Birch Hill-owned GDI to combine with Medwell Capital, go public

Medwell Capital Corp (TSX-V: MWC), an Edmonton-based investment and advisory company, has agreed to combine with GDI Integrated Facility Services Inc, a Montréal-based provider of janitorial and related services to the commercial real estate industry. The arrangement between the two companies will include a cash-and-stock transaction and a concurrent public offering of securities. The resulting public entity will carry on the business of GDI and assume its name. Both GDI and Medwell are portfolio investments of Canadian mid-market private equity firm Birch Hill Equity Partners.

PRESS RELEASE

Medwell Capital Corp. and GDI Integrated Facility Services Inc. Announce Arrangement and Concurrent Public Offering

EDMONTON, ALBERTA–(Marketwired – April 1, 2015) –

MEDWELL CAPITAL CORP. (“Medwell” or the “Company”) (TSX VENTURE:MWC) is pleased to announce that it has entered into an arrangement agreement (the “Arrangement Agreement”) on March 31, 2015 with GDI Integrated Facility Services Inc. (“GDI”) relating to a transaction (the “Arrangement”) pursuant to which the Company proposes to acquire, among other things, all of the issued and outstanding securities of GDI (the “GDI Shares”) in exchange for the issuance of shares of the Company and a cash consideration (the “Cash Consideration”).

Pursuant to the Arrangement Agreement, the Company has been assigned a value fixed at $11,200,000 (the “Medwell Valuation Amount”), an amount equal to approximately $1.54 per currently issued and outstanding common share of the Company (the “Common Shares”), representing a premium of approximately 121% over the volume weighted average price of the Common Shares on the TSX Venture Exchange (the “Exchange”) of $0.697 over the last 20 trading days. The Arrangement Agreement is the result of arm’s length negotiations conducted between representatives of the Company and GDI.

As part of the Arrangement, GDI will be combined into Medwell to form a single entity to be renamed “GDI Integrated Facility Services Inc.” (the “Resulting Issuer”) that will carry on the business of GDI. The Arrangement requires the approval of the shareholders of the Company (the “Shareholders”) at an annual general and special meeting of the Shareholders (the “Meeting”) to be held on May 13, 2015 or such later date as adjourned or postponed.

In connection with the Arrangement, a public offering of securities will be carried out by the Company (the “Offering”), which will be conditional on, and will close concurrently with, the Arrangement.

Trading in the Common Shares has been halted in accordance with the policies of the Exchange and will remain halted until completion of the Offering and the Arrangement.

The Arrangement will be deemed to be a Change of Business (COB) under the policies of the Exchange.

GDI Integrated Facility Services Inc.
GDI is a Montréal-based janitorial services provider which offers a range of commercial cleaning services and other complementary services such as mechanical maintenance services and restoration services to owners or managers of large property portfolios and large specialized facilities in Canada and the United States (the “U.S.”). With approximately 17,000 employees across Canada and in selected cities in the U.S., GDI is the largest outsourced janitorial services provider in Canada (approximately 1.3 times larger than its nearest competitor), and one of the top five in North America. GDI’s services are used by the majority of the largest multi-property owners or managers in Canada, and by an increasing number of clients in the U.S.

GDI is a private corporation incorporated in its current form on January 1, 2013 under the Canada Business Corporations Act (the “CBCA”). Birch Hill Equity Partners IV, LP, Birch Hill Equity Partners (US) IV, LP and Birch Hill Equity Partners (Entrepreneurs) IV, LP (collectively, the “Birch Hill Entities”), partnerships formed under the laws of Ontario and acting through their general partner, Birch Hill Equity Partners Management Inc. (“Birch Hill Management”), a corporation incorporated in the Province of Ontario, are collectively a controlling shareholder of GDI. Mr. Claude Bigras (residing in Montréal, Québec), the current President and CEO of GDI, through his holding company Gestion Claude Bigras Inc. (“Group CB”) incorporated in the Province of Québec, is also a significant shareholder of GDI.

Unanimous Recommendation of the Board of Directors
The Board of Directors of the Company formed a special committee comprised solely of independent directors (the “Special Committee”) to consider the Arrangement and to determine if such transactions would be in the best interests of the Company and the Shareholders.

The Special Committee retained Deloitte LLP to evaluate the fairness of the Arrangement and Deloitte LLP concluded that, based upon and subject to the various assumptions, matters considered and limitations set forth in their opinion, that the Medwell Valuation Amount is fair, from a financial point of view, to the Shareholders.

The Board of Directors of the Company, following the unanimous favourable recommendation of the Special Committee, has unanimously determined (with Kevin A. Giese, Michael Salamon and Patrick Barry abstaining) that the Arrangement is in the best interests of the Company and the Shareholders. The Board of Directors has unanimously (with Kevin A. Giese, Michael Salamon and Patrick Barry abstaining) approved the Arrangement and unanimously recommends that Shareholders vote in favour of the Arrangement.

Concurrent Public Offering
In connection with the Arrangement, the Company will carry out the Offering. The Offering will be conditional on, and will close concurrently with, the Arrangement.

The Company will file a prospectus to qualify the distribution of a number of subordinate voting shares of the Company (the “Subordinate Voting Shares”) pursuant to the terms of an underwriting agreement to be entered into with certain underwriters.

Upon completion of the Offering and the Arrangement, the Resulting Issuer will have two classes of issued and outstanding shares: the Subordinate Voting Shares and the multiple voting shares of the Company (the “Multiple Voting Shares”).

A portion of the proceeds to be received by the Company from the Offering will be used to pay the Cash Consideration.

Details of the Arrangement
The Arrangement is expected to be effected by way of a plan of arrangement (the “Plan of Arrangement”) under section 192 of the CBCA.

The Arrangement Agreement and the Plan of Arrangement are the legal documents that govern the Arrangement. The following is a summary of the Arrangement and is subject to, and qualified in its entirety by, the full text of the Arrangement Agreement and the Plan of Arrangement, copies of which are filed on SEDAR under the Company’s issuer profile at www.sedar.com.

Effect of the Arrangement
As part of the Arrangement, the Company will consolidate its currently issued and outstanding Common Shares by a ratio to be mutually determined by the Company and GDI (the “Consolidation”), amend the terms of the Common Shares to create the Subordinate Voting Shares and create the Multiple Voting Shares. Moreover, the Company will be continued under, and in accordance with, the CBCA (the “Continuance”).

The closing of the Arrangement is subject to, and will occur concurrently with, the completion of the Offering, and as a result:
investors in the Offering will become shareholders of the Resulting Issuer and will hold Subordinate Voting Shares upon completion of the Offering and the Arrangement;
Group CB will receive a portion of the Cash Consideration and Multiple Voting Shares upon completion of the Offering and the Arrangement;
certain executives of GDI, excluding Claude Bigras, will receive a portion of the Cash Consideration and Subordinate Voting Shares upon completion of the Offering and the Arrangement;
the Birch Hill Entities will receive a portion of the Cash Consideration and Multiple Voting Shares upon completion of the Offering and the Arrangement;
Shareholders holding Common Shares prior to the closing date of the Arrangement (the “Closing Date”) will become shareholders of the Resulting Issuer and will own Subordinate Voting Shares upon completion of the Offering and the Arrangement;
GDI will be combined into the Company to form the Resulting Issuer;
Claude Bigras, Michael Boychuk, David A. Galloway, Richard G. Roy, David G. Samuel and Carl M. Youngman will join Kevin A. Giese, Patrick G. Barry and Will Sawchyn on the Board of Directors of the Company, and Laine Woollard and Michael Salamon will resign;
KPMG LLP, the current auditors of GDI, will be appointed as auditors of the Resulting Issuer;
a new stock option plan (the “New Stock Option Plan”) with respect to the Resulting Issuer will enter into force and effect in accordance with its terms; and
the Company’s previous stock option plan will be terminated.

Conditions Precedent to the Completion of the Arrangement
The Arrangement is subject to the satisfaction of certain conditions including, among other things:
the granting of an interim order of the Superior Court of Québec (Commercial Division) (the “Court”) providing for, among other things, the calling and holding of the Meeting;
the approval by the Exchange of the Arrangement and the Offering;
the approval of the Continuance by at least two-thirds of the votes cast by the Shareholders present in person or represented by proxy at the Meeting;
the approval of the resolution approving the Arrangement by:
at least two-thirds of the votes cast by the Shareholders, and
at least a simple majority of the votes cast by the Shareholders (excluding the Birch Hill Entities and Kevin A. Giese), present in person or represented by proxy at the Meeting;
the listing approval of the Subordinate Voting Shares on the Toronto Stock Exchange (the “TSX”);
the approval of the New Stock Option Plan by at least a simple majority of the votes cast by the Shareholders present in person or represented by proxy at the Meeting;
the granting of a final order of the Court approving the Arrangement; and
the Offering being simultaneously completed with the Arrangement.

Principal Shareholders
Following the closing of the Arrangement, it is anticipated that Mr. Claude Bigras, through Group CB, and Birch Hill Management, through the Birch Hill Entities, will constitute the principal shareholders of the Resulting Issuer, with no other individual or entity holding greater than 10% of its issued and outstanding shares.

Supporting Shareholders
The Birch Hill Entities as well as certain directors and officers of the Company (Kevin A. Giese (President and CEO), Tami Reich (CFO), Michael Kennedy (Secretary) and Will Sawchyn (director)) (collectively the “Supporting Shareholders”) have each entered into a separate support and voting agreement with the Company and GDI in connection with the Arrangement (collectively the “Support and Voting Agreements”). The Supporting Shareholders who have entered into such Support and Voting Agreements beneficially own, directly and indirectly, or exercise control or direction over, in the aggregate, 3,529,340 Common Shares as at the date hereof, which represent approximately 48.46% of the outstanding Common Shares and have agreed, subject to the terms of the Support and Voting Agreements, to vote such Common Shares held by them in favour of the Arrangement Resolution.

Non-Solicitation
Each of the Company and GDI have agreed to customary non-solicitation covenants with a right to match any superior proposal. Under certain circumstances where the Arrangement is not completed, a termination fee of up to $500,000 is payable by one party to the other.

TSX Listing
The Company will apply to the TSX for approval of the listing of all the issued and outstanding Subordinate Voting Shares upon completion of the Offering and the Arrangement under the symbol “GDI”. The listing is subject to the Company fulfilling all of the requirements of the TSX. If the TSX approves the application, the Common Shares shall become Subordinate Voting Shares, will be delisted from the Exchange and the Subordinate Voting Shares will be listed on the TSX.

Annual General and Special Meeting of the Shareholders
The Company will disseminate a subsequent news release confirming the date, time and location of the Meeting. The Meeting is currently scheduled to be held at 10:00 a.m. (Edmonton Time) on May 13, 2015 at 2900 Manulife Place, 10180 – 101 Street, Edmonton, Alberta, or on such later date as adjourned or postponed.

Record Date
The record date for those Shareholders entitled to receive notice of, and vote at, the Meeting is April 10, 2015. Only Shareholders whose names have been entered in the register of the Company as of the close of business on such date are entitled to receive notice and to vote at the Meeting.

Matters to be Approved at the Meeting
At the Meeting, Shareholders will be asked, among other things, to consider, and if thought advisable, to pass (i) an ordinary resolution authorizing the adoption of the New Stock Option Plan (the “SOP Resolution”) (ii) a special resolution authorizing and approving the Continuance (the “Continuance Resolution”), and (iii) a special resolution authorizing and approving the Arrangement (the “Arrangement Resolution”). To be effective, each of the Continuance Resolution and the Arrangement Resolution requires the affirmative vote of not less than two-thirds (66 2/3%) of votes cast by Shareholders in person or represented by proxy at the Meeting. Pursuant to TSX Venture Exchange Policy 5.9 (“Policy 5.9”) and Multilateral Instrument 61-101 (“MI 61-101”), the Company must also obtain minority shareholder approval for the Arrangement Resolution (50% +1). The SOP Resolution requires the affirmative vote of a majority of votes cast by Shareholders in person or represented by proxy at the Meeting.

At the Meeting, Shareholders will also be asked to receive and consider matters independent from the Arrangement, including, among others, (i) the report of the directors of the Company and the audited financial statements of the Company for Fiscal 2014, together with auditor’s report thereon, (ii) the election of directors of the Company to serve for a term expiring on the earlier of the Closing Date and the date of the next annual general meeting of the Company, and (iii) the appointment of PricewaterhouseCoopers LLP, as auditors for a term expiring on the earlier of the Closing Date and the date of the next annual general meeting of the Company and to authorize the Board of Directors of the Company to fix the remuneration to be paid to the auditors.

Management Information Circular
The Company will prepare and mail a management information circular (the “Circular”) to Shareholders. The Circular will set forth important information, including the process that culminated in the Company entering into the Arrangement Agreement with GDI, a description of the Arrangement and other information relating to the Meeting. The Company encourages Shareholders to read the Circular carefully.

Certain information relating to the Offering and the Arrangement will not be determinable as of the mailing date and an estimate of such information will instead be provided in the Circular, as applicable. The Circular will provide an estimate of, among other things: (i) the ratio by which the Common Shares will be consolidated pursuant to the Consolidation; (ii) the consideration payable by the Company in connection with the Arrangement, namely the amount of the Cash Consideration to be paid, and the number of Multiple Voting Shares and Subordinate Voting Shares to be issued, (iii) the number of Subordinate Voting Shares to be sold pursuant to the Offering and the price at which they will be offered; (iv) the anticipated net proceeds from the Offering; and (v) the number and percentage of the issued and outstanding shares of the Resulting Issuer which will be held by the Shareholders upon completion of the Offering and the Arrangement.

Upon filing of the final long form prospectus and at least 5 days prior to the Meeting, the Company will file on SEDAR and disseminate a news release which will confirm and complete any information that was not determinable as of the mailing date of the Circular.

Executive Officers of the Resulting Issuer: See information here.

Board of Directors of the Resulting Issuer: See information here.

Related Party Transaction
The Arrangement constitutes a Related Party Transaction for the Company within the meaning of the Policy 5.9 and of MI 61-101. The Birch Hill Entities hold a significant equity position (78% of the voting interests) in GDI, are creditors of GDI and hold a significant equity interest (44.6% of the voting interests) in the Company and, accordingly, Birch Hill Management, the Birch Hill Entities and Michael Salamon are considered to be “related parties” under Policy 5.9 and MI 61-101. Michael Salamon is a director of the Company and is a partner of Birch Hill Management. Kevin A. Giese, the President, CEO and a director of the Company, will receive a termination payment on completion of the Arrangement and may be considered an “interested party” under Policy 5.9 and MI 61-101. Patrick G. Barry is a Birch Hill Management nominee to the Board of Directors of the Company. All matters requiring the consideration of the Board of Directors of the Company have been handled by directors other than Kevin A. Giese, Michael Salamon and Patrick G. Barry, and a special committee (the “Special Committee”) comprised of Will Sawchyn and Laine Woollard was formed to consider the Arrangement.

The Arrangement is exempt from the formal valuation requirements of Policy 5.9 and MI 61-101 pursuant to the provisions of section 5.5(b) of MI 61-101 in that the securities of the Company are not listed on certain specified exchanges. The Arrangement is subject to the evidence of value requirements of Exchange Policy 5.4.

Selected Financial Information regarding GDI: See information here.

About Medwell Capital Corp.
The Company is a Canadian-based investment and advisory firm which invests in and advises companies on strategy and technology development. For further information, you may contact the Company at 1-866-701-6033 or visit www.medwellcapital.com.

Forward-Looking Information: See information here.

Contact Information
MEDWELL CAPITAL CORP.
1-866-701-6033
WWW.MEDWELLCAPITAL.COM

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