Kingsway Arms Retirement Residences Inc. Provides Update in Connection with Reverse Takeover Transaction

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TORONTO, March 1, 2016 /CNW/ - Kingsway Arms Retirement Residences Inc. ("Kingsway" or the "Company") (TSX.V: KWA) today announced that it has filed a management information circular (the "Circular") in connection with an annual and special meeting (the "Meeting") at which shareholders will be asked to, among other things, approve the reverse takeover transaction  (the "Reverse Takeover") previously announced by the Company. The Meeting is scheduled to be held at 333 Bay Street, Suite 3400, Toronto, Ontario M5H 2S7 at 11:00 a.m. (Toronto time) on March 30, 2016. The record date for determining the shareholders entitled to receive notice of and vote at the Meeting is February 29, 2016.

The Company also announced that it has entered into an amended and restated purchase agreement (the "Amended Purchase Agreement"), which includes certain changes to the previously announced Reverse Takeover, including (i) the covenant of Mainstreet Investment Company LLC (together with its affiliates, "Mainstreet") and third party investors to, at the request of Mainstreet Health Holdings Inc. ("MHI Holdco") and subject to certain conditions, fund an aggregate $15.4 million of the purchase price for the acquisition of an eleventh senior care property, located in Hanover Park, Illinois, (the "Hanover Park Facility") through a loan (in the case of Mainstreet) and a loan, convertible debentures and/or shares of MHI Holdco (in the case of the third party investors), which amount will be reduced by $3.5 million advanced by Mainstreet to a subsidiary of MHI Holdco by way of a loan for purposes of funding the deposit, and (ii) the removal of the right previously granted to the third party investors to exchange their shares of MHI Holdco for shares of the Company following completion of the Reverse Takeover.

Other changes to the previously announced Reverse Takeover include the removal of the annual incentive fee payable to Mainstreet under the management agreement that will be in effect following completion of the Reverse Takeover.

As previously disclosed, at the Meeting shareholders will also be asked to consider a number of additional items in connection with the Reverse Takeover.  Among those items will be the approval of new articles of the Company (to be effective on the continuation of the Company from Ontario to British Columbia), which will contain advance notice provisions. In particular, the articles will fix a deadline by which shareholders of record must submit director nominations to Kingsway prior to any annual or special meeting of Kingsway shareholders. In addition, shareholders will be asked to approve a deferred share unit plan of the Company (but will not be asked to approve a restricted share unit plan as previously announced).

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 and other ancillary matters at the Meeting.

The Reverse Takeover is expected to be completed by early April 2016. Completion of the Reverse Takeover is subject to a number of conditions, including disinterested shareholder approval with respect to the Reverse Takeover. There can be no assurance that the Reverse Takeover will be completed as proposed or at all.

The Circular is available on SEDAR at www.sedar.com. Investors are cautioned that, except as disclosed in the Circular, any information released or received with respect to the Reverse Takeover may not be accurate or complete and should not be relied upon.

About Mainstreet

Mainstreet is a U.S. company specializing in real estate development, value investments and health care. As the  largest developer of transitional care properties in the United States, Mainstreet has been recognized by Senior Housing News, winning the Architecture & Design Award in 2013, 2014, and 2015, 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 disinterested shareholder approval. 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.

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