Chesswood Income Fund announces rights offering and unitholder approval of
conversion to dividend paying corporation

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE U.S./

TORONTO, May 14 /CNW/ - Chesswood Income Fund ("Chesswood" or the "Fund") (TSX:CHW.UN) announced today an equity rights offering to raise up to $5.3 million. Net proceeds from the offering will be used to support the growth of its Pawnee Leasing Corporation subsidiary, as well as for general corporate purposes. The Fund also announced that it has received unitholder approval for its proposed conversion into a dividend paying corporation.

Rights Offering

"We chose a rights offering because it gives all of our existing unitholders on a pro rata basis an opportunity to acquire additional units at a discount to our market price," said Chesswood's President and CEO Barry Shafran. "This additional capital adds more strength to our balance sheet and provides us with the wherewithal to continue building on the strength of our business model," added Shafran.

The Fund has seen a recent trend of substantial improvement in delinquencies at Pawnee. As reported in its first quarter results, gross lease receivable outstanding more than 31 days at March 31, 2010 declined to 4.54% from 6.23% at December 31, 2009. This key metric has declined further since March 31st, to 3.96% as at April 30th, 2010. Historically, a pattern of decline in receivables outstanding more than 31 days, has been followed by reduced charge-offs and increased profitability.

Under the terms of the rights offering, each holder of Fund units at the close of business on May 26, 2010 (the "Record Date") will receive one right for each Fund unit held. Rights will also be issued to holders of the outstanding exchangeable shares issued as part consideration for the Fund's acquisition of Pawnee. Seven rights will entitle the holder to subscribe for one Fund unit at a price of $4.00 per unit. Holders who exercise their rights in full can subscribe for additional Fund units on a pro-rata basis. Holders who wish to exercise their rights may do so until June 30, 2010. The rights will commence trading on the Toronto Stock Exchange on an ex-rights basis at the opening of business on May 21, 2010 at which time the rights will be posted for trading on a "when issued" basis. Based on the 7,767,055 Fund units and 1,478,537 exchangeable shares currently outstanding, the maximum number of Fund units which could be issued under the rights offering is 1,320,799.

A rights offering circular and rights certificates will be mailed on or about May 28, 2010 to all Canadian resident unitholders as of the Record Date.

Conversion to Dividend Paying Corporation

The Fund is also pleased to announce that at yesterday's annual and special meeting its unitholders overwhelmingly approved the Fund's conversion into a dividend paying corporation. Management expects the conversion to a corporation to take effect on or before January 1, 2011, which is the point at which income trusts will begin to be taxable on substantially the same basis as corporations.

Details of the voting on the various matters considered at the meeting will be included in the Fund's report of voting results which will be filed under the Fund's profile at www.sedar.com.

About Chesswood Income Fund

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

For more information visit www.ChesswoodFund.com.

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

SOURCE CHESSWOOD INCOME FUND

For further information: For further information: Barry Shafran, Chesswood Income Fund, (416) 386-3099, bshafran@chesswoodfund.com

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CHESSWOOD INCOME FUND

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