwire - April 21, 2008) - Brascan Adjustable Rate Trust I (the "Fund") (TSX:BAO.UN), today announced that it proposes to call a meeting of unitholders following the completion of the previously announced strategic review by its Manager of the Fund's investment objectives and strategy in light of the ongoing volatility in the credit and mortgage-backed securities markets.

The Fund provides exposure to an actively managed portfolio of primarily mortgage-backed securities held by Brascan Adjustable Rate Limited Partnership (the "Partnership") and at April 10, 2008, had net assets of approximately $4.7 million or $3.25 per unit.

Special Redemption Right

The Manager is announcing that it proposes to call a meeting of unitholders to consider a special resolution to permit any unitholders who wish to redeem their investment in the Fund to do so as of July 31, 2008. This special one-time redemption right would be in addition to the normal annual redemption right that arises, pursuant to the Fund's Declaration of Trust, on November 30th of each year. This special redemption right would give unitholders an additional opportunity to liquidate their holdings at net asset value which otherwise would not be available to them at this time. Full details of the special redemption right will be set out in materials to be delivered to unitholders prior to the meeting.

The special resolution will also include an amendment of the Fund's Declaration of Trust to provide for the termination of the Fund without the further consent of unitholders in the event that the total number of Fund units held by unitholders other than the Manager falls below 1,000,000 or if the net asset value of the Fund declines to less than C$3 million. If either of these thresholds is broken, the Manager believes that there will be insufficient liquidity for the remaining unitholders and that operating costs of the Fund will be prohibitively high in relation to the size of the Fund and, as a result, it will be in the best interests of unitholders to liquidate the Fund and distribute the proceeds to unitholders in an orderly fashion. Full details of the proposed amendment will be set out in materials to be delivered to unitholders prior to the meeting.

Unitholder Meeting

The Manager proposes to call a meeting of Fund unitholders which it anticipates will take place no later than July 11, 2008 to consider the special resolution to amend the Fund's Declaration of Trust to provide for the special redemption right and the termination of the Fund in certain circumstances. It is expected that materials for this meeting, which will provide further details on the proposal, will be available no later than three weeks prior to the date of the meeting.

Update on Counterparty Arrangements

Current conditions in the credit markets remain extremely volatile and liquidity-constrained and financing continues to be difficult to secure. Under the terms of the forward agreement by which the Fund receives its exposure to the Partnership and its portfolio, the counterparty may, in certain circumstances, elect to terminate it. In order to permit the Fund to continue to have exposure to the Partnership's portfolio, the counterparty has agreed to waive its termination rights on the condition that an affiliate of the Manager provides the counterparty with an indemnity in connection with its waiver. Neither the Fund nor the Partnership has made or is required to make any payments in consideration of this indemnity.

The Fund's Independent Review Committee has reviewed the indemnity and concluded that it is clearly in the best interests of the Fund, since it allows the Fund to continue operations in the normal course, with no costs or obligations on the Fund and no benefit to the Manager or its affiliates. As a result, the Independent Review Committee has recommended that the Manager proceed with the contemplated transactions on the basis that they achieve a fair and reasonable result for the Fund.

Brascan Adjustable Rate Trust I is an investment trust providing unitholders with exposure to a portfolio primarily consisting of mortgage-backed securities. The Fund is listed on the TSX under the symbol BAO.UN.

About Forward-looking Information

This News Release contains forward-looking information within the meaning of Canadian provincial securities laws and other "forward-looking statements" and information, within the meaning of certain securities laws, including "safe harbour" provisions in any applicable Canadian securities regulations. The words "anticipates", "believe," "will," "likely,", "expected," derivations thereof and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters, identify forward-looking statements. Although the Manager and Investment Manager believe that the anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund and the Partnership to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information. Factors that could cause actual results to differ materially from those set forth in the forward-looking statements or information include: general economic conditions; market disruptions; changes in interest and exchange rates; changes in mortgage prepayment rates; credit risk around borrower default; availability of financing; changes in legislation or practices governing the income trust sector and other risks and factors described in the Fund's and the Partnership's Prospectus, Annual Information Form and other documents filed by the Fund and the Partnership with the securities regulators in Canada. Except as may be required by law, neither the Fund nor the Partnership undertakes any obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise.

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