WI Western Investment Company of Canada Limited

The Western Investment Company of Canada Limited (TSXV: WI) ("Western" or the "Corporation"), today announced a revised financing to replace the multiple voting structure that was previously announced on March 22, 2024 (the “Original Transaction”).

“We have essentially become victims of our own success," said Scott Tannas, President and CEO of Western. “Securing agreements for the purchase of 100% of Fortress Insurance, instead of the 51% outlined as a condition of the Original Transaction, would have required a complex and costly process in order to close the Fortress Insurance acquisition. In addition to being costly, this would have significantly delayed and altered the Original Transaction. Given the strategic importance to Western of acquiring 100% of Fortress Insurance in the near term, we searched for a simpler and more efficient financing path. This revised transaction provides Western with a much clearer and quicker path to achieving its insurance and investments growth strategy and maintains a simple capital structure.”

The “Revised Transaction”

• Designed to be simple and fast, with expedited regulatory approvals.
• Enables Western to increase its interest in Fortress Insurance Company ("Fortress") from 28.5% to 100%. See "Update on Increased Interest in Fortress" below.
• Key points:
  • $15 million backstop commitment (the “Backstop”). See “The $15 million Backstop” below.
  • Private placement financing of up to 37,500,000 Units, consisting of one share and one share purchase warrant (a “Unit”) for gross proceeds of up to $15 million (the “Private Placement”). See “The Private Placement” below.
  • Rights offering of up to $22 million (the “Rights Offering”) involves the issuance of one right (a “Right”) for each Western share, that will commence following the conclusion of the acquisition of Fortress shares with common shares of Western (the “Common Shares”). Rights are proposed to be publicly listed and traded for a period of up to 45 days. In the event that Rights are fully exercised, an aggregate of $22 million is expected to be raised for Western. See “The Rights Offering” below.
  • The Backstop may be fulfilled by purchasing shares through either the Private Placement or the Rights Offering. Tevir Capital Corp. (“Tevir”) proposes to lead the Backstop with a $5 million commitment.
• Removes Multiple Voting Share structure which had become a point of concern with regulators.
• Keeps Tevir’s ownership under 20% to avoid Control Person designation and the incumbent ongoing requirements.
• Allows Western to engage one or more brokers to assist with the Rights Offering and the Private Placement.
• Provides $15 million initial investment in Western required to fund working capital and provide acquisition funds. A portion of the proceeds may be used to pay the cash portion for the purchase of additional shares in Fortress (see update below).
• Supports Tevir proposal to nominate at least three of seven members to Western’s board of directors.
• Maintains all other elements of the Revised Transaction essentially the same as the Original Transaction, including Executive Structure with Paul Rivett to assume CEO role, Scott Tannas to assume the role of Chair of the Board of Directors, and Management Services / Investment Services plan.
• Does not require shareholder approval and therefore eliminates the need for the General and Special Meeting of Shareholders (the “Meeting”). Therefore, Western will delay the Meeting until after the Revised Transaction closes whereupon a new Board of Directors will be elected.

"Aside from the exclusion of the multiple voting shares our strategic plan remains the same and we have all the elements we require for Western’s future success," continued Mr. Tannas. "The significant interest our shareholders have expressed in the rights offering as previously conceived is such that we are confident we can secure the capital we require for our near-term growth objectives while maintaining a modest level of dilution. "

Transaction Comparison

	OriginalTransaction	Revised Transaction
Multiple Voting Share structure	Yes	No
Able to acquire 100% of Fortress in the near-term	No	Yes
Tevir designated Control Person	Yes	No
Minimum capital requirements ($ millions)	20	15
Rights issued per Common Share	2.5	1
Paul Rivett appointed to CEO	Yes	Yes
Scott Tannas appointed to Chair of the Board of Directors	Yes	Yes
Management Services / Investment Services Plan	Yes	Yes
Tevir nominees to Board	4	3
Board Seats	7	7

Transaction is Revised to Remove Multiple Voting Shares Western has revised its proposed transaction with Tevir that was previously announced on March 22, 2024 (the “Revised Transaction”). The Revised Transaction does not incorporate multiple voting shares. The removal of multiple voting shares should help expedite the completion of the Revised Transaction.

“The intention of the multiple voting shares was to protect Western from inopportune takeover bids,” said Paul Rivett. “There is a benefit to all shareholders working from an even playing field which ensures all shareholders’ interests are completely aligned. We are excited to complete this transaction and to begin executing on our strategic plan to deliver value to Western’s shareholders with all the essential elements of our success in place.”

The $15 Million BackstopTevir is expected to provide $5 million to support the Backstop, subject to several conditions, including assembling a minimum $10 million of additional funds from other accredited investors that are expected to participate in the Backstop. Backstop participants would either fulfill their Backstop commitment through the Private Placement or the exercise of unused rights in the Rights Offering. Participants that provide a backstop guarantee for the Rights Offering, may be provided with bonus warrants for up to 25% of the Common Shares that are guaranteed in the backstop for the Rights Offering, subject to TSX Venture Exchange (the “TSXV”) policies.

The Private PlacementWestern plans to raise up to $15 million through a private placement financing to accredited investors of up to 37,500,000 units at a price of $0.40 per Unit. Each Unit will consist of one Common Share of the Corporation and one warrant to purchase a Common Share (the “Warrant”), with each Warrant exercisable to purchase one additional Common Share for a period of 5 years from the date of closing at an exercise price of $0.47. Western may engage one or more brokers to act as agent for the Private Placement. The Private Placement is subject to approval of the TSXV.

The Rights Offering The previous transaction structure contemplated a rights offering (the “Rights Offering”) of 2.5 rights to each existing eligible Western shareholder by way of a rights offering circular. Western is updating its plans to pursue a more modest Rights Offering whereby each eligible shareholder as of the record date for such offering (the “Rights Record Date”) will be issued one right (the "Right") for each Common Share held on the Rights Record Date, entitling that holder to purchase one Common Share for each whole one Right held at a price of $0.40 per Common Share for a period of 45 days. The Rights Offering will also include Fortress shareholders who convert into Western shares. The Rights will be freely tradeable on the TSXV for a period of 45 days. Western may engage one or more brokers to act as solicitation agent in the Rights Offering.

The Rights Offering is intended to provide existing Western shareholders with a mechanism to ensure their economic interest in the Corporation is not diluted. The Revised Transaction results in lower dilution to Western’s existing shareholders while delivering all the capital required for Western’s near-term growth objectives.

The definitive terms of the Rights Offering, including the proposed Rights Record Date, will be set forth in a subsequent news release. The Rights Offering (including the subscription price and any listing of the Rights on the TSXV) is subject to applicable regulatory approval, including approval of the TSXV.

Use of ProceedsIf both the Rights Offering and Private Placement are fully subscribed Western could raise proceeds of up to $37 million. The Company plans to use the proceeds from the Private Placement and the Rights Offering to fund working capital and provide funds for acquisitions. A portion of the proceeds may be used to pay the cash portion for the purchase of additional shares in Fortress (see below).

Update on Increased Interest in FortressAs previously announced, Western has secured agreements in aggregate to increase its share ownership in Fortress from its current 28.5% position to 100% (the “Share Purchases”). These share purchase agreements with other holders of Fortress shares, which are conditional on approval by the TSXV, will be settled primarily through the issuance of approximately 27 million Common Shares of Western at a price of $0.40 per share, with the remainder settled in cash. All of the Share Purchases are arm’s length transactions, except as described below. The Share Purchases are expected to close before the end of the year subject to customary approvals and conditions.

One of the Share Purchases could be deemed a “related party transaction” because one of the vendors selling Fortress shares to Western is a private company owned by an independent director of Western. The private company would be entitled to receive 944,762 Common Shares in exchange for selling its interest (less than 5%) in Fortress shares to Western. The proposed Share Purchase is exempt from the formal valuation and minority shareholder approval requirements of Multilateral Instrument 61-101 (pursuant to subsections 5.5(a) and 5.7(1)(a)) as neither the fair market value of the Common Shares of Western to be distributed to, nor the consideration received from, interested parties exceeds 25% of Western's market capitalization.

Postponed MeetingThe Revised Transaction does not require shareholder approval and therefore eliminates the need for the General and Special Meeting of Shareholders scheduled for August 30, 2024. Therefore Western proposes to delay the Meeting until after the Revised Transaction closes whereupon a new Board of Directors will be elected. Western will provide the details of its revised meeting and record date in a subsequent release and post a revised Notice of Meeting and Record Date to Sedar+ (www.sedarplus.ca) at that time.

Investor Rights AgreementThe terms of the Revised Transaction will also provide Tevir with certain investor rights from time to time to nominate up to three individuals to the Board of Directors of Western and customary participation and registration rights in future Western financings, subject to certain terms and conditions, including that Tevir holds at least 2.5% of the outstanding Common Shares (including any securities convertible into Common Shares held by Tevir or its affiliates).

Tevir Management ContractAs previously contemplated, as part of the Revised Transaction, Western will enter into a contract with Tevir where Tevir will provide Western with access to legal, financial, business development, Toronto office space, and other expert and clerical assistance for a fixed fee of $500,000 per year.

Tevir Investment Management ContractAs previously contemplated, as part of the Revised Transaction, Western and its subsidiaries will enter into contracts with Tevir where Tevir will provide certain investment management services.

Stock ConsolidationAt the Shareholders Meeting, Western will also put forward a proposal for shareholders to approve a consolidation of Common Shares on a basis of up to 1 for 10. Any decision to implement a stock consolidation would remain at the discretion of Western's board of directors.

Webcast - Join Scott Tannas and Paul Rivett as they discuss the Revised TransactionSeptember 3, 2024 at 8:00 AM Mountain Time, 10:00 AM Eastern TimeOn Tuesday, September 3, 2024, please join Scott Tannas, President and CEO of Western, and Paul Rivett, Founder and President of Tevir, on a webcast where they will discuss the Revised Transaction and related items. Participants of the live event will also have the opportunity to ask questions.

The webcast will take place at 10:00 AM Eastern Time, 9:00 AM Central Time, 8:00 AM Mountain Time, and 7:00 AM Pacific Time.

Participants can access the webcast using the link below:

Webcast Link

https://events.teams.microsoft.com/event/5b3728e2-0ccb-4256-9892-620f8f3a84b3@3149c8f2-095e-4d5e-b9cc-dd2063820f76

Following the webcast a recording of the event will be available at the link above.

About The Western Investment Company of Canada Limited Western is a unique publicly traded, private equity company founded by a group of successful Western Canadian businesspeople, and dedicated to building and maintaining ownership in successful Western Canadian companies, and helping them to grow. Western's shares are traded on the Exchange under the symbol WI.

For more information on Western, please visit its website at www.winv.ca.

To add yourself to our email news alert subscription please visit this link.

CONTACT INFORMATION - The Western Investment Company of Canada Limited

Scott Tannas President and Chief Executive Officer (403) 652-0408 or stannas@winv.ca

Advisories

Completion of the Revised Transaction is subject to a number of conditions. There can be no assurance that the Revised Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Revised Transaction, any information released or received with respect to the Revised Transaction may not be accurate or complete and should not be relied upon. Trading in the securities Western should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed transactions and has neither approved nor disapproved the contents of this news release.

This document contains forward-looking statements. More particularly, this document contains statements concerning: the completion of the Revised Transaction and the other proposed transactions described in this news release, including the Share Purchases, and the appointment of the new CEO and additional directors; and the use of proceeds from the Rights Offering. Readers are cautioned that the foregoing list of factors should not be construed as exhaustive.

The forward-looking statements are based on certain key expectations and assumptions made by Western, including expectations and assumptions concerning the ability of Western to successfully implement its strategic plans and initiatives, the timing of receipt of required shareholder and regulatory approvals (including TSXV approval) and third party consents and the satisfaction of other conditions to the completion of the Revised Transaction and Share Purchases.

Although Western believes that the expectations and assumptions on which the forward-looking statements made by Western are reasonable, undue reliance should not be placed on the forward-looking statements because no assurance can be provided that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks that required shareholder, TSXV, regulatory and third party approvals and consents are not obtained on terms satisfactory to the parties within the timelines provided for, or at all, and risks that other conditions to the completion of the Revised Transaction are not satisfied on the required timelines or at all, the ability of management to execute its business strategy, and the impact of general economic conditions in Canada and the United States. A description of additional assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in Western's disclosure documents on the SEDAR+ website at www.sedarplus.ca.

The forward-looking statements contained in this news release are made as of the date hereof and Western undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

This news release also contains financial outlook information ("FOFI") about prospective results of operations and book value, which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained in this news release was made as of the date of this news release to provide information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for any other purpose. Western disclaims any intention or obligation to update or revise any FOFI contained in this news release, whether as a result of new information, future events or otherwise, except as required by applicable law.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The Rights and underlying Common Shares and the Common Shares being offered have not been, nor will they be, registered under the 1933 Act or under any U.S. state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act, as amended, and applicable state securities laws.

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