Mullen Group Income Fund announces 2008 capital budget and growth plans

    CALGARY, Jan. 28 /CNW/ - (TSX - MTL.UN) Mullen Group Income Fund (the
"Fund") announced today that it has approved a $40.0 million capital
expenditure budget for 2008. This amount will be allocated to those business
units in the Fund that need new capital to grow or sustaining capital to meet
their ongoing customer needs. Additional capital may be required later in the
year to fund growth plans in certain business units, acquisitions that the
Fund may pursue and the acquisition of long-term assets such as land and
    "Based upon our current outlook we believe the Fund is positioned to
generate moderate top-line and bottom-line growth in 2008 in spite of the
challenging oil and gas drilling environment in Alberta. Several of our
business units, most notably in the areas of infrastructure investment, oil
sands development and production services, continue to experience growth and
these are areas where we will concentrate our capital expenditures in 2008,"
stated Stephen H. Lockwood, President & Co-Chief Executive Officer.
    On the issue of income trusts and the ability to adequately fund ongoing
distributions, a number of income trusts have been forced to cut or suspend
cash distributions to their unitholders. In fact, it appears we are starting
to witness the differentiation in the income trust models. At the Mullen Group
we have a diversified business model, a very strong balance sheet and
relatively low sustainable capital requirements, elements that we consider
essential to the income trust structure. In 2008 we can maintain our current
monthly distribution of $0.15 per unit to unitholders, unless of course there
is a significant shock to the economy or the capital markets.
    The Fund also announced that it is continuing the process of assessing
the goodwill it booked in 2006 in connection with its oilfield services
acquisitions and expects to recognize a writedown of goodwill in its December
31, 2007 year-end statements.
    "The Federal government's legislation concerning SIFT's and the Alberta
government's changes to its royalty regime coupled with lower natural gas
prices have severely impacted our unit price and the business operations of
our business units dependant on drilling activity. This has resulted in the
Fund assessing whether its goodwill has been impaired. At this time we
anticipate recognizing a goodwill impairment of between $200 million and
$300 million for our 2007 year end. The exact amount will be announced when we
release the Fund's year-end results near the end of February, 2008," stated
Stephen H. Lockwood.
    The Fund enters 2008 with a renewed emphasis on growth. During 2007 the
Fund focused its efforts on absorbing the 11 business units acquired during
2006 into the Mullen group. This task has been accomplished and the Fund will
once again concentrate on creating unitholder value through growth. To
accomplish this strategic objective over the long-term the Fund will require
access to capital. The Fund's current cash reserves of approximately
$100 million will suffice in the short-term but access to new sources of
capital will eventually be required.
    The trust model that existed in July of 2005 when Mullen Transportation
Inc. converted to a trust was conducive to accessing capital as evidenced by
the $102 million of new capital raised by the Fund in January of 2006.
Unfortunately the Federal government's October 31, 2006 announcement on tax
policy relating to income trusts and the subsequent legislation has changed
the landscape. The Fund is concerned that the Federal government's actions
will ultimately result in the demise of the trust structure as a viable
business model and that the Fund's access to capital will be limited.
Therefore, it is the Fund's intention to actively investigate all the
potential restructuring alternatives available to it well in advance of 2011
when the most punitive aspects of the Federal government's new Trust Tax
Regime becomes effective. This investigation will be a complicated and time
consuming process but the ultimate goal is to ensure that the Fund has a
viable and sustainable structure over the long-term that will be effective and
efficient in allowing for growth, capital appreciation and a cash yield for
security holders. The Fund expects to be in a position to report to its
unitholders on its strategic direction in the early part of 2009.

    This press release may contain forward-looking statements that are
subject to risk factors associated with the oil and gas business and the
overall economy. The Fund believes that the expectations reflected in this
press release are reasonable, but results may be affected by a variety of
variables. The Fund relies on litigation protection for "forward-looking"

    Mullen is an open-ended income fund that owns a network of independently
operated businesses. Today the Mullen Group is recognized as the largest
provider of specialized transportation and related services to the oil and
natural gas industry in western Canada and as one of the leading suppliers of
trucking and logistics services in Canada - two sectors of the economy in
which the Fund has strong business relationships and industry leadership.
Administration of the Fund is delegated to Mullen Group Inc. which, in
addition to managing the Fund, provides management and financial expertise,
technology and systems support to its independent businesses.
    Mullen is a publicly traded income trust listed on the Toronto Stock
Exchange under the symbol "MTL.UN". Additional information is available on our
website at

    %SEDAR: 00022408E

For further information:

For further information: Mr. Murray K. Mullen - Chairman and Chief
Executive Officer, Mr. Stephen H. Lockwood - President and Co-Chief Executive
Officer, Mr. David E. Olson - Chief Financial Officer and Vice President,
Finance, P.O. Box 87, 1 Maple Leaf Road, Aldersyde, Alberta, Canada, T0L 0A0,
Tel: (403) 652-8888, Fax: (403) 601-8301

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Mullen Group Ltd.

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