Premium Income Corporation II Announces Exchange Ratios

    TORONTO, July 19 /CNW/ - Premium Income Corporation II (the "Company"), a
split share corporation offering an investment in the common shares of the six
largest Canadian banks through its Class A Shares and Preferred Shares, is
pleased to announce the exchange ratios for the Company's exchange option (the
"Exchange Option") with respect to its initial public offering. Under the
Exchange Option, prospective purchasers had the opportunity to exchange common
shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of
Commerce, National Bank of Canada, Royal Bank of Canada and The
Toronto-Dominion Bank ("Bank Shares") for Class A Shares and Preferred Shares
together in Units (each consisting of one Class A Share and one Preferred
Share) or for Class A Shares.
    Under the Exchange Option for Units, the number of Class A Shares and
Preferred Shares issuable in exchange for Bank Shares deposited by prospective
purchasers was determined by dividing the volume-weighted average trading
price of Bank Shares on the Toronto Stock Exchange (the "TSX") during the
three consecutive trading days ending on July 18, 2007, adjusted to reflect
dividends declared on such Bank Shares that will not be received by the
Company (the "Exchange Price") by $25.00 (being the sum of the issue price of
one Class A Share and one Preferred Share).
    Under the Exchange Option for Class A Shares, prospective purchasers will
receive Class A Shares in exchange for Bank Shares and $0.01 in cash per Class
A Share. The number of Class A Shares issuable in exchange for Bank Shares
deposited was determined by dividing the Exchange Price by $15.00 (being the
issue price of a Class A Share). This exchange ratio was adjusted to reflect
the $0.01 per Class A Share to be received by prospective purchasers.
    The following table sets out each Exchange Price and exchange ratio,
which represents the number of Units or Class A Shares to be received by
prospective purchasers for each Bank Share deposited.-------------------------------------------------------------------------
                                          Units             Class A Shares
                                   ------------------------------------------
                                   Exchange   Exchange   Exchange   Exchange
    Bank Share                        Price      Ratio      Price      Ratio
    -------------------------------------------------------------------------
    Bank of Montreal               $68.7208     2.7488   $69.4008     4.5783
    -------------------------------------------------------------------------
    The Bank of Nova Scotia        $51.6768     2.0671   $51.6768     3.4428
    -------------------------------------------------------------------------
    Canadian Imperial Bank of
     Commerce                      $97.7559     3.9102   $97.7559     6.5127
    -------------------------------------------------------------------------
    National Bank of Canada        $62.5261     2.5010   $62.5261     4.1656
    -------------------------------------------------------------------------
    Royal Bank of Canada           $57.2459     2.2898   $57.2459     3.8139
    -------------------------------------------------------------------------
    The Toronto-Dominion Bank      $72.7232     2.9089   $72.7232     4.8450
    -------------------------------------------------------------------------Neither fractional Units nor fractional Class A Shares will be issued.
The Exchange Option expired at 5:00 p.m. (Toronto time) on July 17, 2007.
    Premium Income Corporation II will invest in a portfolio consisting of
Bank Shares. Investors in the Company's Class A Shares will receive leveraged
exposure to the performance of the Bank Shares, including increases or
decreases in the value of Bank Shares and increases or decreases in the
dividends paid on Bank Shares. Investors in the Company's Preferred Shares
will receive monthly distributions on a fixed, cumulative and preferential
basis. The Preferred Shares have been provisionally rated Pfd-2 by Dominion
Bond Rating Service Limited.

    The TSX has conditionally approved the listing of the Class A Shares
    under the symbol PIB and the Preferred Shares under the symbol PIB.PR.A.

For further information: John Mulvihill, President and CEO, Don Biggs,
Senior Vice-President, Sheila Szela, Vice-President, Finance and CFO,
Mulvihill Structured Products, A member of the Mulvihill Capital Management
Inc., Group of Funds, 121 King Street West, Suite 2600, Toronto, Ontario, M5H
3T9, [phone], [phone], www.mulvihill.com, [e-mail]