Trading Symbol: The Toronto Stock Exchange - GRO.UN VANCOUVER, Aug. 10 /CNW/ - Sun Gro Horticulture Income Fund today announced that its wholly owned subsidiary, Sun Gro Horticulture Canada Ltd. (Sun Gro), has agreed to purchase substantially all of the operating assets of Fort Frances, Ontario peat moss producer, Normiska Peat Inc. from Normiska Corporation. The $3.3 million purchase price includes approximately $0.7 million for product inventory on hand as at August 1, 2006. The transaction, which is expected to close on August 15, 2006, significantly increases Sun Gro's central Canadian harvest capacity and enhances the company's geographic diversification. Of Normiska's total 1,440 acres of professional grade peat bogs, nearly 1,300 acres have yet to be developed, providing Sun Gro with substantial long-term harvest growth potential. The acquisition also includes a peat processing plant and related harvesting equipment. "The Normiska acquisition will further strengthen our peat supply position in our core professional growers' market, while giving us a presence in an entirely new harvest area," said Mitch Weaver, President and CEO of Sun Gro and a Trustee of the Fund. "The Fort Frances location is ideally situated to serve our customers in the US Midwest, as well as within economical shipping range of our Michigan growing mix plant. Ongoing development of the new bog will provide a growing source of high quality professional peat for years to come." The acquisition was funded through Sun Gro's existing acquisition line of credit and is expected to be accretive to the Fund's unitholders beginning in 2007. With planned expansion of the harvest area over the coming months, the Normiska peat bog is expected to add approximately 250,000 equivalent bales (Sun Gro's standard unit of volume measurement, referring to 10 cubic feet of peat) to the company's 2007 peat harvest. At current peat prices and foreign exchange rates, this could support $2.4 million in additional sales beginning next year. Income Fund Profile Sun Gro Horticulture Income Fund was launched with the completion of an Initial Public Offering of 22,023,000 trust units on March 27, 2002. The Fund is dependent on Sun Gro's operations, with monthly distributions to its unitholders based entirely on Sun Gro's performance. Company Profile Sun Gro was founded in 1929 in Vancouver, BC and has grown to become North America's largest producer of sphagnum peat, and the largest distributor of peat moss and peat and bark-based growing media to professional plant growers in the US and Canada. Sun Gro sells its professional products primarily to greenhouse, nursery and specialty crop growers, as well as to golf course developers and landscapers. Sun Gro also sells peat moss and peat-based growing mixes to retail customers, either by way of private label partnerships or under its own brand names. Approximately 80% of the company's sales volume goes to the US. Forward-Looking Statements This news release contains forward-looking statements. These statements relate to future events or future performance and reflect Sun Gro's expectations regarding its growth, results of operations, performance, business prospects, opportunities or industry performance or trends. These forward-looking statements reflect management's current internal projections, expectations or beliefs and are based on information currently available. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from those discussed in the forward-looking statements. Important factors that could cause actual results to differ materially from Sun Gro's expectations include, among other things, fluctuations in currency exchange rates, the impact of adverse weather conditions on harvesting operations, an increase in freight rates, and the impact of an increase in fuel costs. You should specifically consider these factors, including the risks and uncertainties described in the Fund's most recent annual information form for the year ended December 31, 2005. In addition, the Fund's ability to make distributions to unitholders is entirely dependent on Sun Gro's performance. Although management believes that the forward-looking statements contained in this news release are based on reasonable assumptions, readers cannot be assured that actual results will be consistent with such statements. Forward-looking statements are made as of the date of this news release and Sun Gro assumes no obligation to update or revise them to reflect new events or circumstances. %SEDAR: 00017490E