Echelon Financial Holdings Inc. Provides Update on Sale of Echelon Insurance to CAA Club Group and Proposed Special Distribution Payment

TORONTO, May 30, 2019 /CNW/ - Echelon Financial Holdings Inc. ("EFH" or "the Company") (TSX: EFH), which has historically operated in the property and casualty insurance industry in Canada, is pleased to confirm that final regulatory approval has been granted for the sale of its wholly-owned subsidiary, Echelon Insurance, to a subsidiary of CAA Club Group ("CCG")  (the "Transaction"). "We are pleased to take this important step towards completing the sale of Echelon Insurance to a buyer that will support the continued growth of Echelon Insurance, and the employees behind its success," commented Murray Wallace, Chairman of EFH. 

"We are excited to welcome Echelon Insurance to the CAA Club Group of Companies," said
Jay Woo, President and CEO of CAA Club Group. "We look forward to the continued growth of Echelon Insurance, leveraging its expertise and market leadership in specialty and commercial insurance.  We will expand and deepen our relationships with Brokers across Canada to continually enhance insurance products and services to protect Canadians from coast-to-coast."

The Transaction is scheduled to be completed on or about May 31, 2019. The net proceeds to EFH (after adjustments and expenses) is expected to be approximately C$166 million, which includes C$12 million that will be placed in escrow while EFH and CAA Club Group review and confirm the calculation of regulatory MCT at closing (which EFH has committed will be at least 220%) (the "Escrowed Proceeds").

Conditional upon the closing of the Transaction as scheduled, the board of EFH has declared a special distribution in the amount of $8.80 (the "Special Distribution Payment") per outstanding common share of EFH (the "Common Shares"). The record date for shareholders entitled to receive the Special Distribution Payment will be June 11, 2019 and the payment date will be June 17, 2019 (the "Payment Date"). Approximately $5.80 of the Special Distribution Payment will be paid to shareholders as a return of capital, with the balance of $3.00 paid to shareholders as an eligible dividend.

The Toronto Stock Exchange (the "TSX") has advised EFH that "Due Bills" are to be used in connection with the trading of the Common Shares through the facilities of the TSX for the period from and including June 10, 2019 until the close of trading on June 17, 2019 (the "Due Bill Period"). A Due Bill is defined in the TSX Company Manual as an instrument used to evidence the transfer of title to any dividend, distribution, interest, security or right to a listed security contracted for, or evidencing, the obligation of a seller to deliver such dividend, distribution, interest, security or right to a subsequent purchaser.

As a result, buyers of Common Shares during the Due Bill Period will receive the Special Distribution Payment, provided they continue to be holders of the applicable Common Share on the Payment Date.

The Common Shares will commence trading on an ex-distribution basis (i.e., without an attached Due Bill entitlement to the Special Distribution Payment) commencing at the opening of trading on June 18, 2019. The Due Bill redemption date will be June 19, 2019 ("Due Bill Redemption Date").

As a result of the Common Shares trading on a Due Bill basis during the Due Bill Period, those shareholders entitled to be paid the Special Distribution Payment owing on the Due Bills should expect to receive that payment by the Due Bill Redemption Date. Shareholders prior to the Due Bill Period who do not purchase or sell Common Shares during the Due Bill Period will not have their applicable Special Distribution Payment impacted by the Due Bill process.

Following the closing of the Transaction and the Special Distribution Payment, the only material assets remaining in EFH will be its 75% shareholding in The Insurance Company of Prince Edward Island, and a cash reserve of approximately $80 million (including EFH's entitlement to receive the remaining Escrowed Proceeds). For more information see EFH's management information circular dated December 21, 2018 available at www.sedar.com.

Forward-looking Information

This news release contains forward-looking information based on current expectations. This information includes, but is not limited to, statements about the Transaction, the Special Distribution Payment and the financial position of EFH following the closing of the Transaction and the Special Distribution Payment.

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a projection as reflected in the forward-looking information. By its nature, this information is subject to inherent risks and uncertainties that may be general or specific. A variety of material factors, many of which are beyond EFH's control, affect the operations, performance and results of its business and could cause actual results to differ materially from the expectations expressed in any of this forward-looking information.

EFH does not undertake to update any forward-looking information. Additional information about the risks and uncertainties about EFH's business is provided in its disclosure materials, including its Annual Information Form and Management Discussion & Analysis, filed with the securities regulatory authorities in Canada, available at www.sedar.com.

About EFH

Founded in 1998, EFH has operated in the property and casualty insurance industry in Canada, providing personal and commercial lines insurance exclusively through the broker channel. It trades on the TSX under the symbol EFH. For more information, please visit echeloninsurance.ca.

SOURCE Echelon Financial Holdings Inc.

Company contact information: Jennifer Kew, Investor Relations, 905-214-7880, [email protected]