Newport Partners Income Fund

December 18, 2007 07:56 ET

Newport Partners Income Fund Reduces Distributions to $0.65 Per Unit

Retained cash to be invested in value creation - Amended distribution policy allows distributable cash to be retained to support value creation - Realized capital gains expected in 2008 also to be invested predominantly in debt reduction and portfolio re-investment - Normal Course Issuer Bid is being renewed - For 2008, management expects income and capital gains to remain in line with targeted return objectives

TORONTO, ONTARIO--(Marketwire - Dec. 18, 2007) - Newport Partners Income Fund (TSX:NPF.UN) ("NPF" or "the Fund") announced today that its Board of Trustees has approved amendments to the Fund's distribution policy to allow the Fund to retain a greater portion of the cash generated by the Fund's investment portfolio. As a result, the Board of Trustees authorized a reduction in the annual distributions to unitholders from $1.00 per unit to $0.65 per unit. Beginning with the distribution to be paid on January 15, 2008 covering the period from December 1 to December 31, 2007 to unitholders of record at the close of business on December 31, 2007, the Fund plans to pay unitholders $0.0542 per unit per month versus the current distribution rate of $0.0833 per unit per month.

"The market is sending us a strong signal that our current distribution policy is not the most effective use of the cash generated by the Fund's investments," said Mr. Peter Wallace, President & CEO. "We concur and believe that our overall capital efficiency will be improved by paying a lower monthly distribution and re-investing the Fund's cash in growing the value of our investment portfolio. The new distribution rate is high enough to provide a reasonable cash-on cash-return for income-oriented investors and low enough to provide the Fund with a meaningful source of retained cash to invest in activities that create value."

NPF is a diversified fund that invests in high quality Canadian private businesses to earn total returns based on income and capital appreciation from the underlying investments. Since inception, NPF's distribution policy has been to pay substantially all of its distributable cash, the income portion of its total return, to the Fund's unitholders. Under the amended policy, the Fund has been given the flexibility to pay unitholders a portion of distributable cash and to retain the balance to allow it to act on opportunities that management believes will create value for unitholders such as portfolio reinvestment including unit repurchases under a renewed Normal Course Issuer Bid ("NCIB"), announced today in a separate news release, and debt reduction.

The Fund also confirmed that it expects to reinvest the majority of proceeds from any capital gains received in 2008 from the sale of portfolio holdings in portfolio reinvestment and debt reduction. In November, the Fund announced that it is working on a plan for its largest holding, NPC Integrity Energy Services LP to access the public markets directly in 2008, a transaction that is expected to result in the realization of a capital gain.

"NPF was established to earn a total annual return of greater than 20% from a portfolio of private businesses that deliver a distributable cash yield of 15-20% and grow in value over time. The portfolio has achieved these objectives every year since inception and our outlook for 2008 is that it will continue to meet these return expectations," added Mr. Wallace.

"We believe our Fund has much to offer investors looking for income and growth," noted Aubrey Baillie, Executive Chairman. "Since the beginning of this year, the Fund's management and trustees have stepped up to reinforce this belief by purchasing more than 800,000 units in the open market, in addition to the Fund's re-purchase of 1.9 million units under the NCIB."

Investor Conference Call

Management will hold a conference call at 10:30 am (Eastern Standard Time) on December 18, 2007 to discuss the change in the Fund's distribution policy. The call may be accessed by dialing 416-641-6111 within the Toronto area or 1-866-862-3912 (toll free). This conference call will be recorded and available for replay until January 1, 2008. To listen to the replay, please dial 416-695-5800 or 1-800-408-3053 and enter pass code 3246409.


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

Newport Partners Income Fund is a publicly-traded diversified fund that invests in well-established, successful Canadian private companies. We target above-average rates of return by putting our money to work behind talented entrepreneurs who have a record of success in their business and a growth opportunity for the future. Our unit holders share in the income generated by these businesses as well as their value appreciation. The Fund currently has approximately $600 million invested in 18 companies representing a diverse cross-section of the Canadian economy.


Newport Partners creates wealth and opportunity with successful entrepreneurs. We provide capital and corporate financial advice to help our clients realize their goals for their business. And we provide money management and financial advice to enhance their personal wealth. Newport Partners was established by a group of entrepreneurs and senior financial executives. From start-up in 2001, we have invested more than $750 million in private businesses and currently have approximately $1.8 billion of public and private assets under management. Newport Partners carries on its business through Newport Partners LP and its subsidiaries, and through TSX-listed Newport Partners Income Fund (NPF.UN).

Forward-Looking Information

This news release contains certain forward-looking information. This information relates to future events or future performance and reflects management's expectations and assumptions regarding the growth, results of operations, performance and business prospects and opportunities of the Fund and the Operating Partnerships. Such forward-looking information reflects management's current beliefs and is based on information currently available to management of the Fund and the Operating Partnerships. In some cases, forward-looking information 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, information regarding the future operating results and economic performance of the Fund and the Operating Partnerships is forward-looking information. Forward-looking information involves significant risks and uncertainties. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking information including risks related to investments, conditions of capital markets, economic conditions, taxation of income trusts, dependence on key personnel, limited customer bases, interest rates, regulatory change, labour, continued availability of credit facilities, and availability of future financing. These factors should not be considered exhaustive. In addition, in evaluating this information, investors should specifically consider various factors, including the risks outlined under "Risk Factors", which may cause actual events or results to differ materially from any forward-looking statement. In formulating forward-looking information herein, management has assumed that business and economic conditions affecting the Fund and the Operating Partnerships will continue substantially in the ordinary course, including without limitation with respect to general levels of economic activity, regulations, taxes, interest rates, that there will be no material changes in its credit arrangements. Although the forward-looking information is based on what management of the Fund 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 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 NPF does not assume any obligation to update or revise them to reflect new events or circumstances. Undue reliance should not be placed on forward looking information.

Non-GAAP Measures

The terms "distributable cash" and "distributable cash yield" (collectively the "Non-GAAP Measures") are financial measures used in this news release that are not standard measures under Canadian generally accepted accounting principles ("GAAP"). NPF's method of calculating Non-GAAP Measures may differ from the methods used by other issuers. Therefore, NPF's Non-GAAP Measures, as presented may not be comparable to similar measures presented by other issuers.

The Fund has provided a reconciliation of cash provided by operations to distributable cash in the MD&A dated November 8, 2007 References to distributable cash are to cash available for distribution to Unitholders in accordance with the distribution policies of the Fund. As the Fund intends to make monthly cash distributions and management believes it is therefore a useful financial measure as an indication of the Fund's ability to make such distributions and is used by management and the Trustees for this purpose. Distributable cash is also used by management in the calculation of overall yield which it uses to monitor the performance of the Fund's Operating Partnerships. One of the factors that may be considered relevant by prospective investors is the cash distributions by the Fund relative to distributable cash and the price of the Units. Management believes that distributable cash is a useful supplemental measure that may assist prospective investors in assessing an investment in the Fund.

Distributable cash yield refers to the Fund's cash on cash return from an Operating Partnership based on distributable cash paid to the Fund as a percentage of the invested capital. Management believes that overall yield is a useful supplemental measure for investors to assess the quality of the investments in the Fund's portfolio and management's ability to invest in successful businesses at reasonable prices. Management uses this measure to monitor the performance of its investment strategy.

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 performance or cash flows, a measure of liquidity or as a measure of actual return on the Units. These Non-GAAP Measures should only be used in conjunction with the financial statements included in the MD&A and the Fund's annual audited financial statements available on SEDAR at or at

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