CML HealthCare Income Fund Announces Anticipated Initial Post-Conversion
Dividend of $0.0629 per Share Monthly (or $0.7548 per Share Annually)


Toronto Stock Exchange Symbol: CLC.UN

MISSISSAUGA, ON, Aug. 12 /CNW/ - CML HealthCare Income Fund (TSX: CLC.UN) (the "Fund" or "CML") today provides further information on the previously announced intention to convert (the "Conversion") from an income trust structure to a corporation (the "Corporation"). The Board of Trustees has approved an initial post-conversion dividend anticipated to be $0.0629 per share on a monthly basis, or $0.7548 per share on an annualized basis effective January 1, 2011. This dividend policy maintains the current distribution level adjusted to take into account the anticipated level of income taxes that the Corporation will be subject to commencing in 2011. As previously announced, the Fund intends to maintain its current monthly distribution level of $0.08927 per unit for the remainder of 2010.

"CML's strategy is to be a stable dividend-paying corporation post conversion, and to continue to create value for shareholders through organic growth as well as opportunistic, accretive acquisitions," said Paul Bristow, President and Chief Executive Officer of CML. "For our income-oriented investors, we intend to continue with our monthly payment policy with an initial post-conversion dividend anticipated to be $0.0629 per share per month which is equivalent to $0.7548 per annum," continued Mr. Bristow. "The declaration and payment of dividends will be subject to the discretion of the Board of Directors of the Corporation and may vary depending on, among other things, financial results, financial requirements, the economic environment and other factors considered relevant by the Board."

The Conversion, which is expected to be completed by way of a plan of arrangement under the Ontario Business Corporations Act (the "Arrangement"), is subject to a number of conditions including regulatory, Toronto Stock Exchange, and court approval. In addition, it will be subject to the approval of 66 2/3 per cent of the votes cast by the Fund's unitholders at a special meeting to be held on December 1, 2010. The mailing of the information circular to unitholders of the Fund is expected to occur in early November 2010.

Pursuant to the Conversion, it is currently contemplated that one common share of the Corporation will be received for each CML unit held by unitholders. It is expected that the Conversion will be completed on a tax-deferred, rollover basis for Canadian resident unitholders and upon completion of the Arrangement, the Corporation will directly or indirectly own and operate the existing businesses of the Fund and its subsidiaries.

Conversion Rationale

Given the Federal government's announcement on October 31, 2006 regarding the taxation of income trusts (the "SIFT Rules") effective on January 1, 2011, Management and the Board of Trustees have concluded that the proposed exchange of trust units for common shares of a corporation will best enable CML to execute its strategy of stable growth while continuing to provide investors with monthly income. The implications of the Conversion are as follows:

    -   The Conversion will provide a simplified tax structure that is more
        comparable to public companies operating in Canada and

    -   Post-Conversion, Canadian taxable shareholders will be entitled to a
        dividend tax credit in respect of eligible, taxable dividends

    -   The Conversion will be tax deferred for Canadian resident unitholders
        based on the SIFT Rules for conversions;

    -   The Conversion will remove the Federal government's "normal growth"
        and "undue expansion" limitations;

    -   The Conversion may attract new investors and provide a more liquid
        market for CML's securities;

    -   The Conversion is intended to provide investors with sustainable
        monthly income with opportunities for capital appreciation; and

    -   The Conversion may allow CML to have greater access to capital in
        Canada, United States, and other international markets on a more
        timely and cost efficient basis.

About CML HealthCare Income Fund

CML HealthCare Income Fund is an unincorporated open-ended trust that owns CML HealthCare Inc., one of North America's largest healthcare services businesses. Based in Mississauga, Ontario, CML HealthCare Inc. is a leading provider of laboratory testing services in Ontario, the largest provider of medical imaging services in Canada and is a leading provider of medical imaging services in the U.S. Northeast. CML HealthCare Income Fund is publicly traded on the Toronto Stock Exchange under the symbol "CLC.UN" and has approximately 89.8 million units outstanding. To reach CML HealthCare Income Fund via the worldwide web log on to

Caution concerning forward-looking statements

This document includes forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario) and other provincial securities law in Canada. These forward-looking statements include, among others, statements with respect to our objectives, goals and strategies to achieve those objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words "may", "will", "could", "should", "would", "suspect", "outlook", "believe", "plan", "anticipate", "estimate", "expect", "intend", "forecast", "objective" and "continue" (or the negative thereof), and words and expressions of similar import, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. Certain material factors or assumptions are applied in making forward-looking statements and actual results may differ materially from those expressed or implied in such statements. We caution readers not to place undue reliance on these statements, as a number of important factors, many of which are beyond our control, could cause our actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: failure to receive approval of the Conversion from unitholders or relevant regulatory authorities; a reduction of funds from operations; general economic conditions; dependence on government-based revenues in Canada; pending and proposed legislative or regulatory developments in Canada including the impact of changes in laws, regulations and the enforcement thereof; intensifying competition, resulting from established competitors and new entrants in the businesses in which we operate; our ability to complete strategic acquisitions and to integrate our acquisitions successfully; insurance coverage of sufficient scope to satisfy any liability claims; operational and infrastructure risks including possible equipment failure and performance of information technology systems; fluctuations in total patient referrals; technological change and obsolescence; loss of services of key senior management personnel; privacy laws; dependence on our operating subsidiary to pay its interest obligations to us; unpredictability and volatility of the unit price; nature of the units; fluctuations in cash distributions and capital investment; structural subordination of the units; leverage and restrictive covenants; timing and amount of capital expenditures; restrictions on potential growth; tax-related risks; redemption right; dilution; future sales of units; distribution of CML Shares and Notes on termination of the Fund; and limited unitholder liability. Additional factors related to the business operations in the U.S. imaging market include, but are not limited to: potential termination of the management services agreement between our subsidiary, American Radiology Services and American Radiology Associates, P.A., or other arrangements with contracted radiology practices; fluctuations in total patient referrals; changes in third-party reimbursement rates or methodology; increased pressure to control healthcare costs; increased competition; technological change; exposure to professional malpractice liability; potential termination of relationship with Johns Hopkins; currency fluctuations; ability to grow business in the United States; U.S. income tax matters; different regulatory environment characterized by extensive regulation; penalties arising from failure to comply with all regulations; federal and state fraud and abuse laws; reversal of Board of Physician's decisions or legislative change; loss of licensing, certification or accreditation; Certificate of Need regulations; privacy legislation; legislative change affecting prices that physicians or suppliers can charge; avoidance of fee-splitting; environmental health and safety laws; and the uncertainty of the U.S. regulatory environment.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When reviewing our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found in the "Risk Factors" section, under "Business Risks" and elsewhere in our Management's Discussion and Analysis of Operating Results and Financial Position for the year ended December 31, 2009 and elsewhere in our filings with Canadian securities regulators. Except as required by Canadian securities law, we do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf; such statements speak only as of the date made.

%SEDAR: 00020333E


For further information: For further information: Alice Dunning, Director, Corporate Communications, CML HealthCare Income Fund, (905) 565-0043 ext.3472, (905) 565-2844 fax; Tom Weber, Chief Financial Officer, CML HealthCare Income Fund, (905) 565-0043 ext. 3204, (905) 565-2844 fax; Internet:

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