Newport Partners Income Fund

April 17, 2007 16:00 ET

Newport Partners Income Fund Invests $18.2 Million in Baird MacGregor Insurance Brokers


Newport Partners Income Fund (TSX:NPF.UN) ("Newport" or "the Fund") announced today that it has invested $18.2 million cash for a 77.5% interest in the business of Toronto-based Baird MacGregor Insurance Brokers LP ("BMI"), a leading full-service insurance broker specializing in the transportation and logistics industries in Ontario. The 22.5% minority interest is controlled indirectly by BMI President, Philomena Comerford. For the twelve month period ended February 28, 2007, BMI generated $13.6 million of revenue and $4.4 million of normalized EBITDA.

Under the terms of the transaction, Newport is also providing $2.3 million for working capital and to replace a pre-existing operating line for BMI's premium financing business. Newport will draw on its credit facility to finance the transaction.

Established in 1979, BMI has established a niche stronghold in commercial insurance by focusing on under-serviced industries and specialized programs that most insurers have difficulty handling. The company, which has 70 employees, services a diversified base of customers.

"With this investment, we are pleased to be adding to our financial services segment, which has been the most profitable segment of our portfolio," stated Mr. Peter Wallace, President & CEO of Newport. "We especially like the insurance industry for its relatively high levels of profitability and low capital expenditure requirements. Management came highly recommended to us through our insurance industry contacts and the opportunity to invest during the current softness in the cycle gives us additional upside potential."

"We had been approached by a number of interested purchasers, some offering higher valuations but only Newport was aligned with the objectives that were important to us," stated Ms Comerford. "We wanted to maintain our independence and ensure that we could perpetuate our business model for the benefit of our customers, insurance partners and our staff. We also wanted to maintain a significant equity interest. We feel comfortable that Newport understands our business and has a good reputation as a financial partner."


Newport is an unincorporated, open-ended trust created to hold through its 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 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 18 private business 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 term "normalized EBITDA" is a financial measure used in this news release that is not a standard measure under Canadian GAAP. Therefore, it may not be comparable to similar measures presented by other issuers.

Herein, "normalized EBITDA" refers to earnings of BMI determined in accordance with generally accepted accounting principles, normalized to remove owner earnings, before depreciation and amortization, interest expense and income tax expense. Management believes that normalized EBITDA is a useful supplemental measure of performance and is the primary basis on which management assesses financial performance and cash available for debt service, working capital, capital expenditures, income taxes and distributions.

This news release contains certain forward-looking information, including, but not limited to, information relating to future events or future operating results and economic performance of Newport and BMI and reflects management's current expectations and assumptions regarding the growth, results of operations, performance and business prospects and opportunities of Newport and BMI. A number of factors, including risks and uncertainties, could cause actual events or results to differ materially from the events and results discussed in the forward-looking information. There can be no assurance that actual events or results will be consistent with this forward-looking information, and management's assumptions may prove to be incorrect. This forward-looking information is made as of the date of this news release, and Newport assumes no obligation to update or revise them to reflect new events or circumstances. Undue reliance should not be placed on forward-looking information.

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