Najafi Companies to Acquire Assets and Business of Cinram

About Najafi Companies

Najafi Companies is a private investment firm whose current portfolio companies include Direct Brands, Actissia, SkyMall, Trend Homes and Snowflake Power. The firm makes highly-selective investments up to $1 billion in transaction value in companies with strong management teams across a variety of industries. The firm takes a long-term view on its investments and focuses its efforts to create value through growth and superior performance.

Certain statements included in this release constitute "forward-looking statements" within the meaning of applicable securities laws. Such forward-looking statements include statements concerning the possible effects of the transactions described herein, and the likelihood of their successful completion. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. These risks may affect the achievement of the expected results of the transactions described herein. The transactions are subject to conditions, and there can be no assurance that the said transactions will be successfully completed or that, if completed, the expected consequences will result in whole or in part, and the deviations from such expectations may be material.

Schedule - Summary of Transaction Terms

Implementation Process

The transaction will be implemented through a court-supervised process. Cinram has applied for and obtained an order from the Ontario Superior Court of Justice (Commercial List) to commence proceedings under the Companies' Creditors Arrangement Act (CCAA). These proceedings are limited to Cinram's operations in North America, Cinram will also be seeking recognition of its CCAA proceedings under applicable U.S. laws. These CCAA proceedings do not apply to Cinram's European businesses.

The hearing for the approval of the sale transaction and a vesting order of the purchased assets will be scheduled before the Ontario Superior Court of Justice (Commercial List).

The court restructuring process is not expected to affect Cinram's day-to-day operations. Cinram has access to the funding necessary to maintain its operations and the operations will continue without disruption during this period. Cinram will operate its business in the ordinary course, including continuing to pay its suppliers for all goods and services through the course of the court restructuring process.

Lender Support

The sale transaction has the support of members of the steering committee of lenders under Cinram's senior secured credit facilities. Cinram anticipates further support of the sale transaction from additional lenders following the public announcement of the transaction.

Details of the sale transaction

The sale transaction includes the following key elements:

• Najafi will purchase substantially all of the assets used in Cinram's core businesses for the manufacture of pre-recorded multimedia products and the provision of related logistics services, digital media solutions and outsourced vendor management inventory services in North America and substantially all of the European business.
  
  
• The sale transaction is subject to customary conditions, including receipt of approval under the Investment Canada Act and completion of other regulatory processes, and receipt of any other requisite approvals, in North America and Europe.
  
  
• Najafi will continue to fulfill Cinram's obligations to its customers and suppliers in respect of any of the acquired assets or business.
  
  
• The sale transaction is expected to close by early August, 2012, although the transfer of portions of the business may occur later in the year.

Assets excluded from the sale transaction include the assets used in Cinram's telecommunications products logistics services (the "Wireless Business") and certain real estate assets.

The proceeds of the sale transaction, and proceeds generated from the excluded assets, will be used to repay Cinram's senior creditors (and will not be available for distribution to unitholders).

SOURCE Cinram International Income Fund