Hardwoods Distribution Income Fund Announces Signing of Support Agreement and Calling of Meeting to Convert to a Corporation

TRADING SYMBOL: Toronto Stock Exchange - HWD.UN

This news release contains "forward looking information and statements" within the meaning of applicable securities laws.  A summary of the forward looking information and statements are set out later in this news release.

LANGLEY, BC, April 15 /CNW/ - Hardwoods Distribution Income Fund (the "Fund") today announced that the Supreme Court of British Columbia has approved the calling of a meeting of its unitholders to approve the previously announced conversion from an income trust structure to a publicly traded corporation called "Hardwoods Distribution Inc." at its annual general and special meeting of unitholders scheduled for May 19, 2011. If approved by unitholders at the meeting and by the Supreme Court of British Columbia, the conversion is expected to be completed on July 1, 2011.

The Fund also announced today that it has entered into an arrangement agreement with its subsidiaries and a support agreement (the "Support Agreement") with Sauder Hardwoods Inc., Hardwoods Inc. and certain of their affiliated entities and associates (the "Sauder Parties"). Sauder Hardwoods Inc. and Hardwoods Inc. are the holders of a 20% interest in the Fund's operating subsidiaries Hardwoods Specialty Products LP and Hardwoods Specialty Products US LP (collectively, "Hardwoods") in the form of special voting units of the Fund and Class B limited partner units of Hardwoods (the "Retained Interest").

Pursuant to the Support Agreement, the Sauder Parties have agreed to vote the 270,000 units and 3,602,500 special voting units of the Fund held by them in favour of the special resolution approving the conversion. The Sauder Parties have also agreed to amend the ratio at which the Retained Interest may be exchanged from one unit of the Fund to 0.3793 units of the Fund and to exchange their Retained Interest as part of the conversion for common shares of Hardwoods Distribution Inc. at the new exchange ratio, subject to the conversion becoming effective on or before July 1, 2011.

The proposed conversion transaction was announced by the Fund in its news release of April 5, 2011. Under the conversion transaction, Hardwoods will continue to conduct the business but will now be wholly owned by Hardwoods Distribution Inc.  Holders of units of the Fund will receive one common share of Hardwoods Distribution Inc. for each unit of the Fund held by them and the Retained Interest will be exchanged for common shares of Hardwoods Distribution Inc. at the new exchange ratio. Upon completion of the conversion transaction, Sauder Hardwoods Inc. and Hardwoods Inc. will hold an aggregate of 1,366,428 common shares of Hardwoods Distribution Inc., representing approximately 8.56% of the issued and outstanding shares, and the other Sauder Parties will hold an aggregate of 270,000 common shares of Hardwoods Distribution Inc., representing approximately 1.69% the issued and outstanding shares.

It is expected that the Trustees of the Fund (Messrs. Holland, Purchase and Wilson) and Messrs. Lawrence Sauder and William Sauder, all of whom are the current directors of the general partner of Hardwoods Specialty Products LP, will become the directors of Hardwoods Distribution Inc., and the current officers and management of Hardwoods will become officers and management of Hardwoods Distribution Inc.

About the Fund

Hardwoods Distribution Income Fund is an unincorporated, open-ended, limited purpose trust established to hold, indirectly, securities which represent an 80% ownership interest in Hardwoods.

About Hardwoods

Hardwoods is one of North America's largest distributors of high-grade hardwood lumber and sheet goods to the cabinet, moulding, millwork, furniture and specialty wood products industries. The company currently operates a network of 26 distribution centers in the U.S. and Canada.

Forward-Looking Statements

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

This news release includes forward-looking statements. These involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", "expect", "may", "plan", "will", and similar terms and phrases, including references to assumptions. Such statements may involve, but are not limited to, comments with respect to the completion of the conversion of the Fund from an income trust structure to a publicly traded corporation.

These forward looking statements reflect current expectations of the Fund's management regarding future events and operating performance 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: national and local business conditions; political or economic instability in local markets; competition; consumer preferences; spending patterns and demographic trends; legislation or governmental regulation.

Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, the Fund cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements reflect management's current beliefs and are based on information currently available to the Fund.

All forward-looking information in this news release is qualified in its entirety by this cautionary statement and, except as may be required by law, the Fund undertakes no obligation to revise or update any forward looking information as a result of new information, future events or otherwise after the date hereof.


SOURCE Hardwoods Distribution Income Fund

For further information:

Rob Brown
Chief Financial Officer
Phone: (604) 881-1990
Fax: (604) 881-1995
Email: robbrown@hardwoods-inc.com
Websitehttp://www.hardwoods-inc.com 

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Hardwoods Distribution Income Fund

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