Drive Products Income Fund
TSX : DPI.UN

Drive Products Income Fund

October 08, 2010 15:51 ET

Drive Products Enters Into Support Agreement for Privatization Transaction

TORONTO, ONTARIO--(Marketwire - Oct. 8, 2010) - Drive Products Income Fund (the "Fund") (TSX:DPI.UN) and 2256479 Ontario Inc. (the "Offeror"), a company controlled by Greg Edmonds, Chief Executive Officer of the Fund and Russell Bilyk, President of Drive Products, the operating partnership owned by the Fund (together, the "Insiders"), announced today that they have entered into a support agreement (the "Support Agreement") under which the Offeror has agreed to offer to purchase (the "Offer") at a price of $2.50 cash per trust unit of the Fund (each, a "Unit" and collectively, the "Units") all of the issued and outstanding Units, other than Units owned and/or controlled, directly or indirectly, by the Offeror, its affiliates, the Insiders and certain excluded unitholders (the "Excluded Parties"). The Offer will be made by way of a take-over bid that will be mailed to unitholders of the Fund on or about October 8, 2010. The transaction is expected to be completed on or about November 15, 2010.

The Board of Trustees of the Fund has unanimously recommended that unitholders tender their Units to the Offer. The Board of Trustees have made their recommendation with the benefit of input from the legal and financial advisors of the Fund. Campbell Valuation Partners, the financial advisor to the Board of Trustees, rendered an opinion to the Board of Trustees that, subject to the assumptions and limitations described therein, as at September 30, 2010, the consideration offered pursuant to the Offer is fair from a financial point of view to unitholders of the Fund (other than the Offeror, its affiliates, the Insiders and the Excluded Parties).

The $2.50 per Unit cash consideration represents a 92% premium over the closing price of the Units on September 15, 2010, the last day of trades prior to public announcement of the Offeror's intention to make the Offer and a 72% premium over the volume weighted average price of the Units over the last 20 trading days ending on September 15, 2010.

A take-over bid circular containing the terms of the Offer will be mailed to unitholders together with a Trustees' circular describing the background and negotiations leading up to the Offer. These documents will also be filed on SEDAR at www.sedar.com. The Offer is subject to certain conditions, including the tender to the Offer of a sufficient number of Units that will result in the Offeror, together with its affiliates, the Insiders and the Excluded Parties, owning at least 66 2/3% of the outstanding Units. The Offeror and its affiliates, together with the Insiders and the Excluded Parties, currently own 874,100 Units and 6,185,418 Class B LP Units representing approximately 13% of the currently outstanding Units and approximately 53% of the outstanding Units on a fully-diluted basis. If the Offer is successful, the Offeror intends to proceed with a second stage transaction that will result in the Offeror, its affiliates, the Insiders and the Excluded Parties owning and/or controlling, directly or indirectly, 100% of the Units.

In connection with the Offer, the Offeror has entered into lock-up agreements with unitholders of the Fund pursuant to which such unitholders, who control approximately 41% of the currently outstanding Units and approximately 21% of the voting securities of the Fund, have agreed to tender to the Offer all of the Units under their control.

About Drive Products Income Fund

Drive Products Income Fund holds a 52% indirect interest in Drive Products. Founded in 1983, Drive Products is a Canadian leader in the design and installation of systems solutions that transform a conventional new truck chassis into a specialized vehicle that meets a customer's technical and performance requirements. To achieve this, Drive Products offers a wide variety of products such as power take-offs, hydraulic pumps, motors and coolers, winches, cables and controls, drivelines, blowers and compressors, hoses and fittings, custom consoles, snowplows, spreaders and electronic spreader controls, from leading international manufacturers, in many instances as the sole distributor in Canada.

Cautionary Statement Regarding Forward-looking Information

This press release contains forward-looking information (as defined in the Securities Act (Ontario)) and forward-looking statements (as defined in the United States Securities Exchange Act of 1934) (collectively referred to herein as "forward-looking information" or "forward-looking statements"). Forward-looking statements include all statements that are predictive in nature or that depend on future events or conditions. Forward-looking information is typically identified by words such as "may", "will", "intend", "should", "expect", "believe", "plan", "anticipate", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar terminology. All statements in this press release, other than statements of historical fact, are forward-looking statements. Specifically, this press release contains forward-looking statements regarding the mailing date for the Offer and circular by the Offeror and the Trustee circular by the Board of Trustees and the expected completion date of the Offer. Forward-looking information should not be read as a guarantee of future performance or results. Investors should not rely unduly on forward-looking information as a number of factors could cause actual results to differ materially from the results discussed in the forward-looking information. Although the forward-looking information contained in this press release is based upon what management believes are reasonable assumptions, neither the Fund, Gregory Edmonds, Russell Bilyk nor 2256479 Ontario Inc. can assure investors that actual results will be consistent with results anticipated in such forward-looking information.

The forward-looking information is provided as of the date of this press release and none of the Fund, Gregory Edmonds, Russell Bilyk nor 2256479 Ontario Inc. assumes any obligation to update or revise the forward-looking information to reflect new events or circumstances except as required by applicable law.

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