Associated Brands Announces Interim Waiver From Bank.

TORONTO -- Associated Brands Income Fund (TSX:ABF.UN) announced today that its subsidiaries have entered into an agreement with their bank pursuant to which the bank has agreed to waive certain existing defaults under their credit agreement until March 27, 2006.

On January 29, 2006 the Fund announced that due to the unexpected poor financial results in the fourth quarter, based on preliminary and unaudited financial information, the Fund breached two financial covenants in its credit agreement with its bank and a covenant in such agreement limiting the amount of distributions permitted to be made to unitholders. These covenant breaches have also resulted in a default under the terms of the exchangeable debentures of Associated Brands Holdings Limited Partnership. Since that date, the Fund has had discussions with its bank and holders of the exchangeable debentures in connection with these breaches.

The agreement with the bank provides a basis for the Fund's subsidiaries and the bank to continue discussions regarding the credit agreement during the period to March 27, 2006. Pursuant to this agreement, the bank remains able to exercise its rights with respect to these existing defaults after March 27, 2006. The bank also remains able to exercise its rights with respect to these existing defaults prior to March 27, 2006 if there is a default under this agreement, if another default occurs under the credit agreement or if the bank does not consent in writing to the treatment proposed by the Fund of certain expense items for the purpose of calculating certain financial covenants in the credit agreement. Based on discussions with the bank, the Fund's subsidiaries believe that written consent to such expense item treatment will be provided by the bank.

Under this agreement, the Fund's subsidiaries, among other things, have committed to deliver certain additional financial and other information to the bank, to restrict further payments or distributions to certain third parties (including to the Fund for distribution to unitholders and to the holders of exchangeable debentures of Associated Brands Holdings Limited Partnership) without the consent of the bank and to make monthly repayments under the Canadian term facility under the credit agreement until the bank agrees that such payments may be discontinued.

There is no assurance as to the date by which, or the conditions (including an improvement in the financial condition of the Fund) under which, the bank would be prepared to provide its consent to the reinstatement of such payments and distributions or the discontinuance of such mandatory monthly repayments.

There can be no assurance that the Fund's discussions with its lenders will be successfully concluded. There can be no assurance that any actions taken by the lenders in response to defaults under their agreements with the Fund's subsidiaries will not have a material adverse effect on the Fund or its financial position.

Associated Brands Income Fund (TSX:ABF.UN), through its operating subsidiaries, is a leading North American manufacturer and supplier of private-label dry blend food products and household products. Since beginning operations in 1985, Associated Brands has grown to become one of the three largest suppliers of a diverse range of private-label dry-blend food products in North America, producing over eleven million cases annually across multiple product categories currently sold to 44 of the 50 largest North American food retailers. More information can be obtained at www.associatedbrands.com.

This press release contains certain forward-looking information and statements. Forward-looking information typically contains statements with words such as "consider", "anticipate", "believe", "expect", "plan", "intend", "may", "likely" or similar words suggesting future outcomes or statements regarding an outlook for, or future changes in, the Fund's financial performance, results of operations or distributions or other expectations, future events or performance. Readers should not place undue reliance on forward-looking information and should be aware that forward looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements of Associated Brands Income Fund to differ materially from those suggested by the forward-looking statements. These factors include, but are not limited to, the possible failure to successfully plan and execute business improvement strategies; the absence of long term sales contracts; possible failure of new product offerings; operating hazards; sensitivity of sales to weather conditions; compliance or changes in environmental, health and safety and other regulations; possible declines in vertical industry markets (grocery, foodservice, industrial and contract manufacturing); competition; reliance on key personnel; possible labour action; volatility in commodity prices and other input materials; prices; foreign exchange exposure; and restrictive covenants contained in the Fund's credit agreement and under the terms of its exchangeable debentures.

The above list of important factors affecting forward-looking information is not exhaustive, and reference should be made to the other risks discussed in Associated Brands Income Fund's filings with Canadian securities regulatory authorities. Associated Brands Income Fund undertakes no obligation, except as required by law, to update publicly or otherwise any forward-looking information, whether as a result of new information, future events or otherwise, or the above list of factors affecting this information.

Associated Brands Income Fund (TSX:ABF.UN)