Lakeview Hotel REIT announces intention to extend maturity date of Series D Debentures and other amendments

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WINNIPEG, Aug. 14, 2012 /CNW/ - Lakeview Hotel Real Estate Investment Trust (TSXV:LHR.UN) ("Lakeview REIT" or the "Trust") announced today its intention to amend the terms of its outstanding 8.5% Series D Convertible Redeemable Subordinated Debentures (the "Debentures").  Lakeview REIT has prepared and will send to holders of the Debentures (the "Debentureholders") an information circular (the "Circular") and a proxy and consent form relating to a meeting of the Debentureholders to be held on September 21, 2012 (the "Meeting") at which the Debentureholders will vote on whether to accept the amendments to the Debentures.

Lakeview REIT wishes to amend the Debentures as it does not currently have the cash resources available to repay the Debentures when they mature. The Trust's operations have seen recent improvement, however, cash resources have been utilized to service current debt.

At the Meeting, the Debentureholders will be asked to approve the following amendments (the "Amendments") to the Debentures:

• Extending the maturity date of the Debentures from May 31, 2013 to May 31, 2018;
• Changing the payment of interest from being calculated and payable semi-annually at the rate of 8.5% per annum to being calculated and payable semi-annually in arrears at the rate of 9.0% per annum on June 30 and December 31 in each year, commencing June 30, 2013.  For greater certainty, from July 1, 2012 to December 31, 2012 the applicable interest rate will be 8.5% per annum and from January 1, 2013 to maturity, the interest rate will be 9.0% per annum payable semi-annually in arrears
• Eliminating  the ability of Debentureholders to convert the Debentures into trust units of the Trust ("Units");
• Eliminating the "Change of Control" provision set out in Section 9.1.01 of the Trust Indenture which provided that upon the occurrence of a change of control involving the acquisition of voting control or direction over 66⅔% or more of the Units by any person or group of persons acting jointly or in concert, Debentureholders will have the right to require the Trust to repurchase their Debentures, in whole or in part, at a price equal to 101% of the principal amount of the Debentures, plus accrued and unpaid interest thereon;
• Amending the redemption feature of the Debentures so that on and after May 31, 2013 but prior to the maturity of the Debentures, the Debentures will be redeemable by the Trust, in whole or in part, at a price equal to the principal amount thereof, plus accrued and unpaid interest from time to time at the Trust's sole option on not more than 60 days' and not less than 30 days' prior written notice;
• Improving the security granted by the Trust for the repayment of the Debentures by providing that the Debentures shall rank senior in all respects to all future series of debentures issued by the Trust and are subordinate only to senior security (as such term will be defined in the supplemental replacement trust indenture attached to the Circular) and are pari passu with the 5 Year Series C Redeemable Subordinated Debentures of the Trust; and
• Increasing the aggregate principal amount of Debentures authorized to be issued under the Trust Indenture by $180,000 to $10,180,000.

In order to effect the Amendments, Lakeview REIT will be required to enter into a supplemental trust indenture with the trustee for the Debentures, CIBC Mellon Trust Company.  The Amendments will be effective on or about September 30, 2012.  Further information regarding the Amendments will be available in the Circular, which will be filed on SEDAR.

Lakeview REIT has retained Osprey Capital Partners Inc. ("Osprey") to act as soliciting dealer.  Osprey will form a soliciting dealer group to solicit votes regarding the Amendments.

In the event Lakeview REIT receives the written consent of Debentureholders holding at least 66⅔% of the principal amount of the Debentures prior to the Meeting, the Amendments will be approved and Lakeview REIT will cancel the Meeting.

There are approximately $9,980,000 principal amount of Debentures issued and outstanding.  The Debentures are listed on the TSX Venture Exchange under the trading symbol "LHR.DB.D".

Lakeview REIT is a real estate investment trust, which is listed on the TSX Venture Exchange under the symbol "LHR.UN".  Lakeview REIT receives income from ownership, management and licensing of hotel properties.  For further information on Lakeview REIT please visit our website www.lakeviewreit.com.

Neither 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: Lakeview Hotel Real Estate Investment Trust

For further information:

Keith Levit, President, or Avrum Senensky, Executive Vice President

Tel: [phone], Fax: [phone], Email [email protected]