Cinram Addresses Tax Consequences to U.S. Unitholders of Distributions Suspension

    TORONTO, Dec. 17 /CNW/ - Cinram International Income Fund ("Cinram" or
the "Fund") (TSX: CRW.UN) today announced that it is implementing changes to
its internal debt structure to address the tax consequences to taxable U.S.
unitholders which would have otherwise resulted from the Fund's suspension of


    On November 5, 2007, Cinram announced the Fund's intention to suspend all
distribution payments following the distribution for the month of December
2007. A distribution of C$0.1625 (previously C$0.2708) per unit was declared
for November and December 2007 to help address the potentially adverse tax
consequences to U.S. unitholders of the suspension of distributions.
    The Fund's distributions to unitholders are funded in part through
interest payments made on an inter-company note. For U.S. federal income tax
purposes, the Fund's unitholders are treated as the beneficial owners of this
inter-company debt. To the extent that the Fund does not distribute cash equal
to the amount of the interest income, any shortfall is treated as imputed
income to unitholders for U.S. federal income tax purposes. By maintaining a
reduced distribution of C$0.1625 for November and December, management
estimates that sufficient cash will be distributed to avoid any imputation of
income to U.S. unitholders under U.S. federal income tax principles for which
there is no corresponding distribution of cash.

    Internal reorganization

    To eliminate imputed income, on a going forward basis, for unitholders
subject to U.S. federal income tax, the Fund is executing an internal
reorganization by way of a series of inter-company transfers. The initial
inter-company transfer was completed as of December 14, 2007, and the balance
of the transfers will occur by year end. The reorganization will result in
minimal cash tax leakage and a loss of tax basis which may result in future
capital gains; however, it should not have a material impact on the Fund's
2007 and 2008 free cash flow projections.

    Information for U.S. unitholders

    We recommend that unitholders subject to U.S. federal income tax consult
with their tax advisors to determine if they are required to file an
information return on Internal Revenue Service Form 926 reporting the transfer
of Cinram International LLC to Cinram International Inc., one of the
inter-company transfers. Additional information concerning tax matters and
reporting relating to the reorganization is available in the investor
relations section of Cinram's website at

    The tax consequences discussed in this release are intended for
unitholders subject to U.S. federal income tax only and do not apply to
unitholders who are not subject to U.S. federal income tax. The information
contained in this news release does not constitute legal or tax advice.
Unitholders are advised to consult with a tax advisor as residency and other
circumstances may vary.

    About Cinram

    Cinram International Inc., an indirect, wholly-owned subsidiary of the
Fund, is the world's largest provider of pre-recorded multimedia products and
related logistics services. With facilities in North America and Europe,
Cinram International Inc. manufactures and distributes pre-recorded DVDs,
audio CDs, and CD-ROMs for motion picture studios, music labels, publishers
and computer software companies around the world. Cinram now also provides
distribution and logistics services to the telecommunications industry in
North America and Europe through its wireless subsidiaries. The Fund's units
are listed on the Toronto Stock Exchange under the symbol CRW.UN and are
included in the S&P/TSX Composite Index. For more information, visit our
website at

    Certain statements included in this release contain words such as
"could", "expects", 'expectations", "may", "anticipates", "believes",
"intends", "estimates" and "plans" (and similar expressions) and constitute
"forward-looking statements" within the meaning of applicable securities law.
These statements are based on Cinram's current expectations, estimates,
forecasts and projections about the operating environment, economies and
markets in which Cinram operates. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which are difficult
to predict and may cause the actual results, performance or achievements of
the Fund, outcomes, or results of the multimedia duplication/ replication
industry, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions, which will, among other things, impact the demand for the Fund's
products and services; multimedia duplication/replication industry conditions
and capacity; the ability of the Fund to implement its business strategy,
including having the cash resources necessary to do so; a shortage of product
due to labour disruptions, the Fund's ability to retain major customers; the
Fund's ability to invest successfully in new technologies and other factors
which are described in the Fund's filings with Canadian securities
commissions. Unless otherwise required by applicable securities laws, Cinram
disclaims any intention or obligation to update or revise any forward-looking

For further information:

For further information: Lyne Beauregard Fisher, Tel: (416) 321-7930,

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