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The Amended Debentures will be substantially similar to the Debentures, except that they will not be convertible for Common Shares and will have the following terms:

• Interest Rate: 9.75% per annum, payable semi-annually on June 30 and December 31, commencing on June 30, 2025.

• Redemption: The Corporation will have the right, at its option, to redeem the Amended Debentures, in whole at any time or in part from time to time, on not more than 60 days' and not less than 30 days' prior notice, at a redemption price equal to:

  • if the redemption occurs on or prior to the one-year anniversary of the issuance date of the Amended Debentures (the "First Anniversary"), 102% of the principal amount of the Amended Debentures to be redeemed, plus accrued and unpaid interest thereon, if any, up to but excluding the redemption date; provided, however, that the Corporation may redeem up to 25% of the principal amount of the Amended Debentures during this period at a redemption price equal to 100% of the principal amount of the Amended Debentures to be redeemed, plus accrued and unpaid interest thereon, if any, up to but excluding the redemption date; and

  • if the redemption occurs after the First Anniversary and on or prior to Maturity Date (as defined below), the principal amount of the Amended Debentures to be redeemed, plus accrued and unpaid interest thereon, if any, up to but excluding the redemption date.

• Maturity Date: Third anniversary of the issuance date of the Amended Debentures.

• Default: The Corporation will be in default under the Amended Debentures if the Corporation is in default under a loan that is recourse to the Corporation and has an aggregate principal amount that is greater than US$50,000,000.

• Indenture: The Amended Debentures will be issued pursuant to a new indenture, substantially similar to the existing indentures for the Debentures, provided that certain sections, including Section 7.11 [Clear Market] (in respect of the 2026 Debentures) and Article 11 [Successors], will be removed.

If the Debenture Amendments are approved by the Debentureholders (i) other than the interest payment on the 2026 Debentures to be made by the Corporation on September 30, 2024, Debentureholders will receive no additional interest payments under the 2025 Debentures or 2026 Debentures and the next interest payment to be received by Debentureholders (in respect of the Amended Debentures) will be on June 30, 2025, and (ii) the effective date of the Debenture Amendments will be on the date that Invesque enters into the respective supplemental trust indentures embodying the Debenture Amendments and the exchange of the Debentures for Amended Debentures and Common Shares (the "Debenture Exchange") will occur on the same date as the supplemental trust indentures or on such later date as set forth in such supplemental trust indentures. The Debenture Amendments and the Debenture Exchange will be subject to certain conditions, including contemporaneous closing of the Preferred Share Exchange and approval of the Toronto Stock Exchange ("TSX").

Preferred Share Exchange

Further, certain funds (the "Exchanging Magnetar Funds") managed by Magnetar Financial LLC ("Magnetar"), have entered into an exchange agreement with the Corporation  (the "Exchange Agreement") pursuant to which such Exchanging Magnetar Funds have agreed to exchange their class A convertible preferred shares ("Preferred Shares") for 674,705,882 Common Shares (the "Preferred Share Exchange"), having a value of US$114,700,000 based on a price per Common Share of US$0.17, being a 15% premium to the 15-day VWAP of the Common Shares as of September 13, 2024. The value of the Common Shares to be issued to the Exchanging Magnetar Funds pursuant to the Preferred Share Exchange represents a discount to the current liquidation value of the Preferred Shares agreed to by the Corporation and Magnetar. The Preferred Shares held by the Exchanging Magnetar Funds represent all of the issued and outstanding Preferred Shares in the capital of the Corporation. Based on the number of Common Shares and Preferred Shares outstanding as of the date hereof, following the Debenture Exchange and the Preferred Share Exchange, Magnetar, the Exchanging Magnetar Funds and certain other funds managed by Magnetar (together with the Exchanging Magnetar Funds, the "Magnetar Funds") will own and exercise control over approximately 80% of the Common Shares, and there will be no Preferred Shares outstanding. The Preferred Share Exchange will be subject to certain conditions, including the substantially contemporaneous closing of the Debenture Exchange, approval of the TSX and shareholder approval, as required under the rules of the TSX. Meeting details will be made available at a later date.

Pursuant to the Exchange Agreement, the Corporation, Magnetar and the Magnetar Funds will enter into an investor rights agreement (the "IRA"), providing for, among other things, the following rights of Magnetar and the Magnetar Funds: (i) board nomination rights in respect of a certain number of directors of the Corporation (based on the size of the Corporation's board and the securityholder percentage of Magnetar and the Magnetar Funds at the relevant times), (ii) customary demand and piggyback registration rights, (iii) customary pre-emptive rights with respect to equity securities of the Corporation, and (iv) approval and consent rights in respect of certain actions of the Corporation. The IRA will also provide for certain standstill restrictions on Magnetar and the Magnetar Funds until March 31, 2025.

Support Agreements

Debentureholders holding approximately 33% of the outstanding 2025 Debentures and Debentureholders holding approximately 37% of the outstanding 2026 Debentures have signed voting support agreements to vote the Debentures beneficially owned or controlled by them FOR the Debenture Amendments. The directors and officers of the Corporation, as well as the Corporation's largest holder of Common Shares (holding approximately 31% of the issued and outstanding Common Shares) have each signed a voting support agreement to vote the Common Shares beneficially owned or controlled by them FOR the Preferred Share Exchange and FOR the issuance of Common Shares pursuant to the Preferred Share Exchange and the Debenture Exchange.

Board of Directors Recommendation

The Corporation's Board of Directors (the "Board"), following its review and after receiving a unanimous recommendation from its governance committee comprised of independent directors, has unanimously determined that each of the Debenture Amendments, the Debenture Exchange and the Preferred Share Exchange are in the best interests of the Corporation. The Board unanimously approved the Debenture Amendments, the Debenture Exchange and the Preferred Share Exchange and will recommend that the Debentureholders vote FOR the Debenture Amendments and that the shareholders vote FOR the Preferred Share Exchange and FOR the issuance of Common Shares pursuant to the Preferred Share Exchange and the Debenture Exchange.

Update on Asset Sales

In the Corporation's June 30, 2024, financial statements which were released on August 8, 2024, Invesque had classified 13 assets as held for sale. The Corporation sold one asset on August 14, 2024, for US$2,500,000 and expects to sell eight additional assets in the next 30 days for a gross sales price of more than US$78,000,000. Any net available proceeds from these sales will be used to pay down the Corporation's credit facility with KeyBank. Closing of each of these asset sales is subject to various closing conditions and there are no assurances that any or all of these transactions will close on the terms contemplated or at all.

"Executing on both the Debenture Amendments and the Preferred Share Exchange represents an important next step in Invesque's journey," commented Adlai Chester, Chief Executive Officer. "Management and the Board worked very hard to negotiate transactions that benefit the Corporation and all stakeholders, and we believe that the discounts taken by the Debentureholders and Magnetar, as well as the premium to the current Common Share price, is a win for all of Invesque's stakeholders, including the current common shareholders. These transactions will substantially improve the balance sheet and the go-forward cashflow of the Corporation. Invesque has worked closely with Magnetar since our inception eight years ago, and Magnetar's flexibility to help facilitate this transaction represents their continued support of the Corporation, management and the Board."

About Invesque

Invesque is a North American health care real estate company with an investment thesis focused on the premise that an aging demographic in North America will continue to utilize health care services in growing proportion to the overall economy. Invesque currently capitalizes on this opportunity by investing in a portfolio of income-generating predominantly private pay seniors housing communities. Invesque's portfolio includes investments primarily in independent living, assisted living, and memory care, which are operated under long-term leases and joint venture arrangements with industry-leading operating partners. Invesque's portfolio also includes investments in owner-occupied seniors housing properties in which Invesque owns the real estate, the licensed operations, and provides management services through Commonwealth Senior Living, LLC, a Delaware limited liability company. For more information, please visit www.invesque.com.

Forward-Looking Information

Certain statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These forward-looking statements include statements regarding: the proposed Debenture Amendments, the Debenture Exchange, the Preferred Share Exchange and proposed asset sales. In some cases forward-looking information can be identified by such terms as "will", "would", "anticipate", "anticipated", "expect" and "expected". The forward-looking statements in this news release are based on certain assumptions, including assumptions regarding the Corporation's ability to complete the Debenture Amendments, the Debenture Exchange, the Preferred Share Exchange and the proposed asset sales and that existing trends being observed by the Corporation's seniors housing operating partners will continue. Such statements are subject to significant known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Such risks include the risk that the Debenture Amendments will not be approved by Debentureholders or that the issuance of Common Shares pursuant to the Preferred Share Exchange and the Debenture Exchange will not be approved by shareholders or by the TSX, the closing conditions to the Debenture Amendments, the Debenture Exchange, the Preferred Share Exchange and/or the proposed asset sales, as applicable, will not be satisfied or waived, and that existing trends being observed by the Corporation's seniors housing operating partners will not continue, as well as those risks described in the Corporation's current annual information form and management's discussion and analysis, available on SEDAR+ at www.sedarplus.ca, which risks may be dependent on market factors and not entirely within the Corporation's control. Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. These forward-looking statements reflect current expectations of the Corporation as at the date of this news release and speak only as at the date of this news release. The Corporation does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.

SOURCE Invesque Inc.

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