CEO.CA Chairman's Briefing

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TORONTO, Dec. 4, 2017 /CNW/ - Equity Financial Holdings Inc. (TSX: EQI) ("Equity"), which offers residential mortgage loans through its wholly-owned subsidiary, Equity Financial Trust Company ("Equity Trust"), today announced that it has been advised that shareholders (including members of management of Equity) who hold approximately 16.03% of the issued and outstanding shares of Equity (the "Shares") have entered into amended "hard" lock-up agreements with Smoothwater Capital Corporation ("Smoothwater") in support of the previously announced plan of arrangement (the "Arrangement") and Equity has been provided with details of such amended lock-up agreements. Under the Arrangement, Smoothwater will acquire all of the issued and outstanding Shares, other than Shares already owned or controlled by Smoothwater, its officers, and by certain other shareholders who have agreed to remain as continuing shareholders, at $10.25 per share, representing a premium of 36.2% to the volume weighted average price of the Shares on the Toronto Stock Exchange for the 20 trading days ending October 30, 2017, the initial date of announcement of the Arrangement.

Following the execution and delivery by Equity and Smoothwater of the amended and restated arrangement agreement (the "Amended and Restated Arrangement Agreement") on November 26, 2017 and the related public disclosure, Equity received two unsolicited non-binding expressions of interest to acquire up to 100% of the outstanding Shares from the parties that submitted expressions of interest on substantially the same terms during the go-shop period prior to the entering into of the Amended and Restated Arrangement Agreement.  One of the expressions of interest was received from an OSFI-regulated entity and contemplated a per Share purchase price of at least $11.25, all cash, subject to due diligence investigations and regulatory approvals.  The other expression of interest was received from an IIROC member who is not OSFI-regulated and contemplated a purchase price range of $12.50 to $13.50 per Share, all cash, subject to financing, due diligence investigations and regulatory approvals. In light of the subsequent execution of amended "hard" lock-up agreements by certain shareholders of Equity with Smoothwater, the effect of which is to now preclude any reasonable prospect of such expressions of interest from being successfully completed in their current form, the Special Committee, after receiving legal and financial advice, has determined to suspend any further pursuit of these expressions of interest.  Further details about the process followed by the Board of Directors and the Special Committee will be made available in a supplement to the management information circular of Equity dated November 17, 2017 which will be sent to holders of Shares prior to the special meeting scheduled to be held on December 18, 2017 and will also be filed on SEDAR at www.sedar.com.

Smoothwater owns or exercises direction or control over approximately 34.57% of the outstanding Shares, and together with the shareholders who have entered into amended "hard" lock-up agreements, they collectively own or exercise direction or control over approximately 50.50% of the outstanding Shares. This includes one independent institutional shareholder holding approximately 7.83% of the outstanding Shares who was part of the previously disclosed independent institutional shareholders who provided voting support agreements to Smoothwater representing 26.3% of the outstanding Shares.  Under the amended lock-up agreements, until six months from the date thereof or earlier termination of such agreements in accordance with their terms (which agreements do not include a termination right in the event of a superior proposal for Equity), the shareholders have agreed to support the Arrangement or an alternative transaction by Smoothwater to acquire the Shares, and to not support or tender their Shares to a competing transaction without Smoothwater's consent, notwithstanding the existence of any binding proposal to acquire Shares that may be superior to the Arrangement.

In addition to the shareholders who entered into amended "hard" lock-up agreements, as previously announced, independent institutional shareholders now holding approximately 18.70% of the outstanding Shares have entered into voting agreements with Smoothwater in support of the Arrangement whereby such shareholders have agreed to support the Arrangement and to not support a competing transaction without Smoothwater's consent. In aggregate, Smoothwater and shareholders who have entered into lock-up agreements or voting support agreements in support of the Arrangement hold or exercise direction or control over approximately 71.30% of the outstanding Shares. In the aggregate, shareholders holding approximately 49.12% of the Shares voting as part of the "majority of the minority" for purposes of Multilateral Instrument 61-101 have agreed to vote their Shares in favour of the Arrangement.

The meeting for shareholders to approve the Arrangement will be held on Monday, December 18, 2017. Shareholders are urged to carefully review and follow the voting instructions set out in the meeting materials, copies of which are available under Equity's profile on SEDAR at www.sedar.com. Subject to obtaining the requisite shareholder approvals at the meeting, the Arrangement is expected to close on or about December 22, 2017.

Advisors

Blair Franklin Capital Partners Inc. and National Bank Financial Inc. act as financial advisor and McCarthy Tétrault LLP serves as legal counsel to the Special Committee. Cassels Brock & Blackwell LLP serves as legal counsel to Equity. CIBC Capital Markets acts as financial advisor and Norton Rose Fulbright Canada LLP serves as legal counsel to Smoothwater.

Forward Looking Information

Certain portions of this press release as well as other public statements by Equity contain "forward-looking information" within the meaning of applicable Canadian securities legislation, which is also referred to as "forward-looking statements", which may not be based on historical fact. Wherever possible, words such as "will", "plans," "expects," "targets," "continues", "estimates," "scheduled," "anticipates," "believes," "intends," "may," "could," "would" or might, and the negative of such expressions or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved, have been used to identify forward looking information. Such forward-looking statements include, without limitation, the ability of the parties to satisfy all conditions precedent of the Amended and Restated Arrangement Agreement and to complete the Arrangement, the timing of the meeting of Shareholders and other factors. Forward looking statements should not be read as guarantees of future events, future performance or results, and will not necessarily be accurate indicators of the times at, or by which, such events, performance or results will be achieved, if achieved at all.

All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including their knowledge of the current credit, interest rate and liquidity conditions affecting Equity and the Canadian economy, retail mortgage markets, housing sales and capital markets. Certain material factors or assumptions are applied by Equity in making forward-looking statements, including without limitation, assumptions as to the parties' ability to satisfy the conditions precedent of the Amended and Restated Arrangement Agreement and complete the Arrangement, the anticipated receipt of required regulatory, court and Shareholder approvals, the Amended and Restated Arrangement Agreement, the Amended and Restated Arrangement Agreement not being terminated, modified or amended, the anticipated benefits of the Arrangement remaining the same, and the timely preparation of materials necessary for the meeting of the Shareholders.

Forward-looking statements reflect Equity's current views with respect to future events and are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Readers should not place undue reliance on such forward-looking statements, as they reflect Equity's current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Equity, are inherently subject to significant business, economic, regulatory, competitive, political and social uncertainties and contingencies. Many factors could cause Equity's actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including among others, failure to satisfy one of more of the conditions precedent of the Amended and Restated Arrangement Agreement or to complete the Arrangement, failure to obtain any of the required regulatory, court or Shareholder approvals, the Amended and Restated Arrangement Agreement being terminated, modified or amended, the anticipated benefits of the Arrangement changing, the meeting of the Shareholders not being held at the anticipated time, a significant downturn in capital markets or the economy as a whole, errors or omissions by Equity in providing services to its customers, significant increases in the cost of complying with applicable regulatory requirements, civil unrest, economic recession, pandemics, war and acts of terrorism which may adversely impact the North American and global economic and financial markets, significant changes in interest rates, failure by Equity Trust to meet ongoing regulatory requirements, the failure of borrowers or counterparties to honour their financial or contractual obligations to Equity Trust, failure by Equity Trust to adequately monitor and/or adjust its mortgage portfolio management practices for changing circumstances, failure by Equity Trust to adequately monitor the services provided by third party service providers or to establish alternative arrangements if required or the risks detailed from time-to-time in Equity's quarterly filings, annual information forms, annual reports and annual filings with securities regulators. The preceding list is not exhaustive of possible factors. The Corporation disclaims any intent or obligation to update or revise publicly any forward-looking statements whether as a result of new information, estimates, future events or results, or otherwise, unless required to do so by applicable laws. The forward looking statements contained herein are expressly qualified in their entirety by this cautionary statement.

About Equity Financial Holdings Inc.

Equity is a financial services company operating through its wholly‐owned subsidiary, Equity Trust, a federally regulated deposit‐taking trust company. Equity Trust serves the Canadian mortgage market by offering residential first mortgage loans to non‐prime and near‐prime customers who do not meet the conventional underwriting standards of the major Canadian banks. Learn more at www.equityfinancialtrust.com.

SOURCE Equity Financial Holdings Inc.

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