GreenFirst Announces Completion of Rights Offering

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VANCOUVER, BC, Aug. 3, 2021 /CNW/ - GreenFirst Forest Products Inc. (TSXV: GFP) (TSXV: GFP.RT) ("GreenFirst" or the "Company") announces that on July 30, 2021 it completed its previously announced offering (the "Rights Offering") of rights (the "Rights"). The Rights Offering was over-subscribed, resulting in the issuance of 111,665,880 subscription receipts (the "Subscription Receipts") at an exercise price of $1.50 per Right for gross proceeds of $167,498,820. All amounts are in Canadian dollars unless indicated otherwise.

The Subscription Receipts will be listed on the TSX Venture Exchange ("TSXV") under the symbol "GFP.R". Trading of the Subscription Receipts is expected to commence on or about August 6, 2021.

"This is a tremendous development for GreenFirst. The enthusiasm of our shareholders is overwhelming and the successful rights offering puts us on the right track with a view to close our previously announced acquisition at the end of August" said Paul Rivett, Chairman of GreenFirst.

Each Subscription Receipt will be automatically exchanged, without payment of additional consideration or further action by the holders thereof, for one common share in the capital of the Company (a "Common Share") upon the delivery by the Company of a release notice (the "Escrow Release Condition") to Computershare Trust Company of Canada (the "Subscription Receipt Agent"), constituting confirmation of the satisfaction or waiver of all of the conditions to the completion of the Company's previously announced proposed acquisition of a portfolio of forest and paper product assets (the "Acquisition").

The gross proceeds less the expenses and costs relating to the Rights Offering, and all interest thereon, if any, will be placed into escrow pursuant to a subscription receipt agreement (the "Subscription Receipt Agreement") with the Subscription Receipt Agent dated July 2, 2021 and will, if the Escrow Release Condition is satisfied or waived, be released to the Company, or as the Company directs, immediately prior to the closing date of the Acquisition and be used: (i) to make payment of all or a portion of the Purchase Price; and (ii) to the extent of any balance remaining, for capital expenditures, including those associated with the Purchased Assets, general working capital and other corporate purposes.

If the agreement giving effect to the Acquisition is terminated at any earlier time, or if the Escrow Release Condition is not satisfied by the earlier of: (i) the date on which the Subscription Receipt Agent receives a termination notice in accordance with the terms of the Subscription Receipt Agreement; and (ii) the first business day after October 1, 2021 (the "Termination Date"), holders of the Subscription Receipts shall, commencing on the third business day following the Termination Date, be entitled to receive from the Subscription Receipt Agent an amount equal to the aggregate exercise price thereof plus their pro rata share of all interest thereon, if any, less applicable withholding taxes, if any.

In consideration for providing the backstop commitment in connection with the Rights Offering, Senvest Management, LLC (together with its affiliates and funds of which Senvest Management, LLC acts as investment manager, the "Standby Purchaser") has been issued as of today 15,692,500 warrants to acquire Common Shares for a period of five years and at an exercise price of $3.18, and has been granted customary nomination rights in respect of one independent director and customary registration rights for so long as it holds at least 15% of the issued and outstanding Common Shares.

GreenFirst intends to provide later today on its website https://gffp.ca/faq additional details concerning the Rights Offering, including setting out the number of Subscription Receipts issued pursuant to each of the basic subscription privilege and the additional subscription privilege (which is expected to be subject to pro ration). The Standby Purchaser acquired its minimum number of Subscription Receipts and no further funding was required under the backstop commitment. In connection with the Rights Offering, fractional Subscription Receipts and Common Shares will not be issued.

Upon exchange of the Subscription Receipts for Common Shares, GreenFirst expects a total of approximately 148,887,840 Common Shares will be issued and outstanding (or 180,640,458 on a fully-diluted basis, assuming the exercise of all outstanding options, warrants and other convertible, exchangeable or exercisable securities). Based on the results of the Rights Offering, the Standby Purchaser is expected to own 41,846,667 Common Shares carrying 28.11% of the outstanding voting rights in respect of all of the issued and outstanding shares of the Company, and therefore has become a new insider and Control Person (as such term is defined under the policies of the TSXV) of the Company.

The TSXV has conditionally approved the Acquisition.

Additional details concerning the Acquisition, the Rights Offering, the Subscription Receipts, the standby commitment and related matters are described in the final prospectus, filed under the Company's profile on SEDAR at www.sedar.com.

This press release is not an offer to sell or the solicitation of an offer to buy Subscription Receipts, Common Shares or other securities of GreenFirst. Such securities may not be offered or sold in the United States absent registration under the United States Securities Act of 1933, as amended, or an applicable exemption from the registration requirements.

Early Warning Report

Pursuant to the Rights Offering, Larry G. Swets, Jr. (306 N Maple St, Itasca, Illinois 60143) ceased to have ownership and control of 2,119,734 Rights. By the expiry time (the "Expiry Time") of the Rights Offering, Mr. Swets, Jr. exercised 950,334 Rights at an exercise price of $1.50 per Right for aggregate consideration of $1,425,501, gaining ownership and control of 950,334 Subscription Receipts. Prior to and following the Expiry Time, 37,221,960 Common Shares were issued and outstanding.

Prior to the Expiry Time, Mr. Swets, Jr. beneficially owned or controlled 4,409,947 Common Shares (representing approximately 11.85% of the outstanding Common Shares) and 2,119,734 Rights (representing approximately 16.6% of the outstanding Common Shares on a partially diluted basis, assuming only the exercise of the Rights held by Mr. Swets, Jr.).

Following the Expiry Time, Mr. Swets, Jr. beneficially owned or controlled 4,409,947 Common Shares (representing approximately 11.85% of the outstanding Common Shares) and 950,334 Subscription Receipts (representing approximately 14.0% of the outstanding Common Shares on a partially diluted basis, assuming only the exercise of the Rights held by Mr. Swets, Jr.).

The exercise of the Rights occurred pursuant to the terms of the Rights Offering and the Subscription Receipts were issued by the Company. The remaining securities held by Mr. Swets, Jr. are held for investment purposes, and in the future, the Mr. Swets, Jr. may discuss with management and/or the board of directors of the Company any of the transactions listed in clauses (a) to (k) of item 5 of Form F1 of National Instrument 62-103 – The Early Warning System and Related Take-over Bid and Insider Reporting Issues and may further purchase, hold, vote, trade, dispose or otherwise deal in the securities of the Company, in such manner as deemed advisable to benefit from changes in market prices of the Company's securities, publicly disclosed changes in the operations of the Company, its business strategy or prospects or from a material transaction of the Company.

An early warning report will be filed by Larry G. Swets, Jr. in accordance with applicable securities laws and will be available on SEDAR at www.sedar.com or may be obtained directly from the Company upon request at 847-791-6817 (Attention: Michael Liggett) or mailing the Company at its head office: 1800 – 510 West Georgia Street, Vancouver, British Columbia, V6B 0M3.

About GreenFirst:

GreenFirst is a forest-first business, focused on environmentally sustainable forest management and lumber production. We believe that sustainable forest planting and harvesting, coupled with the long-term green advantage of lumber, provide GreenFirst with significant cyclical and secular advantages in building products. GreenFirst's long-term pursuit is to be a global leader in environmentally sustainable lumber. For more information, please visit: www.gffp.ca.

Advisors:

Norton Rose Fulbright Canada LLP is acting as legal counsel to GreenFirst, RBC Capital Markets is acting as financial advisor to GreenFirst and Goodmans LLP is acting as legal counsel to Senvest Management, LLC.

Forward-Looking Information:

Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact are forward-looking statements. Forward looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "potential", "believe", "intend", "estimate" or the negative of these terms and similar expressions. Forward-looking statements in this news release include, but are not limited to, statements with respect to the Rights Offering (including the basic subscription privilege and the additional subscription privilege), statements with respect to the proposed Acquisition (including the terms, conditions, timing and completion thereof), the satisfaction, if at all, of the Escrow Release Condition (including on the anticipated terms, conditions and timing) and TSXV matters (including with respect to approval of certain matters relating to the Company, as well as the listing of the Subscription Receipts). Forward-looking statements are based on assumptions, including expectations and assumptions concerning: interest and foreign exchange rates; capital efficiencies, the lumber industry (and its growth and growth rates) in North America, and the Company's future plans and ability to complete future investments. While the Company considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; future legislative, tax and regulatory developments.

Readers are cautioned that the foregoing list is not exhaustive and other risks are set out in the Company's public disclosure record filed under the Company's profile on www.sedar.com. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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

SOURCE GreenFirst Forest Products Inc.

Larry G. Swets, Jr. at 630-824-8199, Alliance Advisors at [email protected]