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Press release from Marketwire

Canexus Income Fund Announces Closing of $60,000,000 Convertible Unsecured Subordinated Debenture Financing and Update on Conversion to a Corporation

Thursday, June 30, 2011

Canexus Income Fund Announces Closing of $60,000,000 Convertible Unsecured Subordinated Debenture Financing and Update on Conversion to a Corporation09:24 EDT Thursday, June 30, 2011CALGARY, ALBERTA--(Marketwire - June 30, 2011) -NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW. Canexus Income Fund ("Canexus" or the "Fund") (TSX:CUS.UN) is pleased to announce today that it has closed its previously announced convertible debenture bought deal financing (the "Offering"). At closing, Canexus issued $60,000,000 aggregate principal amount of 5.75% Series IV Convertible Unsecured Subordinated Debentures (the "Series IV Debentures") at a price of $1,000 per Debenture. The Series IV Debentures are convertible into trust units of the Fund ("Trust Units") and are listed and posted for trading on the TSX under the symbol "CUS.DB.B".The Offering was underwritten by a syndicate co-led by Scotia Capital Inc. and National Bank Financial Inc., and including CIBC World Markets Inc., HSBC Securities (Canada) Inc., TD Securities Inc. and Acumen Capital Finance Partners Limited (collectively, the "Underwriters").Net proceeds from the Offering will be used to repay existing indebtedness to position Canexus to continue to develop its ongoing suite of potential growth opportunities.Canexus would also like to announce that the reorganization of the Fund's business into Canexus Corporation ("New Canexus") is expected to close as soon as practicable and in any event not later than July 29, 2011 in order to accommodate the potential exercise by the Underwriters of the over-allotment option of the Series IV Debentures up to 30 days following the closing of the Offering. The reorganization is being undertaken pursuant to a Plan of Arrangement (the "Arrangement") under the Business Corporations Act (Alberta), pursuant to which each holder of Fund units will receive, for each Fund unit held, one common share of New Canexus (a "New Canexus Share"). Subject to, and conditional upon the closing of the Arrangement, it is New Canexus' intention to declare a quarterly dividend of $0.1368/share payable on or about October 17 to shareholders of record on September 30. This dividend is consistent with the level of distributions previously paid by the Fund.Following completion of the Arrangement, holders of Series IV Debentures will thereafter be entitled to receive New Canexus Shares, rather than Fund units, on conversion, redemption or at maturity of such Series IV Debentures on the same conversion basis as Fund units were previously issuable on conversion, redemption or at maturity thereof, subject to adjustment in certain events.The Series IV Debentures offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.Forward Looking StatementsThis press release contains forwarding looking statements. More particularly, this press release contains statements concerning the exercise and closing of the over-allotment option, the anticipated use of the net proceeds of the Offering and the occurrence and the anticipated effective date of the Arrangement. By their nature, forward looking statements involve a variety of assumptions, known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements including market and general economic conditions, future costs, treatment under governmental regulatory, tax and environmental regimes and the other risks and uncertainties detailed under "Risk Factors" in the Fund's Annual Information Form filed on the Fund's SEDAR profile at www.sedar.com. Although Canexus believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because Canexus can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The intended use of the net proceeds of the Offering might change if the Board of Directors of Canexus Limited, or, following the completion of the Arrangement, New Canexus, determines that it would be in the best interests of the Fund or New Canexus, respectively, to deploy the proceeds for some other purpose.The forward looking statements contained in this press release are made as of the date hereof and Canexus undertakes no obligations to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.About CanexusCanexus produces sodium chlorate and chlor-alkali products largely for the pulp and paper and water treatment industries. Our four plants in Canada and two at one site in Brazil are reliable, low-cost, strategically-located facilities that capitalize on competitive electricity costs and transportation infrastructure to minimize production and delivery costs. Canexus also provides fee-for-service hydrocarbon transloading services to the oil and gas industry from its terminal at Bruderheim, Alberta. Canexus targets opportunities to maximize unitholder returns and delivers high-quality products to its customers. Canexus trust units (CUS.UN) and convertible debentures (Series I – CUS.DB; Series III – CUS.DB.A) trade on the Toronto Stock Exchange. More information about Canexus is available at www.canexus.ca.FOR FURTHER INFORMATION PLEASE CONTACT: Gary KuberaCanexus LimitedPresident and CEO(403) 571-7300ORRichard McLellanCanexus LimitedCanexus Limited CFO(403) 571-7300www.canexus.ca