Newport Partners Income Fund

March 27, 2007 16:00 ET

Newport Partners Income Fund Announces Definitive Agreement to Sell Its Investment in RGC

Sale proceeds to be reinvested in additional private equity investments

TORONTO, ONTARIO--(CCNMatthews - March 27, 2007) -


Newport Partners Income Fund (TSX:NPF.UN) ("Newport" or "the Fund") announced today that Redmond Group of Companies ("RGC"), an independent distributor of consumer electronics and appliances, has signed a definitive agreement to sell substantially all of its assets to SYNNEX Canada Limited ("SYNNEX Canada"), a subsidiary of global IT supply chain company SYNNEX Corporation (NYSE:SNX). SYNNEX Canada is a leading distributor of technology products to resellers and systems builders in Canada. The final purchase price is subject to adjustment but net proceeds are expected to be approximately $35 million. Newport, which owns 80% of RGC, also announced it will write down the carrying value of its investment by approximately $55.8 million to the Fund's estimated net sale proceeds.

The transaction is expected to close on or about April 30, 2007 and is subject to normal regulatory approval and customary closing conditions. RGC's 45% equity investment in RLogistics, completed in May 2006 for $10 million, is not included in the transaction. Upon closing, Newport will indirectly retain its 36% equity interest in RLogistics.

RGC, which had been in Newport's portfolio since October, 2004, had been experiencing operational challenges primarily due to industry-wide declining margins that impacted profitability and an acquisition that did not deliver intended benefits. The purchase by SYNNEX Canada, a leader in the distribution of technology products, is expected to give RGC access to greater operational scale and management resources.

"While we are clearly disappointed in the financial performance of this investment, concluding this sale has immediate benefits for the Fund," noted Peter Wallace, Newport's President and CEO. "First, it frees up capital and debt capacity that can now be redeployed in investment opportunities that can potentially deliver cash yields of 16 to 20 percent and have good growth potential. Second, it reduces the amount of seasonality and earnings volatility in the portfolio."


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 Partners Income Fund provides a simple way for investors to own private equity investments. Through ownership of Newport, investors gain access to a professionally-managed diversified portfolio of successful Canadian private businesses that offers income, growth, diversification and liquidity. Newport's core business is asset management. Its investment philosophy is to make long-term equity investments in leading or niche private businesses that have a track record of strong earnings, and potential for future growth. The Fund seeks to minimize risk through diversification, prudent use of leverage and investing in competent operating management who are known and trusted by Newport management. Newport's portfolio currently consists of 17 private company holdings representing a diverse cross-section of the Canadian economy. Newport's management has decades of investment experience and a significant ownership position in the Fund.

The terms "Distributable Cash" and "Distributable Cash per Unit" (the "Non-GAAP Measures") are financial measures used in this release that are not standard measures 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, as presented in this release may not be comparable to similar measures presented by other issuers. Newport's method of calculating Distributable Cash is disclosed in its third quarter 2006 Management Discussion and Analysis. Management believes that Distributable Cash and Distributable Cash per Unit are useful supplemental measures that provide investors with information on cash available for distribution.

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 or NPY's performance or cash flows, a measure of liquidity or as a measure of actual return on the Units.

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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