Continuum Health Care Inc. Announces Going Private Transaction

CALGARY, Oct. 19 /CNW/ - Continuum Health Care Inc. (TSXV-CCF) ("Continuum") announces today that it has executed an acquisition agreement (the "Agreement") with Hallmark Properties Ltd. ("Acquisitionco"), a recently formed company which is currently wholly-owned by Patrick Hovan, President, Chief Executive Officer and Director of Continuum. Under the terms of the Agreement, Acquisitionco will amalgamate with Continuum (the "Amalgamation") to form Amalco and the shareholders of Continuum, other than the Acquiring Shareholders, will receive, upon completion of the Amalgamation, $0.29 in cash for each Continuum common share held, representing a 81.3% premium over the average trading price over the five most recent days on which Continuum's common shares traded, which covers a period from June 11, 2009 to present. The Continuum shareholders who are the "Acquiring Shareholders", a group comprised of, among others, Patrick Hovan, Peter H. Allan, Evan Wellbourn, Tracy Wayne, Mushtaq Thobani and Marjorie Hovan, will receive, upon completion of the Amalgamation, one common share of Amalco for every common share of Continuum held and one series 1 preferred share of Amalco for every series 1 preferred share of Continuum held.

The Acquiring Shareholders and their families collectively own, or exercise control or direction over, directly and indirectly 14,321,659 common shares and 2,333,333 series 1 preferred shares in the capital of Continuum representing 75.4% of issued and outstanding common shares and 100% of the issued and outstanding series 1 preferred shares. Certain of the Acquiring Shareholders are insiders of Continuum (the "Insider Group"). The Insider Group is comprised of: Patrick Hovan, President, Chief Executive Officer and Director; Peter Allan, Chief Financial Officer and Director; Evan Welbourn, Director; and Tracy Wayne, Executive Vice President. The Insider Group and their families collectively own or exercise control or direction over, directly or indirectly, 9,292,563 common shares and 1,994,443 series 1 preferred shares in the capital of Continuum representing 49.0% of the issued and outstanding common shares and 83% of the issued and outstanding series 1 preferred shares.

On August 7, 2009, the Board of Directors of Continuum established a Special Committee of independent directors, namely Ian McAuley and Steven McDonnell, to consider the fairness of the proposed going private transaction. The Special Committee retained an independent valuator to consider the fairness of the proposed transaction, from a financial point of view, to the shareholders of Continuum (other than the Acquiring Shareholders). The acquisition price of $0.29 is within the valuation range established by the independent valuator. In light of the advice of the independent valuator, and in consideration of other factors, the Special Committee and the Board of Directors of Continuum have determined to approve and execute the Agreement and the transactions contemplated thereby.

Pursuant to the policies of the TSX Venture Exchange, Acquisitionco is a "related party" of Continuum and the proposed going private transaction constitutes a "related party transaction" as such terms are defined in Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions ("MI 61-101"). The proposed going private transaction is exempt from applicable formal valuation requirements as Continuum is not listed on "specified markets" as such term is defined in MI 61-101.

Copies of the formal valuation report which includes a fairness opinion, factors considered by the Special Committee and the Board and other relevant background information will be included in the management information circular that will be sent to Continuum shareholders in connection with the annual and special meeting (the "Meeting") to consider, among other things, the Amalgamation. The Meeting will be scheduled to be held on a date to be announced in the future, but in any event no later than December 11, 2009. For the Amalgamation to proceed, a special resolution authorizing the Amalgamation must be approved by at least two-thirds of the votes cast by holders of common shares at the Meeting and at least two-thirds of the votes cast by holders of series 1 preferred shares at the Meeting. In addition, the Amalgamation must also be approved by a majority of the votes casts by the shareholders (other than the Acquiring Shareholders) at the Meeting. The completion of the Amalgamation is also conditional on the receipt of all applicable regulatory and TSX Venture Exchange approvals.

Completion of the transaction is subject to a number of conditions, including TSX Venture Exchange acceptance and disinterested shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the 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 transaction, any information released or received with respect to the proposed going private transaction may not be accurate or complete and should not be relied upon. Trading in securities of Continuum should be considered highly speculative.

The TSX Venture Exchange has in no way passed on the merits of the proposed going private transaction and has neither approved or disapproved the contents of this press release.

Cautionary statement regarding forward looking statements and information

This press release contains statements that constitute "forward-looking information" or "forward-looking statements" (collectively "forward-looking information") within the meaning of applicable securities legislation. This forward-looking information includes, among others, the scheduling of the Meeting and the completion of the Amalgamation as currently contemplated or at all.

Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information contained in this press release. Forward-looking information is based on current expectations and projections that involve a number of risks which could cause actual results to vary and in some instances to differ materially from those anticipated by Continuum. Undue reliance should not be placed on forward-looking information. The risk factors include, but are not limited to, the parties will terminate the Agreement and not proceed with the Amalgamation or that the transaction will not be successfully completed for any reason (including a breach of the Agreement or a failure to obtain the required approvals). Forward-looking information is based on the estimates and opinions of Continuum's management at the time the information is released. Continuum undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

    
    Neither the 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.
    

SOURCE CONTINUUM HEALTH CARE INC.

For further information: For further information: Continuum Health Care Inc., Mr. Patrick Hovan, President and CEO, Phone: (403) 556-1971

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CONTINUUM HEALTH CARE INC.

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