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Pawnee Becomes Chesswood Income Fund

by Christopher Menkin

If all goes well with the legal work, the 24 year old Pawnee Leasing, Fort Collins , Colorado , will be issuing their IPO in Canada as “Chesswood Income Fund”. The Toronto Stock Exchange has approved Chesswood Income Fund for listing, contingent upon the closing of the offering on May 10 . Investors in the United States will only see a limited opportunity in this unique offering, perhaps the first of its kind in the equipment leasing industry. Then Pawnee Leasing Corporation president Gary H. Souverein has been conducting a “dog and pony show” to Canadian investors for this day. At worst, it could be delayed until tomorrow, Thursday.

Gary H. Souverein

The actual date is a legal one, indicating when Pawnee is acquired by, and constitutes over 90% of the pro forma earnings of, Chesswood Income Fund. In conjunction with the acquisition of Pawnee, Chesswood is having its IPO in Canada and will be listed on the Toronto Stock Exchange. The company will keep its United States trade style name.

“Chesswood Income Fund (the "Fund") - An application has been granted for the original listing in the Industrial category of 8,861,249 trust units (the "Units") of the Fund of which 7,081,848 Units will be issued and outstanding, and 1,842,401 Units will be reserved for issuance upon completion of a public offering (the "Offering").

“Listing of the Units will become effective at 5:01 p.m. on Tuesday, May 9, 2006 in anticipation of the Offering closing on Wednesday, May 10, 2006. The Units, other than those which have not been distributed to the public, will be posted for trading at the opening on Wednesday, May 10, 2006.

“Additional information on the Units may be found in the final prospectus dated May 2, 2006, (the "Prospectus"), which is available at www.SEDAR.com. Capitalized terms not otherwise defined are as defined in the final Prospectus.

“Stock Symbol: "CHW.UN"
CUSIP: 16549P 20 7
Trading Currency: CDN
“Designated Market Maker: TBA
“Other Markets: None
“Head Office Address:
4077 Chesswood Drive
Toronto , Ontario
M3J 2R8

“Email Address: lstevenson@chesswoodfund.com

“Website: http://www.chesswoodfund.com/

“Head Office Telephone Number: (416) 386-3099”

Toronto Stock Exchange *

Pawnee Leasing Corporation was established in 1982. The company and its staff are both very well respected and well-known small-ticket funding source specializing in start-up business and less traditional credits up to $30,000. Today they have 45 employees and work primarily with brokers who have been in business for only a year

(many are well established for over twenty-five years.) Their rates are high and terms tough, but they have a growing niche in the marketplace as their success has indicated. They know what they are doing.

Leasing News has written about Pawnee and Cars4u and in an exclusive interview with Souverein, where he explained the procedure. After the issuance of stock, he will be willing to engage in an exclusive interview for Leasing News readers again.

Bruce Kropschot of Kropschot Financial made the introduction to Cars4u and guided the company through the acquisition discussions and negotiations along the route to the IPO stage. Cars4u is a public Canadian company that leases and sells automobiles and is also being acquired by Chesswood.

Bruce Kropschot, while a member of the Leasing News Advisory Board thought it best not to make any comment until after the IPO is introduced. He did comment that he has other income funds in Canada that are looking for equipment leasing acquisitions in the United States .

How this worked, as explained by Gary Souverein initially was similar to a reverse merger: a conversion by Cars4u, a much smaller company than the 46 employee Pawnee, into an income trust simultaneous with the acquisition of Pawnee. Such an entity is similar to a real estate trust in the United States : an income trust in Canada has no corporate income tax.

Souverein believes the Pawnee IPO will be similar to the successful one by Marlin Business Leasing with 315 employees and does leases up to $185,000 with very low lease rates, as they are both in the small ticket leasing business, with Pawnee in their niche, meaning start-ups, story credits, unusual equipment, and not just making credit decisions based of Faire-Isaac scores. They are also very popular in the equipment leasing broker community despite their very high lease rates.

October, 2005 interview:

http://www.leasingnews.org/Conscious-Top%20Stories/Gary_Souverein.htm

Bruce Kropschot
Kropschot Financial Services
70 Beachside Drive, #101
Vero Beach , FL 32963
(772) 228-9808

* Toronto Stock Exchange:

Investors Relations:

Tina Gladstone Environics Communications Inc.,
Tel: (416) 969-2752,
tgladstone@environicspr.com

Chief Financial Officer and Corporate Secretary: Lisa Stevenson

Incorporation: The Fund is an unincorporated, open-ended, limited purpose trust established under the laws of Ontario pursuant to a Declaration of Trust dated February 16, 2006, amended and restated on May 2, 2006.

Fiscal Year End: December 31

Nature of Business: The Fund was created to indirectly acquire, (i) all of the shares of Pawnee Leasing Corporation ("Pawnee"), a Colorado company and (ii) all of the shares of cars4U Ltd ("cars4U") pursuant to a plan of arrangement.

Pawnee is a leasing company that leases micro and small-ticket business equipment fundamental to the core operations of its lessees' businesses. Pawnee provides equipment lease financing to small businesses in the start-up and segment of the U.S. equipment leasing market through its network of over 550 independent brokers operating in the lower 48 states of the United States

cars4U is a TSX listed company engaged in the business of leasing automobiles and selling, servicing and leasing Acura brand automobiles in the Province of Ontario through its subsidiaries, Lease-Win Limited and Sherway Fine Cars Limited.

Transfer Agent & Registrar: Equity Transfer Services Inc. at is principal office in Toronto .

Distributions: The Fund intends to make monthly cash distributions of its distributable cash to Unitholders of record on the last business day of each month to the extent determined prudent by the Fund Trustees. The initial cash distribution for the period from the Closing to May 31, 2006 is expected to be paid on or before June 15, 2006 and is estimated to be $0.0649 per Unit. Subsequent regular distributions in the estimated amount of $0.0958 per Unit are anticipated to be paid on the 15th day of each month thereafter (or the next following business day if the 15th is not a business day) commencing July 17, 2006. Distribution payments by the Fund are not mandatory or guaranteed and the board of Fund Trustees may amend or repeal its distribution policy at its discretion.

Public Offering: Pursuant to the terms of the Prospectus, 5,778,193 Units at a price of $10.00 per Unit, are being offered to the public by TD Securities Inc, Canaccord Capital Corporation, Blackmont Capital Inc., Wellington West Capital Markets Inc., Desjardins Securities Inc., Genuity Capital Markets G.P.