Tree Island Wire Income Fund

Tree Island Wire Income Fund

November 26, 2009 16:44 ET

Tree Island Completes $9.75 Million Private Placement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 26, 2009) -


Tree Island Wire Income Fund ("Tree Island" or the "Fund") (TSX:TIL.UN) announced today that, further to its news release on August 13, 2009, the Fund has completed the private placement component of its convertible debenture financing, pursuant to which The Futura Corporation ("Futura"), Marret Asset Management Inc. ("Marret") and Arbutus Distributors Ltd. ("Arbutus" and collectively with Futura and Marret, the "Purchasers") purchased an aggregate $9,750,000 principal amount of 10% second lien convertible debentures of the Fund (the "Debentures") and warrants to purchase 4,875,000 units of the Fund (the "Warrants").

Each Warrant will entitle the holder to purchase, on or before November 26, 2014, one unit of the Fund upon the payment of the exercise price equal to the volume weighted average trading price of the Fund's units on the Toronto Stock Exchange (the "TSX") over the five day trading period beginning on the earlier of (a) the first trading day on which the rights issued pursuant to an offering of rights of the Fund by way of a short form prospectus (the "Rights Offering") commence trading on the TSX, and (b) the day the Fund announces that it is terminating or not proceeding with the proposed distribution of rights, but in any event shall not exceed $0.75 per unit or be less than $0.35 per unit, subject to certain anti-dilution adjustments.

Amar S. Doman, Chairman of Tree Island, commented, "We are pleased with the completion of this first step in recapitalizing Tree Island. However, we remain focused on completing the Rights Offering for up to $10,000,000 which will help provide Tree Island with more working capital to help execute on its business plan going forward. I would like to personally thank our key trade suppliers and GE Capital for working with us through this difficult restructuring."

Ted Leja, Tree Island's President and CEO, said, "This first step in our recapitalization provides assurance that we will be able to better meet the needs of our customers as we continue to strengthen our core business."

The Fund also announced that the investment agreement dated August 13, 2009 among the Fund and the Purchasers (the "Investment Agreement") has been amended to provide for the Fund using commercially reasonable efforts to file a preliminary short form prospectus in connection with the Rights Offering within seven business days subsequent to the closing of the private placement.

The Fund, through its operating subsidiaries, has also entered into forbearance and payment agreements with the Fund's significant trade creditors pursuant to which the Fund has restructured approximately US$38.5 million through deferred payment arrangements extending to December 31, 2013. Payments under the restructuring arrangements are an aggregate US$200,000 per month in 2010 and an aggregate US$400,000 per month in 2011, with the balance deferred throughout 2012 and 2013. In addition, the Fund and its affiliates have entered into amendment and waiver agreements with its senior secured lenders to, among other things, cure the current defaults and reset the borrowing base under its credit agreements.

Fund Profile

The Fund was launched on November 12, 2002, with the completion of an Initial Public Offering. The Fund holds a 100% ownership interest in Tree Island Industries Ltd. (the "Company"). The Fund's performance depends entirely on the performance of the Company.

Tree Island Profile

Headquartered in Richmond, British Columbia, Tree Island Industries Ltd. produces wire products for a diverse range of construction, agricultural, manufacturing and industrial applications. Its products include bright wire, stainless steel wire and galvanized wire; a broad array of fasteners, including packaged, collated and bulk nails; stucco reinforcing products, engineered structural mesh, fencing and other fabricated wire products. The Company markets these products under the Tree Island and TI Imports brand names. Tree Island also owns and operates a Hong Kong-based trading company that provides internationally sourced products to the Company and its customers worldwide.

Forward-Looking Statements

Certain statements contained in this press release constitute "forward looking statements". These statements relate to future events or future performance and include, but are not limited to, statements regarding the timing to file the preliminary short form prospectus in respect of the Rights Offering. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", and similar expressions are often used to identify forward looking statements.

By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific. In evaluating these statements, readers should specifically consider risks which may cause actual results to differ materially from any forward looking statement. These risks include, but are not limited to, risks relating to the possibility that the Rights Offering may not be completed.

The forward looking statements contained herein are based upon certain assumptions considered reasonable at the time they were prepared. Such assumptions include, but are not limited to, assumptions regarding: (i) general economic conditions, (ii) the Fund's future business prospects and opportunities, and (iii) the outcome of the proposed Rights Offering. Should one or more of the risks or uncertainties identified herein materialize, or should the assumptions underlying the forward looking statements prove to be incorrect, then actual results may vary materially from those described herein. Readers are cautioned not to place undue reliance on forward looking statements. Except as required by applicable securities laws, the Fund does not assume any obligation to update the forward looking statements contained herein.

Contact Information

  • Tree Island Wire Income Fund
    Ted Leja
    President and Chief Executive Officer
    (604) 524-3744
    Tree Island Wire Income Fund
    Amar Doman
    Chairman of the Board
    (604) 608-6600