Chesswood Income Fund Announces Results for Fiscal 2007 and Distribution Policy for 2008



    TORONTO, March 31 /CNW/ - Chesswood Income Fund (the "Fund") (TSX:CHW.UN)
announced today results for its fourth quarter and year-ended December 31,
2007.
    "We distributed $8.5 million to our unitholders in 2007, a year in which
the economy in the U.S., especially in the financial services sector, entered
a downward cycle that continues into this year," said Barry Shafran, CEO of
the Fund. "Before taxes, a goodwill impairment charge of $16.8 million, and
unrealized exchange and swap income, we generated $10.1 million of income for
the year and $8.8 million of distributable cash."

    
                      Financial Highlights for the Fund
                               (in CDN $000's)

                                                    Three-Months
                                                           Ended  Year-Ended
                                                         Dec. 31     Dec. 31
                                                   --------------------------
    Adjusted EBITDA(*)                                    $2,184     $11,251

    Distributable Cash(*)                                 $1,746      $8,771

    Distributions(xx)                                     $1,511      $8,471

    Income Before Taxes, Non-Controlling Interest,
     Goodwill Impairment and Unrealized Foreign
     Exchange and Swap Gains/Losses                       $2,550     $10,072

    Net Loss(xxx)                                        ($2,721)    ($3,842)

    (*)    -  see "Non GAAP Measures" below.
    (xx)   -  includes dividends on Class B and C shares of Chesswood US
              AcquisitionCo Ltd.
    (xxx)  -  goodwill impairment charge for Q4 and 2007 of $6.3 million and
              $16.8 million respectively.
    

    Pawnee Leasing Corporation

    Pawnee Leasing Corporation ("Pawnee") continues to exercise underwriting
restraint in the face of higher charge-offs and market pricing that does not,
in management's opinion, adequately reflect inherent risk.
    This pattern, which started in late 2007, has continued into 2008. As a
result, Pawnee's net investment in leases (net of security deposits), dropped
by 2.7% in 2007 to US$72.8 million before the allowance for doubtful accounts,
from US$74.8 million a year earlier.
    Pawnee also increased its allowance for bad debts during the year by
almost US$2.1 million, to US$7.6 million at December 31, 2007. This non-cash
expense, included in Chesswood's income statement in Provision for Credit
Losses, represents an increase in Pawnee's reserve in 2007 of almost 37%.
    Notwithstanding the current trends in the U.S. financial services
industry, Pawnee was able to generate $8.3 million for the Fund in 2007. In
addition to providing the majority of cash flow necessary for the Fund to make
its 2007 distributions, Pawnee repaid US$2.5 million in debt and further
improved its modest portfolio leverage.
    "Pawnee retains its own leases, does not securitize and therefore it is
not exposed to asset backed commercial paper or special investment vehicle
issues," said Shafran. "Pawnee has a strong balance sheet which we believe
leaves us well positioned to continue to address the challenging credit
environment in the U.S."

    Distributions

    Following a review by the Fund's trustees and the directors of Chesswood
GP Limited (the Fund's administrator subsidiary) of cash flow and cash
position as of the end of February 2008, it has been determined that the
Fund's current policy of making monthly distributions of $0.057 per unit will
be continued. The Fund's trustees and directors will continue to review the
Fund's cash flow and cash position, to determine any appropriate change to the
distribution policy going forward.
    Given the fluctuations in monthly earnings at Pawnee due to market
volatility, it is difficult to project charge-off levels and the resultant
cash flow. Chesswood's distributable cash may or may not attain the levels
necessary to generate this level of distribution.
    Notwithstanding this unpredictability, the Fund has cash reserves. In
addition, as directed by its trustees and directors, the Fund has liquidated
its forward currency hedge contracts thereby generating additional cash
reserves of approximately $1.2 million. Given the significant change in U.S. -
Canadian dollar exchange rates in the last six months, it was determined that
liquidation of the hedge was an appropriate and desirable step.

    Non GAAP Measures

    References to Adjusted EBITDA and Distributable Cash are not recognized
measures under Canadian GAAP and do not have standard meanings under Canadian
GAAP. Accordingly, these measures may not be comparable to similar measures
presented by other issuers.
    Please refer to Chesswood's Management Discussion and Analysis for the
year-ended December 31, 2007 for additional information concerning these
measures and a reconciliation of these measures to the Fund's consolidated net
income for the period.

    About Chesswood Income Fund

    The Fund is a financial services trust with operating businesses in both
Canada and the U.S.

    For more information visit www.ChesswoodFund.com.

    This press release contains forward-looking statements that involve a
number of risks and uncertainties because they relate to events and depend on
circumstances that will occur in the future. Many factors could cause actual
results and developments to differ materially from those expressed or implied
by these forward-looking statements.

    NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY
    HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.





For further information:

For further information: Barry Shafran, Chesswood Income Fund, (416)
386-3099, bshafran@chesswoodfund.com; Catharine Marion (media only),
Environics Communications Inc., (416) 969-2809, cmarion@environicspr.com

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CHESSWOOD INCOME FUND

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