Smoothwater Capital Corporation Increases Price to $10.25 Per Share in its Proposed Acquisition of Equity Financial Holdings Inc.

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TORONTO, Nov. 27, 2017 /CNW/ - Equity Financial Holdings Inc. (TSX: EQI) ("Equity"), which offers residential mortgage loans through its wholly‐owned subsidiary, Equity Financial Trust Company ("Equity Trust"), and Smoothwater Capital Corporation ("Smoothwater") today announced that Smoothwater has agreed to increase the consideration payable by Smoothwater pursuant to the previously announced arrangement agreement dated October 30, 2017 from $9.75 per share to $10.25 per share (the "Consideration"). Under the plan of arrangement as amended (the "Amended Arrangement"), Smoothwater will acquire all the issued and outstanding shares of Equity (the "Shares"), other than Shares already owned or controlled by Smoothwater, its officers, and by certain other shareholders who have agreed to remain as continuing shareholders, by way of a plan of arrangement.

Equity and Smoothwater have entered into an amended and restated arrangement agreement (the "Amended and Restated Arrangement Agreement") to give effect to the increased Consideration.  In addition, Equity has agreed to terminate its right to solicit proposals constituting or which may reasonably be expected to constitute a superior proposal, to amend the termination fee payable to Smoothwater to $3 million, to proceed with the previously announced meeting of Equity's shareholders on December 18, 2017 and to close the transactions contemplated by the Amended Arrangement on December 22, 2017. Equity continues to have the right to consider unsolicited alternative proposals that could result in a superior proposal.  The Amended and Restated Arrangement Agreement will be posted under Equity's profile on www.sedar.com.

The increased Consideration of $10.25 per Share represents a premium of 36.2% to the volume weighted average price of the Shares on the Toronto Stock Exchange for the 20 trading days ending October 30, 2017, the initial date of announcement of the plan of arrangement.

The Amended Arrangement and Amended and Restated Arrangement Agreement were unanimously recommended to the board of directors of Equity (the "Board") by the special committee composed entirely of independent directors constituted to consider Smoothwater's initial proposal (the "Special Committee"). The Board (with interested, non-independent directors abstaining from voting), following receipt of the unanimous recommendation by the Special Committee, unanimously approved the Amended and Restated Arrangement Agreement, the Amended Arrangement and the transactions contemplated thereby, and recommended that Shareholders vote in favour of the Amended Arrangement. The Board considered all relevant factors, including the review of two non-binding expressions of interest received by the Special Committee prior the entering into of the Amended and Restated Arrangement Agreement.

Advisors

Blair Franklin Capital Partners Inc. and National Bank Financial Inc. act as financial advisor and McCarthy Tétrault LLP serves as legal counsel to the Special Committee. Cassels Brock & Blackwell LLP serves as legal counsel to Equity. CIBC Capital Markets acts as financial advisor and Norton Rose Fulbright Canada LLP serves as legal counsel to Smoothwater.

Forward Looking Information

Certain portions of this press release as well as other public statements by Equity contain "forward-looking information" within the meaning of applicable Canadian securities legislation, which is also referred to as "forward-looking statements", which may not be based on historical fact. Wherever possible, words such as "will", "plans," "expects," "targets," "continues", "estimates," "scheduled," "anticipates," "believes," "intends," "may," "could," "would" or might, and the negative of such expressions or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved, have been used to identify forward looking information. Such forward-looking statements include, without limitation, the ability of the parties to satisfy of all conditions precedent of the Amended and Restated Arrangement Agreement and to complete the Amended Arrangement, the timing of the meeting of Shareholders and other factors. Forward looking statements should not be read as guarantees of future events, future performance or results, and will not necessarily be accurate indicators of the times at, or by which, such events, performance or results will be achieved, if achieved at all.

All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including their knowledge of the current credit, interest rate and liquidity conditions affecting Equity and the Canadian economy, retail mortgage markets, housing sales and capital markets. Certain material factors or assumptions are applied by Equity in making forward-looking statements, including without limitation, assumptions as to the parties' ability to satisfy the conditions precedent of the Amended and Restated Arrangement Agreement and complete the Amended Arrangement, the anticipated receipt of required regulatory, court and Shareholder approvals, the Amended and Restated Arrangement Agreement, the Amended and Restated Arrangement Agreement not being terminated, modified or amended, the anticipated benefits of the Amended Arrangement remaining the same, and the timely preparation of materials necessary for the meeting of the Shareholders.

Forward-looking statements reflect Equity's current views with respect to future events and are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Readers should not place undue reliance on such forward-looking statements, as they reflect Equity's current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Equity, are inherently subject to significant business, economic, regulatory, competitive, political and social uncertainties and contingencies. Many factors could cause Equity's actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including among others, failure to satisfy one of more of the conditions precedent of the Amended and Restated Arrangement Agreement or to complete the Amended Arrangement, failure to obtain any of the required regulatory, court or Shareholder approvals, the Amended and Restated Arrangement Agreement being terminated, modified or amended, the anticipated benefits of the Amended Arrangement changing, the meeting of the Shareholders not being held at the anticipated time, a significant downturn in capital markets or the economy as a whole, errors or omissions by Equity in providing services to its customers, significant increases in the cost of complying with applicable regulatory requirements, civil unrest, economic recession, pandemics, war and acts of terrorism which may adversely impact the North American and global economic and financial markets, significant changes in interest rates, failure by Equity Trust to meet ongoing regulatory requirements, the failure of borrowers or counterparties to honour their financial or contractual obligations to Equity Trust, failure by Equity Trust to adequately monitor and/or adjust its mortgage portfolio management practices for changing circumstances, failure by Equity Trust to adequately monitor the services provided by third party service providers or to establish alternative arrangements if required or the risks detailed from time-to-time in Equity's quarterly filings, annual information forms, annual reports and annual filings with securities regulators. The preceding list is not exhaustive of possible factors. The Corporation disclaims any intent or obligation to update or revise publicly any forward-looking statements whether as a result of new information, estimates, future events or results, or otherwise, unless required to do so by applicable laws. The forward looking statements contained herein are expressly qualified in their entirety by this cautionary statement.

About Equity Financial Holdings Inc.

Equity is a financial services company operating through its wholly‐owned subsidiary, Equity Trust, a federally regulated deposit‐taking trust company. Equity Trust serves the Canadian mortgage market by offering residential first mortgage loans to non‐prime and near‐prime customers who do not meet the conventional underwriting standards of the major Canadian banks. Learn more at www.equityfinancialtrust.com.

About Smoothwater Capital Corporation

Smoothwater focuses on investing its own capital in small to midcap Canadian public companies where there is an identifiable path to significantly improve the share value. Learn more at www.smoothwatercapital.com.

SOURCE Equity Financial Holdings Inc.

Equity Financial Holdings Inc., Michael R. Jones, President & CEO, 647.277.0106, www.equityfinancialtrust.com; Smoothwater Capital Corporation, Stephen J. Griggs, Chief Executive Officer, 416.986.2207, [email protected]