The Brick announces $10 million increase in offering to $120 million



    
    NOT FOR DISTRIBUTION THROUGH U.S. NEWS WIRE SERVICES OR DISSEMINATION IN
    THE U.S.
    

    EDMONTON, May 11 /CNW/ - (TSX: BRK.UN) - The Brick Group Income Fund (the
"Brick" or the "Fund") is pleased to announce that due to strong investor
demand for its recently announced offering of debt units (the "Offering"), the
Brick has increased the size of the Offering by $10 million to an aggregate of
$120 million. The increased Offering size substantially enhances liquidity to
over $30 million.
    "We are very pleased with the strong demand investors have shown for our
offering and felt that increasing the size of the Offering was a prudent
measure to increase the Brick's financial flexibility. The additional $10
million of gross proceeds further enhances our liquidity position and provides
our suppliers and customers with an additional level of comfort in the Brick."
said Kim Yost, President and CEO.
    In addition to repaying all of our existing senior debt with this
recapitalization plan," said Nick Bobrow, Chief Financial Officer, "as a
result of the additional $10 million of gross proceeds, we expect to have
approximately $34 million of immediate liquidity following closing of the
recapitalization transaction."
    The Offering will now comprise a public offering of up to $30 million in
each of the provinces of Canada pursuant to a short form prospectus (the
"Public Offering"), and a $90 million private placement to accredited
investors under an exemption from the prospectus requirements of applicable
securities laws (the "Private Placement"). As a result of the strong investor
support, it is the Brick's expectation that the stand-by commitment to
purchase any unsold portion of the Public Offering by Fairfax Financial
Holdings Limited ("Fairfax") will not be required.
    The Fund has filed and received a receipt for a preliminary short form
prospectus in connection with the Public Offering in each of the provinces of
Canada. The Fund intends to file an amended preliminary short form prospectus
in connection with the $5 million increase to the size of the Public Offering.
As previously disclosed, it is anticipated that the closing of the Offering
will occur on or about May 28, 2009. The Public Offering is being led by RBC
Capital Markets, together with a syndicate of agents that includes CIBC World
Markets Inc. and GMP Securities L.P.
    Under the increased Offering, Fairfax and William Comrie ("Comrie"), the
Fund's two largest existing unitholders, are to invest $45 million and $20
million under the Private Placement, respectively, and two other institutional
investors are to acquire an additional $25 million of the Private Placement.
As of the date hereof, Fairfax and Comrie own 8,380,200 and 21,561,983 class A
trust units ("Class A Units"), respectively, representing approximately 15%
and 40% of the outstanding Class A Units, respectively, on a fully diluted
basis. Following Closing and taking into account the increased Offering size,
Fairfax and Comrie will own $45 million and $20 million principal amount of
Debentures, respectively, representing approximately 38% and 17% of the
outstanding principal amount of Debentures, respectively, and assuming the
exercise of all Warrants (but not the exercise of the stand-by commitment of
Fairfax), will own 53,380,200 and 41,561,983 Class A Units, respectively,
representing approximately 31% and 24% of the outstanding Class A Units,
respectively, on a fully diluted basis. Although it is not anticipated that
the stand-by commitment of Fairfax will be required, Fairfax's ownership
position could be substantially higher in the event of the exercise of all or
a portion of its stand-by commitment. Assuming the exercise of the stand-by
commitment of Fairfax in full, Fairfax would own $70 million principal amount
of Debentures, representing approximately 58% of the outstanding principal
amount of Debentures and Fairfax will own, assuming the exercise of all
Warrants, 78,380,200 Class A Units, representing approximately 45% of the
outstanding Class A Units on a fully diluted basis. Accordingly, assuming the
exercise of all Warrants (particularly upon the exercise of the stand-by
commitment of Fairfax in full), Fairfax may be in a position to materially
impact control of the Brick. Following the Closing, if insiders were to act
together, including Fairfax and Comrie, or Fairfax alone, they may be in a
position to either pass or block votes of holders of Debentures, Warrants and
Class A Units.
    A committee of trustees of the Fund free from interest in the
recapitalization transaction and unrelated to the parties involved in the
recapitalization transaction has recommended, and the board of trustees of the
Fund has approved, having regard to the $110 million fully committed
financing, the increase in the size of the Offering by $10 million and
concluded that (i) the Fund is in serious financial difficulty; (ii) the
increase in the size of the Offering by $10 million is designed to improve the
Brick's financial condition; and (iii) the increase in the size of the
Offering by $10 million is reasonable for the Brick in the circumstances.
    The Fund has applied to the TSX for an exemption from the requirement to
seek disinterested unitholder approval for the Public Offering and the Private
Placement including the increase in the size of the Offering by $10 million
(which would otherwise be required due to (i) the number of Class A Units
potentially issuable pursuant to the exercise of the Warrants; (ii) the
exercise price of the Warrants is at a discount to the market price of the
Class A Units; (iii) insiders of the Brick are acquiring Warrants exercisable
for Class A Units representing greater than 10% of the issued and outstanding
Class A Units; and (iv) the recapitalization transaction could materially
affect control of the Brick) pursuant to Section 604(e) of the TSX Company
Manual on the basis of the Fund's financial hardship. The Fund would otherwise
be required to obtain disinterested unitholder approval for the
recapitalization transaction, excluding the votes of subscribers under the
Private Placement, in aggregate accounting for 29,942,183 Class A Units.
Closing of the recapitalization transaction is conditional on receipt of an
exemption from the TSX from the requirement to obtain unitholder approval. The
TSX has advised the Brick that reliance on this exemption will automatically
result in a TSX de-listing review to confirm that the Brick continues to meet
TSX continued listing requirements. Management believes that the de-listing
review is a routine procedure when using this exemption and the Fund currently
complies with applicable TSX listing requirements and expects to continue to
comply with such requirements following completion of the recapitalization
transaction. After giving effect to the Public Offering and the Private
Placement, 174.2 million Class A Units will be outstanding on a fully diluted
basis, representing a 221% increase over the current 54.2 million Class A
Units outstanding.
    The Brick is also relying on the financial hardship exemption from the
requirement for a formal valuation and minority approval contained in
Multilateral Instrument 61-101 - Protection of Minority Security Holders in
Special Transactions in connection with a related party transaction.
    Unfortunately, despite previously announced proactive measures (such as
reducing, and then suspending, distributions and revising the financial
covenants of the Brick's senior secured credit facilities and senior secured
notes), the continued deterioration of economic conditions and the resulting
impact on the Brick's financial results over the first quarter of 2009 has
severely constrained the Brick's liquidity. On the basis of these difficulties
and the limited prospects for any near-term improvement in economic
conditions, the Fund determined that the recapitalization transaction was
necessary and advisable to provide confidence to the Fund's customers and
suppliers and allow the Brick to continue operating for the foreseeable
future. In addition, although the reaction of the Brick's suppliers following
the announcement of the recapitalization transaction was positive and many
agreed to improve credit terms provided to the Brick, management believes it
is prudent to increase the size of the Offering by an additional $10 million
to provide further comfort to suppliers and provide the Brick with additional
liquidity that will assist it in its efforts to negotiate improved credit
terms with more of its suppliers.

    This press release is not an offer to sell securities in the United
States. The Debentures and Warrants have not been and will not be registered
under the United States Securities Act of 1933, as amended, (the "U.S.
Securities Act") or any state securities laws, and may not be offered or sold
within the United States except in transactions which are exempt from the
registration requirements of the U.S. Securities Act.

    About the Brick

    The Brick, together with its subsidiaries, is one of Canada's largest
volume retailers of household furniture, mattresses, appliances and home
electronics, operating under five banners: The Brick, United Furniture
Warehouse, The Brick Superstore, The Brick Mattress Store, and Urban Brick. In
addition, through its corporate sales division, the Brick services the
subdivision, condominium, and high-rise builder market. The Brick's retail
operations are located in British Columbia, Alberta, Saskatchewan, Manitoba,
Ontario, Québec, Prince Edward Island, Nova Scotia, New Brunswick, and the
Yukon Territory.

    Forward-Looking Statements

    This news release contains "forward-looking statements" within the
meaning of applicable Canadian securities laws, including (but not limited to)
statements about the anticipated impact of the recapitalization transaction on
the Brick, the financial flexibility and capital resources necessary to manage
the business in the current economic environment, and similar statements
concerning anticipated future events, results, circumstances, performance or
expectations, that reflect management's current expectations and are based on
information currently available to management of the Brick and its
subsidiaries. The words "may", "will", "should", "believe", "expect", "plan",
"anticipate", "intend", "estimate", "predict", "potential", "continue" or the
negative of these terms, or other expressions which are predictions of or
indicate future events and trends and which do not relate to historical
matters, identify forward-looking matters.
    Reliance should not be placed on forward-looking statements because they
involve known and unknown risks, uncertainties and other factors, which may
cause the actual results, performance or achievements of the Brick to differ
materially from anticipated future results, performance or achievement
expressed or implied by such forward-looking statements. Factors that could
cause actual results to differ materially from those set forth in the
forward-looking statements include, but are not limited to, the risk that
relationships with suppliers (including the availability and terms of supplier
credit) fail to improve as expected or deteriorate further, that costs may be
difficult to manage and that availability under the Brick's new asset-based
credit facility may be less than expected and those risks and uncertainties
detailed in the section entitled "Risk Factors" in the Brick's Management's
Discussion and Analysis, Annual Information Form, preliminary short form
prospectus dated May 6, 2009 filed in connection with the Public Offering and
in other filings on www.sedar.com. These and other factors should be
considered carefully and readers are cautioned not to place undue reliance on
these forward-looking statements. The Brick undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, other than as required by
applicable law.





For further information:

For further information: Kim Yost, President and CEO, The Brick, (780)
930-6300, investor@thebrickgroup.ca; Nick Bobrow, CA, Chief Financial Officer,
The Brick, (780) 930-6300, investor@thebrickgroup.ca

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The Brick Ltd.

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