Somerset Entertainment Income Fund

Somerset Entertainment Income Fund

December 12, 2006 15:21 ET

Somerset Entertainment Announces Renewal of Its Revolving Bank Facility and Amendments to Bank Covenants

TORONTO, ONTARIO--(CCNMatthews - Dec. 12, 2006) -

Not for distribution in the United States or over United States Wire Service.

Somerset Entertainment Income Fund (the "Fund") (TSX:SOM.UN) announced today that its subsidiary Somerset Entertainment L.P. has renewed its annual revolving bank facility for an additional term of 364 days and has renegotiated certain of its bank covenants.

At the request of Somerset, Somerset and its banking syndicate have agreed to amend the calculation of its fixed charge covenant until June 30, 2007 to take into account the current monthly distribution rate of $0.05 per unit, rather than cash distributions actually paid over the last four quarters (some of which were at a higher rate). As part of the amendment to its credit agreement, Somerset and its banking syndicate have also agreed to reduce the limit of the revolving facility from $10.0 million to $7.0 million and to reduce the limit of its term facility from $32.0 million to $29.0 million. As at September 30, 2006, Somerset had not drawn on the revolving facility and had drawn $26.2 million on the term facility.

In addition, the interest rates on the revolving and term facilities will increase from between 0.3% to 2.25% per annum depending on the level of debt-to-EBITDA. Based on the debt-to-EBITDA level at September 30, 2006, the interest rate on both facilities would have increased by 0.65% per annum. The amendment does not require any repayment of principal on the credit facilities.

"We are pleased to have amended our banking covenants to take into account our current level of distributions to our unitholders" said Andy Burgess, CEO, Somerset Entertainment. "Somerset will continue to focus on building the business with a view to maximizing distributable cash for our investors."

Forward-Looking Statements

Certain statements in this news release contain "forward-looking" statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Fund or Somerset to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When appearing in this news release, these statements use such words as "may," "will," "intend," "should," "expect," "believe," "plan," "anticipate," "estimate," "predict," "potential," "continue," the negative of these terms or other similar terminology. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, customer concentration, integration of the Compass business, the exchange rate between Canadian and US dollars, lack of written customer contracts, reliance on suppliers and other risks described in the Fund's Annual Information Form dated March 18, 2006 (which can be found at The forward-looking statements contained in this news release are made as of the release date of this document, and the Fund does not assume any obligation to update or revise such statements to reflect new events or circumstances.

About Somerset Entertainment Income Fund

Somerset Entertainment is the leading North American producer and distributor of specialty music sold internationally through non-traditional retailers using interactive displays. The company's extensive distribution network includes mass merchants, specialty chains and independent gift stores in more than 20 countries, including the United States and Canada. Based in Toronto, Canada, the company employs over 150 people at offices in Toronto, Ontario (Canada); Buffalo Grove, Illinois, and Minneapolis, Minnesota, (U.S.A.); and Essex, England (UK).

Additional information relating to the Somerset Entertainment Income Fund, including unaudited financial statements as of September 30, 2006 is available at and

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