December 18, 2006 07:51 ET

Colabor Provides Update on its Acquisition of Summit Food Service Distributors Inc.

BOUCHERVILLE, QUEBEC--(CCNMatthews - Dec. 18, 2006) -


Colabor Income Fund (TSX:CLB.UN)(the "Fund") confirms it is proceeding with the acquisition of the assets of Summit Food Service Distributors Inc. ("Summit"), one of Canada's largest distributors to the foodservice industry, from Cara Operations Limited ("Cara").

On December 15, 2006, in connection with the October 31, 2006 proposals by the Minister of Finance, the Department of Finance (Canada) announced its guidance on what constitutes "normal growth" for income trusts and other flow-through entities ("Guidance"). Upon its preliminary review of the Guidance, Management believes, as it was considered possible at the time the acquisition was announced, that there is a strong likelihood that the acquisition and its corresponding funding will result in the Fund becoming subject to tax on its income beginning in January 1, 2007 provided the enabling legislation is enacted. "As highlighted when the transaction was announced, the combination with Summit achieves one of Colabor's key strategic objectives of growing its business nationally. Through this acquisition, Colabor secures a key position in the strategically important and attractive Ontario foodservice market and establishes itself as one of the leading players in the Canadian food service distribution industry," said Gilles C. Lachance, President and CEO of Colabor.

Under the scenario where the Fund becomes taxable and as previously outlined in the Fund's preliminary prospectus filed on December 14, 2006 with the securities regulatory authorities, Management confirms that it intends to maintain its current distribution policy representing an annual distribution to unitholders of $1.076 per Unit. As a result of the taxation at the Fund level, the distributions received by the unitholders would be deemed to be received as an eligible taxable dividend and therefore would benefit from the enhanced gross-up and dividend tax credit. Management reaffirms its opinion that the transaction will be accretive to the Fund's cash available for distribution per Unit for the first full year of operations following the closing of the acquisition, on both a basic and fully-diluted basis after taking into account tax payable on income earned by the Fund.

Gilles C. Lachance, President and CEO of Colabor, stated: "The acquisition of Summit allows Colabor to take advantage of opportunities in the foodservice sector while strengthening the financial and operational base of Colabor going forward. The Fund's balanced capital structure and enhanced competitive positioning within the Canadian food distribution industry will allow it to continue growing and seize future acquisition opportunities over the course of the next several years."

The Fund will file today with the securities regulatory authorities an amendment to its preliminary prospectus further describing the impact of the Guidance.

About Colabor Income Fund

Colabor is a wholesaler of food and non-food products that it purchases and supplies to wholesale distributors who, in turn, sell them to their retail (grocery stores, convenience stores, etc.) and food-service customers (cafeterias, restaurants, hotels, restaurant chains, etc.). Colabor is one of the largest wholesalers in Canada and the largest in Quebec, with net sales of $399.2 million for the twelve-month period ended September 8, 2006.

Forward-looking Statements

This News Release may contain forward-looking statements reflecting the opinions or present expectations of Colabor Income Fund or Colabor Limited Partnership concerning their performance as well as their respective business activities and future events. These statements are subject to a number of risks, uncertainties and assumptions. Actual results or events may differ.

Further information can be found in the disclosure documents filed by Colabor Income Fund with the securities regulatory authorities, available at

Contact Information

  • Colabor Income Fund
    Mr. Gilles C. Lachance
    President and Chief Executive Officer
    (450) 449-0026 ext. 265
    Colabor Income Fund
    Mr. Michel Loignon, CA
    Vice-President Finance & Administration
    (450) 449-0026 ext. 235