GARNEAU INC. ANNOUNCES LEASE AND OPTION TO PURCHASE OF NISKU PROPERTY

NEX - GAR.H

NISKU, AB, Sept. 24 /CNW/ - Garneau Inc. ("Garneau" or the "Corporation") announces that the Corporation has entered into a lease agreement (the "Lease") with an arm's length third party (the "Tenant") to lease substantially all of Garneau's remaining property (the "Property"), which consists of real property situated in Nisku, Alberta. Pursuant to the Lease, the Tenant has agreed to lease the Property from the Corporation for a term of 5 years for consideration of $385,500 in the first year of the Lease ($5,000 per month for months 1 and 2 and $37,500 per month for months 3 to 12) and $570,000 per year in years 2 to 5 ($47,500 per month). In addition and subject to certain conditions, the Lease provides the Tenant with an option to purchase the Property (the "Option to Purchase") for consideration of: (i) $5,800,000 in months 1 to 6 of the Lease; (ii) $6,100,000 in months 7 to 12 of the Lease; and (iii) $6,400,000 after month 12 of the Lease, until the expiry or termination of the Lease.

The Corporation also announces that if the Option to Purchase is exercised and the sale of the property is completed, the board of directors intends to discharge the Corporation's liabilities, distribute the Corporation's remaining cash assets, if any, to its shareholders, and wind-up the Corporation pursuant to the provisions of a plan of liquidation, distribution and winding-up (the "Plan").

An Annual and Special Meeting of Shareholders (the "Meeting") has been called for October 27, 2010 to consider (i) the annual business of the Corporation; (ii) a resolution which would approve the transactions contemplated in the Lease, including the ultimate sale of substantially all of the property of the Corporation pursuant to the Option to Purchase (the "Lease and Sale Resolution"); and (iii) a resolution which would approve the liquidation, distribution of any remaining cash and winding-up of the Corporation pursuant to the Plan (the "Liquidation Resolution", together with the Lease and Sale Resolution, the "Resolutions"). The Resolutions must be approved by two-thirds of the votes cast at the meeting. Shareholders holding approximately 38.8% of the outstanding Garneau common shares have entered into agreements with the Tenant whereby they have agreed to vote in favour of the Lease and Sale Resolution.

Garneau ceased its manufacturing and equipment fabrication business in December 2009. The decision to lease and provide the Option to Purchase and ultimately liquidate Garneau and wind-up the Corporation resulted from a review of the alternatives available to the Corporation by the board of directors of the Corporation in their continuing efforts to preserve shareholder value in the context of severe financial hardship. Garneau has not received any other viable offers for the Property and based on the strategic review and inquiries made by the board of directors of the Corporation, the consideration to be received pursuant to the Lease, including the Option to Purchase, is believed to be in excess of the price that could be received if the assets were sold through an auction process. In this context and considering the anticipated inability of the Corporation to service its debt and the limited opportunity for an improved financial situation going forward with the current assets of the Corporation, the Garneau board of directors believes the actions announced today are in the best interests of the Corporation, as they present the possibility of the Corporation's shareholders receiving a liquidating distribution. The board of directors unanimously recommends that shareholders vote in favor of the Resolutions.

Garneau anticipates that a proxy and information circular for the Meeting, which will provide greater detail on the transactions referenced in this press release, will be mailed to shareholders very shortly and will be available at www.sedar.com.

    
    Forward-Looking Information
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Certain information in this press release contains forward-looking statements. These statements relate to future events or actions. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "if", "intends", "would", "anticipated", believes", "anticipates", "will", "expected" and similar expressions. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Garneau's control. Actual events or actions could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that Garneau will derive from them. Except as required by law, Garneau undertakes no obligation to publicly update or revise any forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

%SEDAR: 00008952E

For further information: Glen Garneau, Acting President and CEO, Darlene Kirkpatrick, Project and Communications Manager, Phone: [phone], Fax: [phone]