Pacific & Western Credit Corp. announces plans for Pacific & Western Bank of Canada to become a public company and for PWC to diversify its income

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S./

LONDON, ON, Jan. 28, 2013 /CNW/ - Pacific & Western Credit Corp. (TSX:PWC) is pleased to announce that its wholly-owned subsidiary, Pacific & Western Bank of Canada (the "Bank"), plans to complete an initial public offering of its common shares within the second quarter of fiscal 2013 and become a public company.  PWC is planning to diversify its income and is considering options including the acquisition and management of income producing properties.

The key transactions that are expected to be undertaken are as follows:

1. The Bank intends to complete an initial public offering ("IPO") of its common shares, within the second quarter of fiscal 2013.  Structure and pricing details will be set out in the Bank's prospectus.

2. PWC will request approval to modify its Series C Notes from the Series C Note holders at a Note holder meeting scheduled for March 7, 2013, to be held in London, Ontario.

PWC will request that the Series C Note indenture be modified so that PWC has the option, as at June 30, 2014, provided that the Bank has completed its IPO and the Bank's common shares have been listed on the Toronto Stock Exchange ("TSX"), to satisfy all future interest obligations of its issued and outstanding Series C Notes either in cash or in-kind in the form of common shares of the Bank held by PWC.  The number of common shares of the Bank to be transferred to satisfy any in-kind payments on PWC's Series C Notes will be based on a five day volume weighted average trading price of the Bank's common shares on the TSX at the time of issuance.

PWC will also request that the Series C Note indenture be modified to make, at the option of the holder, the Series C Notes convertible into common shares of the Bank held by PWC.  The conversion price is proposed to be fixed at the greater of $10.00 per common share or the IPO price of the Bank's common shares until October 16, 2016, and thereafter at the greater of $12.00 per common share or the IPO price of the Bank's common shares until maturity of the Series C Notes on October 16, 2018. The book value of the Bank's common shares at October 31, 2012 was $6.62, after taking into account an 8:1 share consolidation that was completed on December 31, 2012. The Bank's audited financial statements for the year ended October 31, 2012 are available on PWC's website.

The effectiveness of the proposed amendments will be conditional upon the Bank completing its IPO and its common shares being listed on the TSX.

3. Subject to the completion of the modifications of the Series C Notes noted above and regulatory approval, PWC will convert its holdings of $30 million of subordinated debt of the Bank into common shares of the Bank at the IPO price of the Bank's common shares.  This transaction is conditional upon and will occur immediately prior to the Bank's IPO and listing of its common shares on the TSX.

David Taylor, President & CEO of PWC and the Bank,  said that, "These plans will result in the "releasing" of the considerable value to the PWC shareholders that has been locked in by its corporate structure. I expect investors will recognize the considerable value of our Bank particularly when it has been stripped of its expensive subordinate debt.  Secondly, considering PWC has about $32 million in tax losses, diversifying the business into other areas such as investing in income producing properties will provide significant tax sheltered income.  I am very excited about this plan and look forward to executing it as soon as possible."

These transactions are subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals, including the approval of the Toronto Stock Exchange.

Following completion of the IPO of the Bank, it is expected that PWC will continue to hold at least 90% of the issued and outstanding common shares of the Bank and will continue to be the single largest shareholder of the Bank.  If all of the Series C Notes were fully converted into common shares of the Bank, it is expected that PWC would continue to hold the majority of the issued and outstanding common shares of the Bank.

The securities described above have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.  This press release does not constitute an offer to sell or the solicitation of an offer to buy nor shall there by any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

Not for distribution to U.S. news wire services or dissemination in the U.S.

Pacific & Western Bank of Canada is wholly owned by Pacific & Western Credit Corp., whose shares trade on the TSX under the symbol PWC.

On behalf of the Board of Directors:  David R. Taylor, President & C.E.O.

To receive company news releases, please contact:
Wade MacBain, [phone], [email protected]

FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations: [phone], [email protected]
Public Relations & Media: Tel Matrundola, Vice-President, [phone], [email protected]

Visit our website at:  http://www.pwbank.com

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information contained in this news release, including information relating to the proposed reorganization, the expected timetable for completing the reorganization, benefits of the reorganization and any other statements regarding PWC's future expectations, beliefs, goals or prospects constitute forward-looking information within the meaning of applicable securities legislation (collectively, "forward-looking statements"). All statements in this news release that are not statements of historical fact (including statements containing the words "expects", "does not expect", "plans", "anticipates", "does not anticipate", "believes", "intends", "estimates", "estimates", "projects", "potential", "scheduled", "forecast", "budget" and similar expressions) should be considered forward-looking statements. All such forward-looking statements are subject to important risk factors and uncertainties, many of which are beyond PWC's ability to control or predict. A number of important factors could cause actual results or events to differ materially from those indicated or implied by such forward-looking statements, including without limitation: the conditions to the completion of the reorganization, including the receipt of applicable security holder approval or the regulatory approvals required for the reorganization, may not be obtained on the terms expected or on the anticipated schedule, PWC's ability to meet expectations regarding the timing and completion of the reorganization and the volatility of the marketplace.

PWC assumes no obligation to update the information in this communication, except as otherwise required by law. Additional information identifying risks and uncertainties is contained in PWC's filings with the various provincial securities commissions which are or will be available online at www.sedar.com. Forward-looking statements are provided for the purpose of providing information about the current expectations, beliefs and plans of the management of PWC. Readers are cautioned that such statements may not be appropriate for other purposes. Readers are also cautioned not to place undue reliance on these forward-looking statements, that speak only as of the date hereof.

SOURCE: Pacific & Western Credit Corp.

Visit our website at:  http://www.pwbank.com