Montfort Capital Announces Update Regarding Potential Sale of Mortgage Business and Anticipated Closing Date

TORONTO, March 19, 2025 /CNW/ - Montfort Capital Corp. ("Montfort" or the "Company") (TSXV: MONT), a trusted provider of focused private credit strategies for institutional investors, family offices, and wealth managers, today announced that, in furtherance to its press releases dated November 26, 2024 and February 3, 2025, it has obtained an exemption order (the "Exemption Order") from the Ontario Securities Commission in respect of the proposed sale of its mortgage lending business (the "Sale Transaction") to Brightpath Holdings Corporation (the "Buyer").

Closing of the Sale Transaction (the "Closing") is expected to occur on March 26, 2025, subject to the satisfaction of all remaining closing conditions set forth under the definitive share purchase agreement with the Buyer (the "DefinitiveAgreement"). Montfort has agreed to not close the Sale Transaction for at least five business days from the granting of the Exemption Order. Accordingly, the earliest that Closing can occur is March 26, 2025. The Company will issue a further press release upon Closing.

"Upon completion, the sale of our mortgage lending business will mark a significant milestone in our efforts to focus Montfort's operations on the high-growth lending segments operated from our Toronto head office" said Ken Thomson, CEO of Montfort. "I would like to thank our Special Committee members for their leadership, stewardship and invaluable guidance as we look to conclude the Sale Transaction."

The Buyer is a company controlled by Mr. Blake Albright, a former director and senior officer of the Company. Mr. Albright was among a group of vendors who originally sold Brightpath (as defined below) to the Company in August 2022 (the "Original Sale"). All vendors (other than Mr. Albright) to the Original Sale have since consented to the Sale Transaction.

Sale Transaction Terms

As previously disclosed, under the Definitive Agreement, the Company agreed to sell all of the shares of Brightpath Capital Corporation, Brightpath Servicing Corporation and Brightpath II Servicing Corporation (collectively, "Brightpath"), which together comprise the Company's mortgage lending business, to the Buyer for an aggregate purchase price equal to:

(1)	$13,000,000 of indebtedness owing from the Company to Brightpath (the "Intercompany Indebtedness"), and
(2)	the aggregate value of the 17,500,000 common shares (the "Montfort Shares") and 8,000,000 8% Class A preferred shares (the "Montfort Preferred Shares" and together with the Montfort Shares, the "Subject Securities") in the capital of Montfort determined on the basis of a per share price equal to 95% of the applicable market price (as determined in accordance with section 1.11 of National Instrument 62-104, Take-Over Bids and Issuer Bids ("NI 62-104")) ("Market Price") as of Closing.

At Closing, the Buyer will satisfy the purchase price for the Sale Transaction by: (a) transferring 11,500,000 Montfort Shares to the Company for cancellation; (b) transferring all of the Montfort Preferred Shares to the Company for cancellation; (c) transferring all security-based compensation held by Mr. Albright, including 160,125 options, 80,350 restricted stock units and 1,200,000 performance share units of the Company, to the Company for cancellation; (d) assuming the Intercompany Indebtedness; and (e) issuing a non-interest bearing promissory note to the Company in the aggregate amount of the value of 6,000,000 Montfort Shares (the "Sale Option Shares") determined on the basis of a per share price equal to 95% of the Market Price of the Montfort Shares as of Closing (the "Promissory Note", and such per share price, the "Sale Option Share Price").

Subject to complying with the terms thereof, the Exemption Order exempts the Company from the issuer bid requirements contained in Part 2 of NI 62-104 (the "Issuer Bid Requirements") in respect of the transfer of the 11,500,000 Montfort Shares and all of the Montfort Preferred Shares at Closing.

Call Right

Pursuant the Definitive Agreement, the Company has the right, but not the obligation, to purchase the Sale Option Shares from the Buyer for cancellation at the Sale Option Share Price (the "Call Right"), provided that:

(1)	the purchase of the Sale Option Shares does not result in the creation of a new "Control Person" (as such term is defined in the TSXV Corporate Finance Manual), and
(2)	the then Market Price of the Montfort Shares equals or exceeds the Sale Option Share Price.

Each of the Company, Mr. Albright, and the Buyer has agreed to use commercially reasonable efforts to ensure that the Call Right may be exercised, in compliance with applicable law, prior to the first anniversary of Closing. If the Call Right has not been exercised three years after Closing, the Call Right will terminate and the Buyer will be permitted to transfer all, or any portion of, the Sale Option Shares to an arm's length third party, provided that any proceeds received by the Buyer from such transaction be paid to the Company and set off against the Promissory Note. If any amount remains outstanding on the Promissory Note after the Buyer has disposed of all the Sale Option Shares, such amount will be deemed forgiven by the Company with no further action required by any party. The potential forgiveness of up to the entire amount of the Promissory Note was considered by the  board of directors of Montfort (the "Board") and the special committee (the "Special Committee"), comprised of all of its independent directors, established to evaluate and oversee the negotiation of the Sale Transaction.

The Exemption Order exempts the Company from the Issuer Bid Requirements in respect of the potential exercise of Call Right and the acquisition of the Sale Option Shares.

For the term of the Call Right, Albright has provided the Company with an undertaking that none of the Buyer, Albright or their affiliates will vote the Sale Option Shares.

Regulatory Matters

In addition to the determinations disclosed in the Company's press release dated February 3, 2025, the Board and Special Committee determined in good faith that, among other things: (1) the terms of the Definitive Agreement, Sale Transaction, and the purchase of the 11,500,000 Montfort Shares and all of the Montfort Preferred Shares at Closing and of the 6,000,000 Montfort Shares upon exercise of the Call Right  are fair and reasonable, even if: (i) the value attributable to the Subject Securities at Closing decreases from the value that would have been attributable to the Subject Securities at the time the Definitive Agreement was entered into; and (ii) the Company is unable to realize any of the amounts owed under the Promissory Note and is required to forgive up to the entire amount owed thereunder; and (2) the value of Brightpath is not greater than the economic value of the Subject Securities (determined in accordance with the terms of the Definitive Agreement) and the Intercompany Indebtedness.

The Board and Special Committee approval of the Sale Transaction followed a process that involved, among other things, the Montfort executive team (other than Mr. Albright) approaching potential interested parties, including Mr. Albright, and consideration of the availability and relative benefits and risks of the various other alternatives, the status quo and conditions in the mortgage market such as rising mortgage loan defaults and declining home values in certain geographies.

The Company received conditional acceptance for the Sale Transaction from the TSXV on February 6, 2025, which acceptance is not conditional on disinterested shareholder approval provided that the Sale Transaction does not result in the creation of a new "Control Person" (as such term is defined in the TSXV Corporate Finance Manual).

About Montfort Capital Corp.

Montfort is a trusted provider of focused private credit strategies for institutional investors, family offices, and wealth managers. Montfort's experienced management teams employ focused strategies to drive superior risk-adjusted investment returns. For further information, please visit www.montfortcapital.com.

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

Forward-Looking Information

Certain information and statements in this news release contain and constitute forward-looking information or forward-looking statements as defined under applicable securities laws (collectively, "forward-looking statements"). Forward-looking statements normally contain words like 'believe', 'expect', 'anticipate', 'plan', 'intend', 'continue', 'estimate', 'may', 'will', 'should', 'ongoing' and similar expressions, and within this news release include any statements (express or implied) respecting: the future growth of the Company; the Company's future financial performance; the completion of the Sale Transaction and the timing thereof; the benefits of the Sale Transaction; the exercise of the Call Right; and the determinations with respect to potential debt forgiveness and future liquidity.

Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate in the circumstances, including, without limitation: the assumption that the Company and its investee companies are able to meet their respective future objectives and priorities and assumptions concerning general economic growth; the absence of unforeseen changes in the legislative and regulatory framework for the Company; and the completion of the Sale Transaction, including the ability of the parties to satisfy all remaining conditions related thereto.

Although management believes that the forward-looking statements are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Montfort's business. Material risks and uncertainties applicable to the forward-looking statements set out herein include but are not limited to: intense competition in all aspects of business; reliance on limited management resources; continued availability of equity and debt financing; general economic risks; interest rates remaining elevated for longer; new laws and regulations and risk of litigation; and the failure to close the Sale Transaction. Although Montfort has attempted to identify factors that may cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, predicted, estimated or intended. Also, many of the factors are beyond the control of Montfort. Accordingly, readers should not place undue reliance on forward-looking statements. Montfort undertakes no obligation to reissue or update any forward-looking statements as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements contained in this news release are qualified by this cautionary statement.

SOURCE Montfort Capital Corp.

For further information: Company contacts: Matthew Priebe, Director of Business Development; Ken Thomson, CEO, Montfort Capital Corp., P: [phone], [email protected]