TORONTO, Aug. 14 /CNW/ - Chesswood Income Fund (the "Fund") (TSX:CHW.UN)
announced today its results for the second quarter and six months ended
June 30, 2008.
"Our second quarter results reflect improvement in our distributable cash
and adjusted EBITDA over our first quarter," said Barry Shafran, CEO of the
Fund. "All our operating businesses, including Pawnee Leasing, continue to
operate profitably, notwithstanding the significant challenges currently faced
by all businesses in the financial services industry, especially in the U.S."
The Fund's methodology for calculating distributable cash, which is based
on the earnings of its subsidiaries that can be distributed up to the Fund, is
subject to the terms of credit facilities which permit distributions based on
net income determined in accordance with GAAP. In this second quarter, as in
the first quarter of 2008, Pawnee's increased allowance for bad debts, a
non-cash item, resulted in Pawnee's cash flows being significantly higher than
the amounts it could distribute to the Fund. While the Fund paid distributions
in the quarter that exceeded its distributable cash, $3.0 million of lease
financing was repaid during the three months ended June 30, 2008 - a testament
to Pawnee's strong business model.
Financial Highlights For The Fund
(in CDN $000's, except Per Unit Amounts)
For The Three Months For The Six Months
Ended June 30 Ended June 30
2008 2007 2008 2007
Revenues $23,321 $23,008 $46,228 $44,090
Adjusted EBITDA $1,438 $3,244 $1,889 $6,410
Distributable Cash $909 $2,321 $1,597 $4,779
Distributions(1) $1,230 $2,292 $2,437 $4,740
Distributions Per Unit
Per Month $0.0570 $0.0958 $0.0570 $0.0958
Net Income before
Unrealized foreign exchange
and swap gains/losses
and Goodwill Impairment $1,129 $2,636 $1,341 $5,251
Goodwill Impairment ($14,823) - ($14,823) -
Net Income (Loss) ($11,554) $4,041 ($11,769) $5,621
(1) - includes dividends on 1,478,537 Class B and C shares of Chesswood
US Acquisition Co Ltd. and distributions on 7,040,558 Fund units.
As a result of a number of factors, including the continuing trading
price levels for its units, the Fund recorded a non-cash goodwill impairment
in this quarter of $14.8 million.
Chesswood's trustees and directors will continue to review the Fund's
cash flow and cash position, to determine appropriate changes, if any, 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 current level of
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
three and six months ended June 30, 2008 for additional information concerning
these measures and a reconciliation of these measures to the Fund's
consolidated net income for the period.
Amendment and Restatement of Convertible Debentures
As previously announced on August 1, 2008, after receiving Toronto Stock
Exchange approval to do so, the Fund proposed to amend and restate its
$3.5 million principal amount of debentures, which were to mature on
August 10, 2008 and which were convertible into units of the Fund at a
conversion price of $15.58 per unit, so as to (among other changes) extend the
maturity date to January 31, 2011 and to reduce the conversion price to
$3.50 per unit.
The Fund announces that the holders of all of such debentures as at
August 10, 2008 agreed to the proposed amendment and restatement. As a result,
debentures for the full $3.5 million principal have been amended and restated
(and none were redeemed).
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, firstname.lastname@example.org; Catharine Marion (media only),
Environics Communications Inc., (416) 969-2809, email@example.com