Kingsway Arms Retirement Residences Inc. Enters into Purchase Agreement in Connection with Reverse Takeover Transaction

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TORONTO, Dec. 2, 2015 /CNW/ - Kingsway Arms Retirement Residences Inc. ("Kingsway" or the "Company") (TSX.V: KWA) today announced that it has entered into a purchase agreement (the "Purchase Agreement") in connection with its reverse takeover transaction (the "Reverse Takeover") previously announced on November 6, 2015. Pursuant to the Purchase Agreement, the Company has agreed to acquire from Mainstreet Investment Company, LLC, an affiliate of Mainstreet Property Group, LLC (including its affiliates, "Mainstreet"), all of the issued and outstanding shares of Mainstreet Health Holdings Inc. ("MHI Holdco") owned by Mainstreet (the "Mainstreet MHI Holdco Shares") for an implied purchase price of approximately US$15.6 million. The Mainstreet MHI Holdco Shares will constitute approximately 75% of the issued and outstanding shares of MHI Holdco (assuming that none of the convertible debentures of MHI Holdco are exercised prior to the completion of the Reverse Takeover).

MHI Holdco indirectly acquired a portfolio of 10 senior care properties on October 30, 2015, and has agreed to acquire an eleventh senior care property in 2016 (the eleven properties are referred to as the "Symphony Portfolio"). The initial 10 properties in the Symphony Portfolio were acquired for a purchase price of approximately US$268.4 million, plus approximately US$7.8 million for expenses. The purchase price for the eleventh senior care property, located in Hanover Park, Illinois, (the "Hanover Park Property") which is anticipated to be acquired in early 2016, will be approximately US$34.1 million, plus expenses.

The Purchase Agreement contains customary representations and warranties, covenants and conditions for a transaction of this kind, including (among others) those described below. Concurrently with Kingsway entering into the Purchase Agreement, the directors, executive officers and certain shareholders of Kingsway, who in the aggregate beneficially own approximately 45% of the outstanding common shares of Kingsway (on a non-diluted basis), have agreed, pursuant to voting and support agreements, to vote their common shares in favour of the Reverse Takeover.

Shareholders will be asked to approve the Reverse Takeover at a special meeting of shareholders. The Purchase Agreement provides that completion of the Reverse Takeover is subject to a number of conditions, including but not limited to, approval by the TSX-V and the shareholders of Kingsway, certain approval rights in favour of the security holders (other than Mainstreet) of MHI Holdco not having been exercised, execution of the management agreement and development agreement, there not having been a material adverse effect in respect of the Company, the operators of the Symphony Portfolio confirming that they will provide Kingsway with, and consent to the filing of, certain financial statements and management discussion and analysis, and other conditions that are customary for a transaction of this kind. The Reverse Takeover cannot close until the required shareholder approval is obtained and the conditions in the Purchase Agreement are satisfied or waived. There can be no assurance that the Reverse Takeover will be completed as proposed or at all.

As previously disclosed, the Purchase Agreement provides that, at the meeting to approve the Reverse Takeover, shareholders will also be asked to consider a number of additional items in connection with the Reverse Takeover.

Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the Reverse Takeover, any information released or received with respect to the Reverse Takeover may not be accurate or complete and should not be relied upon. Trading the securities of Kingsway should be considered highly speculative.

About Mainstreet

Mainstreet is a national company specializing in real estate development, value investments and health care. As the nation's largest developer of transitional care properties, Mainstreet has been recognized by Senior Housing News, winning the Architecture & Design Award in 2013 and 2014, and has been named to the Inc. 500/5000 five times since 2010. For additional information, visit www.mainstreetinvestment.com.

Completion of the Reverse Takeover is subject to a number of conditions, including TSX-V acceptance and disinterested shareholder approval. The Reverse Takeover cannot close until the required shareholder approval is obtained. There can be no assurance that the Reverse Takeover will be completed as proposed or at all.

Neither the TSX-V nor any securities regulatory authority has in any way passed upon the merits of the Reverse Takeover described in this press release.

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

Forward-Looking Statements

Certain information in this press release contains forward-looking statements or information ("forward looking statements"), including details about the Reverse Takeover. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company's control, including the impact of general economic conditions, industry conditions, currency fluctuations, environmental risks, operational risks, competition from other industry participants, stock market volatility, the risks that the parties will not proceed with the Reverse Takeover, that the conditions for completion of the Reverse Takeover will not be satisfied or waived, that the conditions for completion of the acquisition of the Hanover Park Facility by MHI Holdco will not be satisfied or waived, that the ultimate terms of the Reverse Takeover will differ from those that are currently contemplated and the ability to access sufficient capital from internal and external sources. Although the Company believes that the expectations in its forward-looking statements are reasonable, its forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements, as no assurance can be provided as to future results, levels of activity or achievements. Risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our public disclosure documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, the Company does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

SOURCE Kingsway Arms Retirement Residences Inc.

Kingsway Arms: Mr. Dan Amadori, Chair, Board of Directors, 416-644-4361; Mainstreet: Mr. Randy Henry, Director - Investor Relations, 317-582-6971