First National AlarmCap Income Fund
TSX : FNA.UN

First National AlarmCap Income Fund

July 27, 2011 19:33 ET

First National AlarmCap Income Fund Announces Sale of Assets

EDMONTON, ALBERTA--(Marketwire - July 27, 2011) - First National AlarmCap Income Fund (TSX:FNA.UN) (the "Fund") is pleased to announce that it has entered into an agreement (the "Agreement") to sell substantially all of its assets (the "Sale") for cash consideration of approximately $59.7M to Stanley Canada Corporation ("Stanley"), a subsidiary of Stanley Black & Decker, Inc. Stanley Black & Decker, (NYSE:SWK), an S&P 500 company, is a global industrial company with an approximately $800M Convergent/Electronic Security Solutions business.

Since the reconstitution of the Board of the Fund in 2008, the management and directors have been reviewing various strategic alternatives for the Fund. During this time, significant amounts of debt have been paid down, various trapped income tax pools have been released for use by the Fund, and restricted growth assets have been divested. These initiatives have enabled the Fund to pursue transactions to maximize unitholder value. This transaction is the culmination of these efforts.

The Agreement provides for the sale to Stanley of 100% of the issued shares of Microtec Enterprises Inc. ("Microtec"), which contains the operations and business assets of the Fund. The Trustees of the Fund unanimously support the Sale. Trustees and officers holding 13% of the units of the Fund have entered into voting and support agreements in favour of the Sale. A termination fee of $1.75M will be payable by the Fund to Stanley in certain circumstances, such as if the Sale is not completed in the event of an alternate transaction.

It is expected that the Microtec business unit will continue operations in substantially the same manner under the new ownership.

The Sale is subject to normal course regulatory approvals and Fund unitholder approval, along with other customary conditions. Closing of the Sale is anticipated to take place towards the middle of September 2011. The annual and special meeting currently scheduled for August 29, 2011 will be rescheduled to a date in the middle of September. An information circular relating to the unitholder meeting to approve the Sale is expected to be sent out in early August.

As soon as practicable following the Sale, it is expected that the Fund will be wound up and the assets of the Fund will be distributed to unitholders. The net cash proceeds to be distributed to unitholders on wind up after repayment of bank debt, transaction costs and wind up costs is estimated to be between $5.25 to $5.50 per Class A Unit. At this range, this represents approximately a 26% to 32% premium to the Fund's unit price at close on July 26, 2011. In terms of the distribution to unitholders, an advance distribution of approximately $5.00 will be made shortly after the annual meeting if (a) it is approved by the unitholders and (b) the transaction closes. The balance will be paid after the Fund is wound up. Detailed information about the transaction will be provided in the information circular that will be provided to the unitholders.

The Board of the Fund has received an opinion from BDO Canada LLP that, as of the date hereof, and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by the unitholders of the Fund and the shareholder of Microtec pursuant to the Sale is fair from a financial point of view to the unitholders of the Fund and to the shareholder of Microtec.

The Fund also wishes to announce that the distribution announced on July 20, 2011 will be the paid on August 31, 2011 and that it will be suspending any further distributions pending completion of the Sale.

The Fund is an unincorporated, open-ended, limited purpose trust and its Class A trust Units are listed on the Toronto Stock Exchange. It is one of the leading Canadian-owned security alarm service providers in Canada, serving more than 79,000 residential and commercial customers. It offers customers a full suite of security and related monitoring products and services, including intrusion, smoke detection, and environmental services. Monitoring services are provided 24 hours per day, 365 days per year from our state-of-the art ULC listed monitoring centres with bilingual speaking capabilities. Information about First National AlarmCap Income Fund can be found at www.sedar.com or at www.alarmcap.ca.

Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, engineered fastening systems, and more. Learn more at www.stanleyblackanddecker.com.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws relating to the Sale, including statements regarding the terms and conditions of the Sale. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Sale, that the ultimate terms of the Sale will differ from those that currently are contemplated, and that the Sale and subsequent wind-up will not be successfully completed for any reason (including the failure to obtain the required approvals from unitholders and regulatory authorities). The statements in this news release are made as of the date of this release. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Fund undertakes no obligation to update forward-looking statements except as may be required by applicable law.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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