ICPEI Holdings Inc. Enters into Definitive Agreement for Going-Private Transaction

TORONTO, Dec. 9, 2022 /CNW/ - ICPEI Holdings Inc. (the "Company") (TSXV: ICPH) announced today that it has entered into an arrangement agreement dated December 9, 2022 (the "Arrangement Agreement") pursuant to which key members of management of the Company and certain other employees and shareholders of the Company (the "Rollover Shareholders"), Desjardins General Insurance Group Inc. ("Desjardins") and certain other investors (collectively with Desjardins and the Rollover Shareholders, the "Consortium"), will indirectly acquire all of the issued and outstanding common shares of the Company (the "Company Shares") for cash consideration of $4.00 per Company Share pursuant to a statutory plan of arrangement under the Business Corporations Act (Ontario) (the "Transaction"). The parties to the Arrangement Agreement include the Company, 1000379990 Ontario Limited ("Rollover Holdco"), the entity through which the Rollover Shareholders and certain other investors will ultimately hold their indirect interest in the Company, and 1000379969 Ontario Limited (the "Purchaser"), an entity that is 72.5% owned by Rollover Holdco and the remainder of which is owned by Desjardins.

The purchase price of $4.00 per Company Share reflects a 90.5% premium to the Company's closing price of $2.10 per share on the TSX Venture Exchange on December 8, 2022, a 74.7% premium to the volume weighted average price of the Company's Shares over the last 30 trading days and represents an estimated 2.1x price to book value multiple based on the Company's balance sheet as at September 30, 2022.

Upon closing of the Transaction, the Rollover Shareholders, which, among others, include Serge Lavoie, President and Chief Executive Officer of the Company, Murray Wallace, Chairman of the board of directors of the Company (the "Board"), Robert Ghiz, a director of the Company, Teddy Chien, Chief Financial Officer of the Company and Ken Coulson, General Counsel of the Company, are expected to own as a group, directly and indirectly, approximately 66.1% of the Company, certain other investors are expected to own as a group, directly and indirectly, approximately 6.4% of the Company and Desjardins is expected to hold an indirect interest in the remaining 27.5%. The Rollover Shareholders currently beneficially own, or exercise control or direction over, approximately 33.1% of the Company Shares.

Sharon Ranson, director and Co-Chair of the special committee of independent directors (the "Special Committee"), stated, "After careful deliberation, the Special Committee considers that the Transaction represents the best available path forward for the Company and its shareholders. The Transaction will provide shareholders, other than the Rollover Shareholders, with immediate and certain cash value, while providing the Company with additional flexibility to operate as a private company in the hands of a committed long-term investor."

Special Committee and Board Approval

The Special Committee, comprised of Sharon Ranson and James Falle, was constituted to consider the Transaction. Origin Merchant Partners, the financial advisor to the Special Committee, has provided an opinion to the Special Committee to the effect that, as of the date thereof and subject to the various assumptions, limitations and qualifications set out therein, the consideration to be received by the shareholders of the Company (other than the Rollover Shareholders and their respective affiliates) pursuant to the Transaction is fair, from a financial point of view, to such shareholders.

The Board (excluding conflicted directors), following receipt of the unanimous recommendation of the Special Committee, unanimously approved the Arrangement Agreement. Both the Special Committee and the Board determined that the Transaction is in the best interests of the Company and fair to the shareholders of the Company (other than the Rollover Shareholders) and the Board (excluding conflicted directors) unanimously recommends that shareholders of the Company (other than the Rollover Shareholders) vote in favour of the Transaction at the special meeting of shareholders to be held to approve the Transaction (the "Special Meeting").

Transaction Details and Timing

The Transaction is to be effected by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario). The consummation of the Transaction is subject to the approval of the Transaction at the Special Meeting by (i) at least two-thirds of the votes cast by the Company's shareholders; and (ii) a simple majority of the votes cast by the Company's shareholders (other than the Rollover Shareholders and any other Company shareholder required to be excluded for the purpose of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions). Completion of the Transaction is also subject to other customary conditions, including receipt of court approval. The Transaction is not subject to a financing condition.

The Arrangement Agreement includes customary deal-protection provisions.  The Company is subject to non-solicitation provisions and in certain circumstances, the Board may terminate the Arrangement Agreement in favour of an unsolicited superior proposal, subject to the payment of a termination fee of $2.4 million and subject to a right of the Purchaser to match such superior proposal. The Arrangement Agreement also provides for payment by the Purchaser of a reverse termination fee of $2.4 million if the Arrangement Agreement is terminated in certain specified circumstances, including if the Purchaser does not satisfy its obligation to provide sufficient funds to complete the Transaction.

The Company expects to hold the Special Meeting to consider and vote on the Transaction in February 2023. If approved at the Special Meeting, the Transaction is expected to close in the first quarter of 2023, subject to court approval and other customary closing conditions. Following closing of the Transaction, the Company Shares are expected to be delisted from the TSX Venture Exchange.

Support and Voting Agreements

In connection with the Transaction, each of the Rollover Shareholders have entered into irrevocable support and voting agreements pursuant to which they have agreed to vote their Company Shares in favour of the Transaction at the Special Meeting. The members of the Special Committee have also entered into support and voting agreements to vote their Company Shares in favour of the Transaction at the Special Meeting, subject to certain customary exceptions.

The Company Shares subject to support and voting agreements represent approximately 33.8% of outstanding Company Shares.

Advisors

Origin Merchant Partners is acting as the exclusive financial advisor to the Special Committee in connection with the Transaction. Blake, Cassels & Graydon LLP is acting as legal counsel to the Special Committee.

McCarthy Tétrault LLP is acting as legal counsel to the Purchaser and Desjardins Capital Markets is acting as financial advisor to the Purchaser.

Additional Information about the Transaction

Further details regarding the terms and conditions of the Transaction are set out in the Arrangement Agreement, which will be publicly filed by the Company under its profile at www.sedar.com. Additional information regarding the Transaction will be provided in the information circular to be sent to shareholders in advance of the Special Meeting, which will also be filed at www.sedar.com.

Forward-looking statements and forward-looking information

Certain statements made herein, including statements relating to matters that are not historical facts and statements of the Company's beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information relates to future events or future performance, reflect current expectations or beliefs regarding future events and is typically identified by words such as "anticipate", "believe", "could", "estimate", "expect", "intend", "likely", "may", "plan", "seek", "should", "will" and similar expressions suggesting future outcomes or statements regarding an outlook. Forward-looking information includes, but is not limited to, statements with respect to the Transaction, including the expected timing of the Special Meeting, closing and various other steps to be completed in connection with the Transaction, the expected indirect ownership interest of each of the members of the Consortium in the Company following closing of the Transaction, expected de-listing of the Company Shares following closing of the Transaction and other statements that are not historical facts.

Forward-looking information is based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such information. There can be no assurance that such information will prove to be accurate. Such information is based on numerous assumptions, including assumptions regarding the ability to complete the Transaction on the contemplated terms or at all, that the conditions precedent to closing of the Transaction can be satisfied, and assumptions regarding present and future business strategies, local and global economic conditions, and the environment in which the Company operates.

Although the Company believes that the forward-looking information in this news release is based on information and assumptions that are current, reasonable and complete, this information is by its nature subject to a number of factors, many of which are beyond the Company's control, that could cause actual results to differ materially from management's expectations and plans as set forth in such forward-looking information, including, without limitation, the following factors, many of which are beyond the Company's control and the effects of which can be difficult to predict: (a) the possibility that the Transaction will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all due to a failure to obtain or satisfy, in a timely manner or otherwise, required shareholder and court approvals or satisfy other conditions of closing necessary to complete the Transaction or for other reasons; (b) the possibility of adverse reactions or changes in business relationships resulting from the announcement or completion of the Transaction; (c) risks relating to the retention of key personnel during the interim period; (d) the possibility of litigation relating to the Transaction; (e) risks related to the diversion of management's attention from the Company's ongoing business operations; and (f) other risks inherent to the Company's business and/or factors beyond its control which could have a material adverse effect on the Company or the ability to consummate the Transaction. The Company cautions that the foregoing list is not exhaustive of all possible factors that could impact the Company's results.

Readers are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Events or circumstances could cause the Company's actual results to differ materially from those estimated or projected and expressed in, or implied by, this forward-looking information.

Investors and others should carefully consider the foregoing factors and other uncertainties and potential events and should not rely on the Company's forward-looking information to make decisions with respect to the Company. Furthermore, the forward-looking information contained herein are made as of the date of this document and the Company does not undertake any obligation to update or to revise any of the included forward-looking r information, whether as a result of new information, future events or otherwise, except as required by applicable law. All forward-looking information contained herein is expressly qualified by this cautionary statement.

About ICPEI Holdings Inc.

Founded in 1998, ICPEI Holdings Inc. operates in the Canadian property and casualty insurance industry through its wholly owned subsidiary The Insurance Company of Prince Edward Island (ICPEI). ICPEI provides commercial and personal lines of insurance products exclusively through the broker channel.

The Company's name was changed from EFH Holdings Inc. to ICPEI Holdings Inc. after receiving approval from shareholders on July 15, 2021. It trades on the TSX Venture Exchange under the symbol ICPH effective August 20, 2021, and prior to December 23, 2020, it traded on the Toronto Stock Exchange.

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

SOURCE ICPEI Holdings Inc.

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