Sun Gro Horticulture Income Fund Forms Special Committee to Evaluate
Strategic Alternatives

TRADING SYMBOL: Toronto Stock Exchange - GRO.UN

VANCOUVER, Sept. 7 /CNW/ - Sun Gro Horticulture Income Fund ("Sun Gro"), North America's largest producer and distributor of horticultural-grade peat moss and bark-based growing mixes, today announced that it has established a Special Committee of the Board of Trustees to explore strategic alternatives aimed at enhancing unitholder value. These alternatives may include, but are not limited to, the possible sale of Sun Gro, a merger or other business combination, or a sale of all or a substantial portion of Sun Gro's assets. It is the Board's belief that Sun Gro's unit price has not reflected the underlying value of Sun Gro's business for a significant period of time, and that the current price does not appropriately reflect its assets, brands and distribution capabilities, combined with the full impact of continuing business improvements and growth initiatives. Therefore, the Board has concluded that it is in the best interests of all Sun Gro unitholders to conduct an orderly and comprehensive review and evaluation of its available strategic, operational and financial alternatives.

The Special Committee is comprised of Craig Graham, David Sutin and John McLaughlin. The Special Committee has engaged Blair Franklin Capital Partners as financial advisor to assist in its review.

In addition, subject to TSX acceptance, the Board has adopted a Unitholder Rights Plan (the "Rights Plan"). The Rights Plan is designed to allow the Board of Trustees and unitholders sufficient time to consider fully any potential transaction involving the acquisition of 20% or more of the outstanding units and, if appropriate, for the Board of Trustees to seek alternatives to such a transaction. The Rights Plan will also prevent an acquirer from gaining control of Sun Gro without paying unitholders an appropriate control premium.

The Board of Trustees has authorized the issuance of one share purchase right with respect to each unit of Sun Gro outstanding as of the close of business on September 7, 2010. These rights will become exercisable when a person, together with any related party, acquires or offers to acquire 20% or more of the outstanding units without, among other things, complying with the "permitted bid" provisions of the Rights Plan or without approval of the Board of Trustees. Unitholders that currently hold 20% or more of the outstanding units will only trigger the plan if their beneficial ownership increases by 1% of the outstanding units. Should such an acquisition occur or be announced, each right would, upon exercise, entitle a rights holder, other than the acquiring person and related persons, to purchase units of Sun Gro at a 50% discount to the market price at the time. Under the Rights Plan, a "permitted bid" is a bid that is made to all holders of Sun Gro's units (other than the offeror) and that is open for acceptance for not less than 60 days. If at the end of 60 days at least 50% of the outstanding units, other than those owned by the offeror and certain related parties have been tendered, the offeror may take up and pay for the units but must extend the bid for a further 10 days to allow other unitholders to tender.

The Rights Plan will expire on the six-month anniversary of its adoption if unitholders have not approved the Rights Plan prior to that time. The Rights Plan has not been adopted in response to any specific proposal to acquire units of Sun Gro and it is not intended to, and Sun Gro believes it will not, hinder full and fair offers for control of Sun Gro that are made to all unitholders. A full copy of the Rights Plan will be available at www.sedar.com in due course.

There can be no assurance that strategic alternatives will be available or that Sun Gro will elect to consummate any such alternatives. Sun Gro does not intend to provide updates or make any further comment until the outcome of the process is determined or until a specific transaction is recommended by the Board of Trustees.

Income Fund Profile

Sun Gro Horticulture Income Fund was launched with the completion of an Initial Public Offering on March 27, 2002. Units of the Fund are listed for trading on the Toronto Stock Exchange. At September 7, 2010, there were 22,284,681 units of the Fund issued and outstanding.

Company Profile

Sun Gro is the largest producer and distributor of peat and bark-based growing mixes to professional plant growers in the US and Canada. It is also North America's largest producer and distributor of sphagnum peat moss, with approximately 65,000 acres of peat bogs under lease. Sun Gro sells its professional products primarily to greenhouse, nursery and specialty crop growers. The company also sells peat moss and potting mixes to retail customers, either by way of private label partnerships or under its own brand names. In addition, Sun Gro sells sand-based mixes to golf course developers and landscapers. The company's North America-wide production network now comprises 12 Canadian operating plants and 13 US operating plants.

%SEDAR: 00017490E

For further information: Bradley A. Wiens, Vice-President, Finance and CFO, Sun Gro Horticulture Income Fund, Tel: [phone], Email: [email protected], Website: www.sungro.com