First National Completes Plan of Arrangement

TORONTO, Oct. 22, 2025 /CNW/ - First National Financial Corporation (the "Company" or "First National") (TSX: FN) (TSX: FN.PR.A) (TSX: FN.PR.B) today announced the completion of the previously-announced plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement"). Pursuant to the terms of the Arrangement, a newly-formed acquisition vehicle (the "Purchaser") controlled by private equity funds managed by Birch Hill Equity Partners Management Inc. and private equity funds managed by Brookfield Asset Management acquired all of the outstanding common shares (the "Shares") of First National, other than certain Shares owned by the Company's founders, Stephen Smith and Moray Tawse (together with their associates and affiliates), for $48.00 per Share in cash (the "Consideration"). As a result of the Arrangement, Messrs. Smith and Tawse each retained an indirect approximate 19% interest in First National, with Birch Hill and Brookfield holding the remaining approximate 62% interest.

In addition, on closing of the Arrangement, the Company's 2.961% Series 3 Senior Unsecured Notes due November 17, 2025, 7.293% Series 4 Senior Unsecured Notes due September 8, 2026 and 6.261% Series 5 Senior Unsecured Notes due November 1, 2027 (collectively, the "Redeemed Notes") were redeemed in accordance with the terms of the Arrangement.

With the Arrangement now complete, the Shares are expected to be delisted from the Toronto Stock Exchange (the "TSX") shortly following the date hereof. First National's Class A Preference Shares, Series 1 and Class A Preference Shares, Series 2 continue to be outstanding in accordance with their terms and listed on the TSX (collectively, the "Preferred Shares").

Settlement of the previously-announced offering of $800 million aggregate principal amount of senior notes of the Company (the "New Notes") is expected to be completed on October 23, 2025, and the Company and the Purchaser intend to amalgamate shortly thereafter (the "Amalgamation"), with the amalgamated company continuing to be named and operated as "First National Financial Corporation". The Preferred Shares and the New Notes will continue to be outstanding securities of First National post-amalgamation with no changes to the terms of such securities. Following the Amalgamation, the Preferred Shares will continue to be listed on the TSX and First National will continue to be a reporting issuer under applicable Canadian securities laws.

Board of Directors and Management

Effective as of closing of the Arrangement, the First National board of directors has been increased from nine directors to the following ten directors: Moray Tawse (Chair), Justin Brenner, Brendan Smith, Matthew Kunica, Nicholas Bigelow, Erson Olivan, Paul Lepage, Benjamin Farrow, Steven Ranson and Robert Mitchell. The senior management team of First National remains unchanged. First National intends to amend its articles to increase the maximum size of its board of directors, at which time William Stone is expected to join the board as an 11^th director.

Reminder to First National Shareholders and Redeemed Noteholders

Registered holders of Shares or Redeemed Notes are reminded to submit a duly completed letter of transmittal and the certificate(s) or direct registration system statement, as applicable, representing their Shares or Redeemed Notes, as applicable, to Computershare Investor Services Inc. ("Computershare"), as depositary, in order to receive the Consideration or the consideration payable for the redemption of the Redeemed Notes in accordance with the terms of such Redeemed Notes (the "Note Consideration"), as applicable. Registered holders of Shares or Redeemed Notes that have questions or require assistance can contact Computershare toll free at 1-800-564-6253 in North America, or at 1-514-982-7555 outside North America, or by email at [email protected].

Shareholders who hold their Shares through a broker, investment dealer or other intermediary should carefully follow the instructions provided by such broker, investment dealer or other intermediary in order to receive the Consideration.

Holders of Redeemed Notes who hold their Redeemed Notes through a broker, investment dealer, bank, trust company or other intermediary will receive payment of the Note Consideration through their intermediary and should contact their intermediary with any questions.

For additional details regarding the Arrangement, see First National's management information circular dated August 27, 2025 (the "Circular"), a copy of which can be found under First National's profile on SEDAR+ at www.sedarplus.ca.

Early Warning Disclosure of Regal Holdings LP

In connection with the Arrangement, the Purchaser became an indirect wholly-owned subsidiary of Regal Holdings LP ("Regal Holdings"). Regal Holdings is a limited partnership in which private equity funds managed by Birch Hill and Brookfield collectively hold approximately 62% of the interests, with the remaining interests held by the Company's founders, Stephen Smith and Moray Tawse (together with their associates and affiliates, the "Rollover Shareholders").

Pursuant to the Arrangement, holders of Shares, other than the Rollover Shares (as defined below), sold their Shares to the Purchaser for cash consideration of $48.00 per Share, or approximately $2.2 billion in the aggregate.

On August 28, 2025, as part of the transactions contemplated under the arrangement agreement dated July 27, 2025 between the Company and the Purchaser and the rollover agreements dated July 27, 2025 between, among others, the Rollover Shareholders, the Purchaser and Regal Holdings, the Rollover Shareholders exchanged 14,080,000 Shares (the "Rollover Shares") for ownership interests in Regal Holdings (the "Rollover"). Pursuant to the Arrangement, Regal Holdings exchanged the Rollover Shares for indirect ownership interests in the Purchaser.

Immediately prior to the Arrangement, as a result of the Rollover, Regal Holdings beneficially owned, or exercised control or direction over, 14,080,000 Shares in the aggregate, representing approximately 23.5% of the issued and outstanding Shares. Following the completion of the Arrangement on October 22, 2025, Regal Holdings owns, indirectly through the Purchaser, 59,967,429 Shares in the aggregate, representing 100% of the issued and outstanding Shares.

The purpose of the Arrangement was for the Purchaser to acquire all of the issued and outstanding Shares. Pursuant to the Arrangement and related transactions, the Purchaser and the Company are now subsidiaries of Regal Holdings. The Amalgamation is intended to be effected following closing of the offering of the New Notes.

Regal Holdings is a limited partnership existing under the laws of the Province of Ontario and its general partner, Regal GP Inc., is a corporation existing under the laws of the Province of Ontario, each formed for the purposes of completing the transactions contemplated under the Arrangement. Both have head offices located at 16 York Street, Suite 1900, Toronto Ontario, Canada M5J 0E6.

An early warning report will be filed by Regal Holdings under applicable Canadian securities laws and once filed will be available on the Company's SEDAR+ profile at www.sedarplus.ca. A copy of such report may also be obtained by contacting Hilda Wong, Executive Vice President and General Counsel of First National, at [phone] or [email protected].

About First National

First National Financial Corporation is the parent company of First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single-family and multi-unit) and commercial mortgages. With almost $160 billion in mortgages under administration, First National is one of Canada's largest non-bank mortgage originators and underwriters. For more information, please visit www.firstnational.ca.

Forward-Looking Information

This news release contains statements that are "forward-looking information" within the meaning of applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking statements include, among other things, statements related to the de-listing of the Shares and continued listing of the Preferred Shares on the TSX, the reporting issuer status of the Company, the amalgamation of the Company and the Purchaser, the composition of the board of directors of the Company and receipt of the Consideration and Note Consideration by holders of Shares and Redeemed Notes, respectively. Forward-looking statements are necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by the Company as of the date of this news release, are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking information. See the risks and uncertainties identified under the headings "Forward-Looking Information" and "Risk Factors" in the Circular and under the headings "Risks and Uncertainties Affecting the Business" and "Forward-Looking Information" in the Company's latest management's discussion and analysis and in other periodic filings that the Company has made and may make in the future with the securities commissions or similar regulatory authorities in Canada, all of which are available under the Company's SEDAR+ profile at www.sedarplus.ca. These factors are not intended to represent a complete list of the factors that could affect the Company. However, such risk factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. You should not place undue reliance on forward-looking information, which speaks only as of the date of this release and is subject to change after such date. Management and First National disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under securities laws.

SOURCE First National Financial Corporation

For further information: Robert Inglis, Chief Financial Officer, First National Financial Corporation, Tel: [phone], Email: [email protected]