K-Bro Linen Income Fund Announces Strategic Acquisition in Quebec City



    EDMONTON, Jan. 30 /CNW/ - K-Bro Linen Income Fund (TSX: KBL.UN) ("K-Bro"
or the "Fund") announced today that an affiliate has entered into an agreement
to acquire the business, linen, building and equipment of Buanderie H.M.R.
Inc. ("HMR") for an aggregate purchase price of $3.5 million.
    HMR is a leading laundry and linen service provider located in Quebec
City, Quebec. K-Bro believes that HMR has a strong market position in the
hospitality and commercial sectors, with excellent brand name recognition. Its
large customer base ranges in size from major hotels to family operated
restaurants.
    In its most recent fiscal year ended May 31, 2007, revenues from HMR's
business were $3.8 million. Management estimates that HMR's EBITDA, after
adjustments for expected non-recurring costs, was approximately $0.6 million
for the fiscal year ended May 31, 2007. These operating results, combined with
an expected low maintenance capital expenditure requirement, results in an
acquisition that management believes will be immediately accretive to the
Fund.
    Linda McCurdy, President and Chief Executive Officer of the Fund, stated,
"We are very pleased with the HMR acquisition in terms of both its current
customer base and the opportunities it presents for expanding K-Bro's
healthcare business in a new marketplace. We will continue to operate the HMR
business out of its existing facility with the existing management and staff
under the HMR name. We believe the addition of the HMR business to our
existing network will further strengthen our ability to grow and add value for
our customers and unitholders and is consistent with our strategic focus of
growing in existing and new markets."
    The closing of the HMR acquisition is subject to finalization of
customary conditions and is expected to occur on or about January 31, 2008.
The purchase will be financed from the Fund's existing bank line of credit.

    ABOUT K-BRO

    K-Bro is the largest owner and operator of laundry and linen processing
facilities in Canada. The company provides a comprehensive range of general
linen and operating room linen processing, management and distribution
services to large healthcare institutions, hotels and other commercial
accounts. K-Bro currently owns and operates laundry and linen processing
facilities in five Canadian cities: Toronto, Edmonton, Calgary, Vancouver and
Victoria.
    Further information can be found in the disclosure documents filed by the
Fund with the securities regulatory authorities, available at www.sedar.com.

    NON-GAAP MEASURES

    Certain financial information contained in this news release, including
references to "earnings before interest, taxes, depreciation and amortization"
or "EBITDA", are not standard measures under Generally Accepted Accounting
Principles ("GAAP") in Canada and may not be comparable to similar measures
presented by other entities. These measures are considered to be important
measures used by the investment community to assess the source and
sustainability of K-Bro's cash distributions and should be used to supplement
other performance measures prepared in accordance with GAAP in Canada. For
further information on non-GAAP financial measures used by K-Bro and a
reconciliation of such measures to GAAP financial measures, see the annual and
quarterly Management Discussion and Analysis and the notes to the annual and
quarterly financial statements filed by the Fund with Canadian securities
regulatory authorities, available at www.sedar.com.

    NOTICE TO READERS

    This news release contains forward-looking information that represents
internal expectations, estimates or beliefs. Certain statements contained
within this news release constitute forward-looking statements. The use of any
of the words "anticipate", "continue", "expect", "may", "will", "project",
"should", "believe", and similar expressions are intended to identify forward
looking statements.
    The expectations, estimates and beliefs contained in such forward-looking
statements necessarily involve known and unknown risks and uncertainties which
may cause the Fund's actual performance and financial results in future
periods to differ materially from any expectations, estimates and beliefs of
future performance or results expressed or implied by such forward-looking
statements. These risks and uncertainties include, among other things,
(i) risks associated with the acquisition of HMR, including the possibility
that K-Bro pays more than the acquired company or assets are worth; the
additional expense associated with completing an acquisition and amortizing
any acquired intangible assets; the difficulty of assimilating the operations
and personnel of the acquired business; the possibility of undisclosed
material liabilities; the challenge of implementing uniform standards,
controls procedures and policies throughout the acquired business; the
inability to integrate, train, retain and motivate key personnel of the
acquired business; the potential disruption of K-Bro's ongoing business and
the distraction of management from its day-to-day operations; and the
inability to incorporate acquired businesses successfully into K-Bro's
operations. In addition, K-Bro may not be able to maintain the levels of
operating efficiency that HMR had achieved (or might have achieved) as a
separate business; (ii) K-Bro's competitive environment, (iii) utility costs,
(iv) K-Bro's dependence on long-term contracts, (v) increased capital
expenditure requirements; (vi) reliance on key personnel; (vii) the
availability of future financing, and such other risks and uncertainties as
described in the Fund's disclosure documents filed with Canadian securities
regulatory authorities. Accordingly, unitholders of the Fund and potential
investors are cautioned that events or circumstances could cause actual
results to differ materially from those discussed. The Fund does not undertake
any obligation to publicly revise these forward-looking statements to reflect
subsequent events or circumstances.

    %SEDAR: 00021539EF




For further information:

For further information: Linda McCurdy, President & CEO, (780) 453-5218
x.27, linda.mccurdy@k-brolinen.com; or Doug Thomson, C.A., Vice President &
CFO, (780) 453-5218 x.26, doug.thomson@k-brolinen.com


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