Lakeview Hotel Investment Corp. Announces Intention to Extend Maturity date of Series C and Series D Debentures and Other Amendments

WINNIPEG, Oct. 28, 2016 /CNW/ - Lakeview Hotel Investment Corp ("LHIC") announced today its intention to amend the terms of its outstanding Series C Redeemable Subordinated Debentures (the "Series C Debentures") and its outstanding Series D Redeemable Subordinated Debentures (the "Series D Debentures", and together with the Series C Debentures, the "Debentures").  LHIC has prepared and will send to holders of the Series C Debentures (the "Series C Debentureholders") and the Series D Debentures (the "Series D Debentureholders") a joint information circular (the "Circular") and a proxy and consent form relating to the meeting of the Series C Debentureholders (the "Series C Meeting"), at which the Series C Debentureholders will vote on whether to accept the amendments to the Series C Debentures, and a proxy and consent form relating to the meeting of the Series D Debentureholders (the "Series D Meeting"), at which the Series D Debentureholders will vote on whether to accept the amendments to the Series D Debentures. Each of the Series C Meeting and the Series D Meeting will be held on November 28, 2016.

LHIC wishes to amend the Debentures as it has been in the process of refinancing certain debt and amending certain debt covenants. LHIC does not currently have the cash resources available to repay the Series C Debentures or the Series D Debentures when they mature and to make the regularly scheduled interest payments thereon.  The Corporation's ability to realize its current business strategy and to establish adequate working capital is contingent on, among other things, a successful resolution of the upcoming maturing of such debentures and deferring interest payments until August 22, 2019.

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

• Extending the maturity date of the Series C Debentures from June 30, 2017 to August 22, 2019;
• Changing the interest rate payable on the Series C Debentures from 8.0% per annum to 7.0% per annum;
• Changing the payment of interest from being payable semi-annually to being payable along with any outstanding principal at the maturity date;
• Including two additional restrictive covenants to Section 6.04 of the Series C Trust Indenture:
  • the first being to restrict the payment of deferred fees by LHIC to Lakeview Management Inc. that would reduce the deferred fee balance owing to Lakeview Management Inc. to under $3.1 million until such time as all accrued and unpaid interest on the Series C Debentures has been paid to the Series C Debentureholders.  In connection with the foregoing, LHIC acknowledges that any of the $3.1 million deferred fees referred to above outstanding as of the maturity date (as amended above) are subordinate to repayment of the principal amount outstanding under the Series C Debentures along with any accrued and unpaid interest payable thereon; and
  • the second to provide that LHIC may not increase the principal amount of senior debt (other than in connection with LHIC's hotel in Prince George, British Columbia) beyond the amount outstanding as at the date of the third supplemental indenture unless either (i) Series C Debentureholder approval has been obtained or (ii) the amount in excess of such principal amount is used to pay down the accrued interest and principal on the Series C Debentures and LHIC's Series D Redeemable Subordinated Debentures on a pro rata basis.

In order to effect the Series C Amendments, LHIC will be required to enter into a supplemental trust indenture with the trustee for the Series C Debentures, CIBC Mellon Trust Company. The Series C Amendments will be effective on or about November 29, 2016. Further information regarding the Series C Amendments will be available in the Circular, which will be filed on SEDAR.

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

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

• Extending the maturity date of the Series D Debentures from May 31, 2018 to August 22, 2019;
• Changing the interest rate payable on the Series D Debentures from 9.0% per annum to 7.0% per annum;
• Changing the payment of interest from being payable semi-annually to being payable along with any outstanding principal at the maturity date; and
• Including two additional restrictive covenants to Section 6.04 of the Series D Trust Indenture:
  • the first being to restrict the payment of deferred fees by LHIC to Lakeview Management Inc. that would reduce the deferred fee balance owing to Lakeview Management Inc. to under $3.1 million until such time as all accrued and unpaid interest on the Series D Debentures has been paid to the Series D Debentureholders.  In connection with the foregoing, LHIC acknowledges that any of the $3.1 million deferred fees referred to above outstanding as of the maturity date (as amended above) are subordinate to repayment of the principal amount outstanding under the Series D Debentures along with any accrued and unpaid interest payable thereon; and
  • the second to provide that LHIC may not increase the principal amount of senior debt (other than in connection with LHIC's hotel in Prince George, British Columbia) beyond the amount outstanding as at the date of the third supplemental indenture unless either (i) Series D Debentureholder approval has been obtained or (ii) the amount in excess of such principal amount is used to pay down the accrued interest and principal on the Series D Debentures and the Corporation's Series C Redeemable Subordinated Debentures on a pro rata basis.

In order to effect the Series D Amendments, LHIC will be required to enter into a supplemental trust indenture with the trustee for the Series D Debentures, CIBC Mellon Trust Company. The Series D Amendments will be effective on or about November 29, 2016. Further information regarding the Series D Amendments will be available in the Circular, which will be filed on SEDAR.

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

LHIC has retained Laurentian Bank Securities to act as soliciting agent. Laurentian Bank Securities will solicit votes regarding the Series C Amendments and the Series D Amendments.

There is $18,326,000 principal amount of Series C Debentures issued and outstanding, and $10,160,000 principal amount of Series D Debentures issued and outstanding. The Series C Debentures are listed on the TSX Venture Exchange under the trading symbol "LHR.DB.C", and the Series D Debentures are listed on the TSX Venture Exchange under the trading symbol "LHR.DB.D".

Lakeview Hotel Investment Corp. is listed on the TSX Venture Exchange under the symbol "LHR". Lakeview Hotel Investment Corp. receives income from ownership, management and licensing of hotel properties.

The TSX Venture Exchange nor its Regulation Service Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Lakeview Hotel Investment Corp

Avrum Senensky, Executive Vice President, Tel: [phone], Fax: [phone], Email [email protected]