VEGREVILLE, ALBERTA--(Marketwire - Sept. 24, 2012) - TerraVest Income Fund ("TerraVest" or the "Fund") (TSX:TI.UN) announced today details of its intention to convert from an income trust to a traditional corporate structure (the "Conversion"), effective on or about October 31, 2012. The Conversion is being contemplated as a result of legislative changes to the tax treatment of business income trusts and is proposed to be implemented by way of a plan of arrangement under the Business Corporations Act (Alberta). Pursuant to an Interim Order of the Court of Queen's Bench of Alberta, the planned Conversion must be approved by a special resolution in writing of the unitholders of the Fund holding not less than 66 2/3% of the issued and outstanding units of the Fund and by a special resolution in writing of the shareholder of TerraVest Capital Inc. (a wholly-owned subsidiary of the Fund) that is intended to be binding on all unitholders of the Fund. The Fund is relying on Section 604(d) of the TSX Company Manual in seeking unitholder approval by written consent.

Copies of the Interim Order, the Arrangement Agreement and the Plan of Arrangement in respect of the proposed Conversion are filed on [ www.sedar.com ], or unitholders may request a copy from the solicitors for TerraVest at the address below. The Arrangement Agreement contains the Plan of Arrangement. The Interim Order further provides that unitholders of the Fund will have the right to appear before the Court of Queen's Bench at the hearing of the application for the Final Order, currently scheduled to be heard on October 24, 2012 at 10:00 a.m. at the Law Courts, 1A Sir Winston Churchill Square, Edmonton, Alberta, provided that in accordance with the Interim Order they file a response to the originating application together with copies of any affidavit materials and other materials on which they intend to rely with solicitors for TerraVest, at the address below, on or before 4:00 p.m. (Edmonton time) on October 18, 2012.

The address for service for TerraVest is Fraser Milner Casgrain LLP, Barristers and Solicitors, 2900 Manulife Place, 10180 - 101 Street, Edmonton, Alberta, T5J 3V5, Attention: Robert Roth (Phone: 780-423-7100). For further details, you may contact the solicitors for TerraVest.

The Conversion

If the Conversion receives the requisite approvals, it will result in the holders of units of the Fund becoming shareholders of a new corporation, TerraVest Capital Inc. ("Newco"). Unitholders will receive, for each unit of the Fund held, one common share of Newco. Upon completion of the Conversion, the holders of the common shares of Newco will be identical to the holders of Fund units immediately before the Conversion. It is anticipated that the common shares of Newco to be issued in connection with the Conversion will be conditionally approved for listing on the TSX prior to the effective date of the Conversion, subject to Newco fulfilling the requirements of the TSX.

The holders of Newco common shares after the Conversion will be entitled to one vote per common share at meetings of shareholders of Newco, to receive dividends if, as and when declared by the board of directors of Newco and to receive pro rata the remaining property and assets of Newco upon its dissolution or winding-up.

The active business owned by the Fund will continue to be carried on as it is currently by certain subsidiary entities of the Fund, which will become subsidiaries of Newco. In connection with the Conversion, the Fund will be wound-up into Newco and will be dissolved.

The specific steps contemplated to take place in connection with the Conversion are described in the Arrangement Agreement and the Plan of Arrangement.

Securities and Principal Holders

As at September 20, 2012, the Fund had 12,529,403 units issued and outstanding. Upon completion of the Conversion, it is expected that an aggregate of 12,529,403 common shares of Newco will be issued and outstanding.

To the knowledge of the Fund, no person beneficially owns, directly or indirectly, or controls or directs more than 10% of the outstanding units of the Fund or will after the Conversion beneficially own, directly or indirectly, or control or direct more than 10% of the outstanding common shares of Newco, other than the following (as reported by such persons): Dale H. Laniuk (4,016,872 units/shares; 32.06%); Clarke Inc. (3,970,108 units/shares; 31.69%) and George Armoyan (2,000,000 units/shares; 15.96%). As previously disclosed, Mr. Armoyan has advised that he is presumed to be acting jointly and in concert with Clarke Inc. (he is Clarke Inc.'s President and CEO).

Insiders of the Fund will participate in the Conversion transaction on exactly the same terms as all other unitholders (i.e. they will receive one common share of Newco for each unit of the Fund held). No insider of the Fund has any direct or indirect interest in the Conversion other than as a holder of units of the Fund, and such interest is identical to the interest of all other unitholders. No related party of the Fund will receive a collateral benefit as a result of the Conversion becoming effective.

Benefits of Conversion

The Board of Trustees and management of the Fund believe the proposed Conversion is in the best interest of unitholders and the business, and can be expected to produce the following benefits:

• the Conversion will simplify the business and tax structure of the Fund and its subsidiary entities and will provide a structure similar to other publicly owned corporations;
• completion of the Conversion will eliminate the risks and uncertainty facing the Fund as a result of the tax legislation relating to mutual fund trusts;
• completion of the Conversion is expected to enhance strategic opportunities available to TerraVest as a result of TerraVest having a simpler and more typical corporate structure;
• it is anticipated that completion of the Conversion will facilitate TerraVest's access to capital and ability to pursue additional financing opportunities, if required;
• it is anticipated that the general and administrative expenses of TerraVest will be reduced over the long term;
• it is anticipated that the taxes payable by TerraVest and its subsidiary entities under a corporate structure will be effectively lower than if the Fund were to remain in a trust structure.

"TerraVest's announcement concerning its proposed Conversion to a traditional corporation is the best approach for us to take in light of the new taxation environment and to support the continued operation of the business," said Dale H. Laniuk, President and Chief Executive Officer. "Moving forward, TerraVest will be well positioned to take advantage of business and strategic opportunities."

About TerraVest Income Fund

The Fund has investments in two remaining portfolio businesses:

• RJV Gas Field Services ("RJV"), one of Canada's largest providers of wellhead processing equipment for the natural gas industry in western Canada; and
• Diamond Energy Services ("Diamond"), a market leader in providing well servicing to the oil and natural gas sector in south-western Saskatchewan.

Caution Regarding Forward-Looking Statements

This news release contains forward-looking statements. All statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, statements regarding the Conversion and its effective date and the benefits of the Conversion. Readers can identify many of these statements by looking for words such as "expects" and "will" and similar words or the negative thereof. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

By their nature, forward-looking statements require us to make assumptions and, accordingly, forward looking statements are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors may cause actual future circumstances, results, conditions, actions or events to differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements and the assumptions underlying the forward-looking statements.

Assumptions and analysis about the performance of the Fund as a whole and the Fund's portfolio businesses, the markets in which the portfolio businesses compete and the prospects and values of the portfolio businesses are considered in setting the business plan for the Fund, in evaluating and forecasting availability of credit and/or ability to pay distributions, tax horizon, capital investments, outlook for operations, financial position, results and cash flow, other plans and objectives and in making related forward-looking statements. Future outcomes that relate to forward-looking statements may also be influenced by the following factors: the inability to obtain requisite consents or approvals related to the Conversion and operating and financial results of the Fund and its successor corporation post-Conversion being different than that anticipated by the trustees and management of the Fund. Should any of these factors or assumptions vary, actual results may differ materially from the forward-looking statements.

The information set forth under "Risk Factors" in the annual information form of the Fund dated March 5, 2012 and under "Financial Instruments" in the MD&A of the Fund for the period ended June 30, 2012, identifies risk factors that could affect the operating results and performance of the Fund and its portfolio businesses and the values of the portfolio businesses and the Fund as a whole. We caution that the lists of factors discussed in such information is not exhaustive and that, when relying on forward-looking statements to make decisions with respect to the Fund, investors and others should carefully consider the factors discussed, as well as other uncertainties and potential events, and the inherent risks and uncertainties of forward-looking statements. The forward-looking statements herein are made based on the assumption that the Fund will not be affected by such risks, but that, if the Fund is affected by such risks, the forward-looking statements may become inaccurate.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release. Except as required by applicable securities laws, the Fund does not undertake to update such forward-looking statements.

Contributing Sources

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