Newport Partners Income Fund

October 25, 2006 17:41 ET

Newport Invests $12.5 Million for 80% Interest in Gusgo Transport LP

TORONTO, ONTARIO--(CCNMatthews - Oct. 25, 2006) -


Newport Partners Income Fund (TSX:NPF.UN) ("Newport" or "the Fund") announced today that it has invested $12.5 million for an 80% interest in the business of Vaughan, Ontario-based Gusgo Transport ("Gusgo"), a provider of intermodel freight services specializing in all aspects of marine container transportation and storage. The remaining 20% interest is controlled by Gusgo's founder and President, Gus Gougoulias, who along with his existing management team will continue to operate the company. This is the seventeenth investment in Newport's diversified fund of private businesses.

Under the terms of the transaction, Mr. Gougoulias is receiving a combination of $9.5 million cash and $3 million units in Newport and has subordinated his 20% interest in Gusgo's cash flows to the Fund's unitholders for a period of four years. Newport's annual priority income under the subordination agreement is $2.4 million. Newport will draw approximately $9.5 million from its credit facility to finance the cash portion of the investment.

For the twelve months ended December 31, 2005, Gusgo had $12.1 million of revenues and $3.1 million of normalized EBITDA. Revenue and normalized EBITDA for the last twelve months to June 30, 2006 were $12.5 million and $3.1 million respectively.

Founded in 1969, Gusgo employs 72 full-time workers. Since moving to its large modern terminal in Vaughan, Ontario in 2003, Gusgo has experienced rapid growth as a provider of storage and transportation services of all manner of marine containers. The company's terminal is licensed as a customs sufferance warehouse and as a carrier, Gusgo is licensed for operation in Ontario, Quebec and throughout the United States. The company plans to continue its growth organically by expanding its customer base and through strategic acquisition. Newport was introduced to the investment opportunity in Gusgo by Hargraft Schofield LP, an insurance broker and another of Newport's investments.

"Gus and his management team have brought a high level of discipline and ingenuity to their business and this has translated into very attractive levels of profitability and a niche market position on which to build," said Mr. Peter Wallace, President & CEO of Newport. "We expect to put more capital behind this business in the future."

"We believe we have the platform, the strategic location, the capacity and the management team to become the leading provider for customers who want 'one stop shopping' for the movement of their container goods," explained Mr. Gus Gougooulias. "In Newport we are gaining a strong financial partner who can help us pursue our growth plan."


Newport is an unincorporated, open-ended trust created to hold through the Company's investment in Newport Partners Commercial Trust, interests in Newport Private Yield LP, ("NPY") a limited partnership established under the laws of the Province of Ontario. Newport began trading on the TSX on August 8, 2005 under the symbol NPF.UN.

Newport is a leading Canadian asset manager. Newport invests in the private business asset class -- a major growth engine of the Canadian economy. Our objective is to make long-term equity investments in leading private businesses that have a track record of strong earnings and potential for future growth. We minimize risk by diversifying our portfolio, investing at attractive prices, with capable operating management who are known to us, and by using debt conservatively. Newport's portfolio currently consists of 17 high-quality businesses representing a diverse cross-section of the Canadian economy. Newport unitholders participate in the cash flows, growth and diversification of the portfolio through monthly distributions. Newport's management has decades of investment experience and a significant ownership position.

The term "Normalized EBITDA" is a financial measure that is not a standard measure under Canadian GAAP. Newport's method of calculating Non-GAAP Measures may differ from the methods used by other issuers. Therefore, Newport's Non-GAAP Measures may not be comparable to similar measures presented by other issuers. Normalized EBITDA refers to net earnings of Newport determined in accordance with generally accepted accounting principles, before depreciation and amortization, net of gain or loss on disposal of capital assets, interest expense and income tax expense and other adjustments.

Investors are cautioned that the Non-GAAP Measures are not alternatives to measures under GAAP and should not, on their own, be construed as an indicator of Newport's performance or cash flows, a measure of liquidity or as a measure of actual return on the Units. Historical performance is not indicative of future returns.

Certain statements in this news release may include "forward-looking" statements that relate to future events or future performance and reflect management's expectations and assumptions regarding the growth, results of operations, performance and business prospects and opportunities of Newport and the operating partnerships in which it holds an ownership interest (the "Operating Partnerships"). Such forward-looking statements reflect management's current beliefs and are based on information currently available to management of Newport and the Operating Partnerships. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the future operating results and economic performance of Newport and the Operating Partnerships are forward-looking statements. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking statements. In evaluating these statements, prospective purchasers should specifically consider various factors, including the risks outlined under "Risk Factors" in Management's Discussion and Analysis, which may cause actual events or results to differ materially from any forward-looking statement. Although the forward-looking statements are based on what management of Newport and the Operating Partnerships consider to be reasonable assumptions based on information currently available to it, there can be no assurance that actual events or results will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this news release, and Newport does not assume any obligation to update or revise them to reflect new events or circumstances.

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