KCP Income Fund, parent of KIK Custom Products, to be acquired by Caxton-Iseman Capital for C$804 million



    KCP unitholders to receive C$10.00 per unit

    TORONTO and NEW YORK, April 2 /CNW/ - KCP Income Fund (the "Fund" or
"KCP") (TSX: KCP.UN) and Caxton-Iseman Capital, Inc. today announced that KCP
has entered into a definitive agreement with an acquisition vehicle organized
by Caxton-Iseman providing for the acquisition by Caxton-Iseman of all of the
assets of KCP for a total acquisition cost of C$804 million. Immediately after
completion of the acquisition the units of KCP will be redeemed for $10.00 per
unit in cash. That value represents a 25.0% premium to the March 30, 2007
closing price, a 27.6% premium to the 10-day volume weighted average trading
price, and a 35.1% premium to the trading price for KCP units immediately
prior to the November 24, 2006 announcement that it would undertake a
strategic process.
    The transaction is subject to the approval of the Fund unitholders
(two-third approval and majority of minority), the receipt of regulatory
approvals and other customary closing conditions. Closing of the transaction
is scheduled to occur in June, 2007, unless extended in accordance with the
agreement. A circular describing the proposed transaction will be mailed to
Fund unitholders for a unitholder meeting (anticipated to be held in early
June, 2007) to consider the transaction.
    KCP unitholders will continue to receive distributions for all months
ending prior to the month in which closing of the transaction occurs. If
closing occurs other than on a month end, KCP unitholders will also receive
partial distributions for that month, provided that if closing occurs after
the 15th day of the month, such partial distribution shall not exceed one half
of the regular monthly distribution.
    The proposed transaction results from a strategic process initiated by
KCP's board of trustees to identify and consider strategic alternatives
available to the Fund to enhance unitholder value. Following the announcement
of the Canadian federal government's intention to tax income trusts, KCP's
board formed a special committee consisting of all independent trustees to
oversee the strategic review process, and engaged TD Securities Inc. and
Genuity Capital Markets to act as financial advisors. The process involved
consideration of a full range of value enhancement alternatives and involved a
significant number of interested parties.
    The board of trustees of KCP, on the recommendation of the special
committee of independent trustees and having received fairness opinions from
TD Securities Inc. and Genuity Capital Markets, has unanimously approved, and
resolved to recommend that the Fund's unitholders approve, the proposed
transaction.
    David Cynamon, the founder and CEO of KCP, has agreed to vote his units
in favour of (and to sell such units into) the proposed transaction and will
maintain a small ownership position in the Caxton-Iseman acquisition vehicle
on the same basis as other Caxton-Iseman principals. Other members of KCP's
management team will acquire a small stake in the Caxton-Iseman acquisition
vehicle.
    James Arnett, Chairman of the special committee of the board, said:
"After considering a wide variety of strategic alternatives and reviewing a
range of initial transaction proposals from a number of interested parties,
the special committee unanimously voted in favour of the proposed transaction.
We feel that the present transaction ascribes full value to KCP's unique
platform and leadership position in contract manufacturing and gives full
credit for the company's growth opportunities. We believe this is an excellent
outcome for unitholders."
    David Cynamon, Chief Executive Officer of KCP, said: "This transaction
reflects the significant value that has been achieved through the vision,
dedication and sheer hard work of KCP's extraordinary employees and executive
team. This agreement is an ideal outcome for the process, as we will deliver
immediate premium value to our unitholders in the form of cash."
    Frederick J. Iseman, Managing Partner of Caxton-Iseman, said: "KCP's
management team has built an impressive company in two important sectors. From
its roots as an acquiror of bleach manufacturers, KCP has transformed itself
into North America's premier contract manufacturer, producing great products
for many of the world's top consumer products companies and retailers. We look
forward to working with KCP's outstanding management team to continue to build
the company."
    Caxton-Iseman has received a commitment from J.P. Morgan Securities Inc.,
Credit Suisse and UBS to provide debt financing for the transaction.
    In connection with the transaction, KIK Acquisition Company, a wholly
owned subsidiary of the Fund, anticipates commencing a consent solicitation to
amend the terms of its exchangeable unsecured subordinated debentures
(TSX:KCC.DB.U) to provide for an early redemption date. The acquisition
agreement includes a non-solicitation covenant by KCP and related provisions
customary for transactions of the nature proposed.
    TD Securities Inc. and Genuity Capital Markets are financial advisors to
the KCP board in connection with the transaction. Heenan Blaikie LLP is legal
advisor for the special committee, and Goodmans LLP is legal advisor for KCP.
Caxton-Iseman's financial advisors with respect to the transaction are UBS
Investment Bank and Atlas Strategic Advisors, LLC, and its legal advisors are
Paul, Weiss, Rifkind, Wharton & Garrison LLP and Blake, Cassels and Graydon
LLP.

    About KCP Income Fund

    KCP, through its operating subsidiaries KIK Holdco Company and KIK
Operating Partnership, is one of North America's largest custom manufacturers
of consumer products in the laundry, household cleaners, personal care,
over-the-counter medicated and pharmaceutical categories, with 19 integrated
manufacturing facilities and 4 Kem Krest distribution centers strategically
located throughout North America. KCP's product lines include Laundry,
Household Cleaners, Personal Care, OTC Medicated and Pharmaceutical, all
supported by KCP's in-house technical expertise and value-added services. KCP
produces leading consumer products for Fortune 500 companies including
Albertsons, Colgate-Palmolive, Dial, Johnson & Johnson, Kroger, Loblaws,
L'Oreal, Procter & Gamble, Safeway, SC Johnson, Sysco, Target, Unilever,
Walgreens, and Wal-Mart.
    The Fund provides unitholders with monthly cash distributions. Trust
units are listed on the Toronto Stock Exchange under the symbol KCP.UN.

    About Caxton-Iseman

    Caxton-Iseman Capital, Inc. is a New York-based private equity firm. Its
portfolio companies include Ply Gem Industries, Inc., a manufacturer of vinyl
and aluminum building products; Buffets, Inc., the largest buffet restaurant
chain in the U.S.; Electrograph Systems, Inc., a leading national distributor
of display technology solutions; Valley National Gases Incorporated, a leading
packager and distributor of gases, welding equipment and supplies, propane and
fire protection equipment; American Residential Services, LLC, a leading
provider of HVAC and plumbing services; and Prodigy Health Group, Inc., a
rapidly expanding health care services company. Caxton-Iseman's companies have
combined revenues of approximately US$5 billion, EBITDA of approximately
US$500 million and 75,000 employees. The firm's investment vehicles have
available capital in excess of US$2 billion.

    Forward Looking Statements

    This release includes certain forward-looking statements including,
without limitation, statements concerning the value of any redemption of Fund
units, the projected costs and plans and objectives of management for future
operations. Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may", "will", "expect", "intend",
"estimate", "anticipate", "believe", "should", "plans" or "continue" or the
negative thereof or variations thereon or similar terminology. Although the
Fund believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations
will provide to be correct. These forward-looking statements are subject to a
number of risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements.





For further information:

For further information: David Cynamon, CEO, KCP Income Fund, (905)
660-2644, dcynamon@kikcorp.com; Paul Richardson, President, KCP Income Fund,
(905) 660-2967, prichardson@kikcorp.com, For Caxton-Iseman Capital, Mark
Semer, Kekst and Company, (212) 521-4802

Organization Profile

KCP INCOME FUND

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CAXTON-ISEMAN CAPITAL, INC.

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