Carfinco Income Fund Implements Changes to Distribution Policy



    TSX: CFN.UN

    EDMONTON, March 31 /CNW/ - Carfinco Income Fund ("Carfinco" or the
"Fund") announces the Fund's Board of Trustees has unanimously approved
changing the Fund's distribution policy to maximize the retention of operating
cash flow. Carfinco's current monthly cash distribution of $0.027 per trust
unit will be replaced with a quarterly "in-kind" unit distribution.
    Carfinco's growth strategy requires equity to leverage the utilization of
the bank credit facility. During the first quarter of 2008 loan originations
were $20.2 million, an increase of 59.2% from $12.7 million for the first
quarter of 2007. The increased loan originations, primarily in the Fund's
regular program, have accelerated finance receivable growth. Although the
Fund's Regular Program incurs the lowest losses of all its programs, it
requires the highest allowance for credit losses. The allowance for credit
losses is increased by a non-cash expense recorded through the provision for
credit losses, which has negatively affected the Fund's net earnings and book
equity.
    Historically, the Fund has utilized unit issuances in the public markets
and subordinated debt issuances to maintain the level of equity required under
the bank credit facility. In the current market environment, the Board of
Trustees believes that it is in the best interests of the Fund to meet its
equity requirements through the retention of operating cash flow for at least
the next two quarters and issue units in lieu of cash. The senior debt will
continue to be accessed through the Fund's bank credit facility of $85 million
provided by a syndicate of lenders including the Bank of America, N.A., BoS
(USA) Inc. and the Bank of Montreal.
    In addition, the Fund is currently experiencing higher losses than the
historical comparisons. This is due to reduced auction values for used
vehicles in Canada. The strong Canadian dollar is significantly reducing the
number of used vehicles selling into the United States. The lack of US buyers
along with increased vehicle returns off-lease is creating an abundance of
used vehicles at auction, which is translating into the Fund experiencing
lower proceeds when liquidating repossessed vehicles. Also affecting higher
losses is an increase in the Fund's delinquent accounts. Management has
identified areas of concern and implemented changes to both the Fund's credit
criteria and collection procedures.
    Distributions settled "in-kind" means that Unitholders will receive
additional trust units instead of cash. Trust units will be issued at a deemed
price equal to the volume-weighted average price of all trust units traded on
the Toronto Stock Exchange on the 10 trading days preceding the applicable
record date. Carfinco anticipates that the next distribution will be announced
on or about June 10, 2008, with a payable date of June 30, 2008 to Unitholders
of record as of the close of business on June 20, 2008.
    Unitholders should consult their own legal, business and/or tax advisers
as to the tax implications of holding trust units in their particular
circumstances.

    About Carfinco

    A growth-oriented income trust, Carfinco focuses on providing consumer
car loans to borrowers unable to obtain financing through traditional lending
sources. A network of select independent and franchise dealerships offer
Carfinco's payment plan to their customers who must, along with the vehicle,
meet Carfinco's underwriting guidelines.
    The units of the Fund trade on the Toronto Stock Exchange under the
symbol "CFN.UN".

    Caution Regarding Forward-Looking Statements - This news release contains
certain forward-looking statements, including statements regarding the
business and anticipated financial performance of the Fund. These statements
are subject to a number of risks and uncertainties. Actual results may differ
materially from results contemplated by the forward-looking statements. When
relying on forward-looking statements to make decisions, investors and others
should carefully consider the foregoing factors and other uncertainties and
should not place undue reliance on such forward-looking statements.

    %SEDAR: 00019164E




For further information:

For further information: Mr. Tracy A. Graf, CEO & Trustee of Carfinco
Income Fund, Telephone: 1-888-486-4356, Facsimile: 1-888-486-7456, E-mail:
tgraf@carfinco.com

Organization Profile

Carfinco Financial Group Inc.

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