WI Western Investment Company of Canada Limited

SM2 Holdings Ltd. (“SM2 Capital”), the founder of Fortress Insurance Company, has made the strategic decision to sells its entire 28.45% stake in Fortress Insurance Company (“Fortress”) valued at $5.2 million to The Western Investment Company of Canada Limited (TSXV: WI) (“Western”) upon close of the proposed transaction previously announced on March 22, 2024 (the “Transaction”). SM2 Capital will receive the vast majority of its compensation as shares in Western representing up to 19% of the single voting common shares outstanding in Western at the close of the Transaction, with the remaining compensation settled in cash. The mix between shares and cash in the compensation will be determined at the close of the Transaction and subject to the aforementioned ownership limits.

“We are proud to have built Fortress from the ground up and are deeply grateful for the leadership of Shafeen Mawani and Scott Tannas over the past several years. We are now excited to see Western thrive under Paul Rivett’s guidance. Paul combines tactical focus with strategic patience as a value investor. We are confident that this approach will lead to even greater success for Western in the years to come,” said Naim Ali, CEO of SM2 Capital.

Mr. Ali will be nominated as SM2 Capital’s representative on the board of directors of Western. SM2 Capital will continue to retain one seat on the board of directors of Fortress.

Fortress was founded in 2005 by Mohamed Ali and Shiraz Ali to handle the self-insured retention component for the fleet of their Budget Rent A Car of Calgary franchise. This decision highlights that the Ali family is in full support of Paul Rivett’s vision to transform Western into an insurance and investment holding company. SM2 Capital will receive most of its proceeds as shares in Western. Fortress will be a key asset in Western’s portfolio as it turns its focus to the insurance underwriting space.

Western has now secured agreements in aggregate to purchase almost 100% of the total shares outstanding in Fortress (the “Share Purchases”) for $2.60 per share or $12.8 million. The Share Purchases will increase Western’s ownership in Fortress from 28.45% to nearly 100% upon closing of the Transaction, thereby satisfying a key condition of the Transaction to own a minimum of 51% of the shares outstanding in Fortress. These Share Purchases, which are conditional on the closing of the Transaction, will be settled with a mixture of cash and the current common shares of Western ("Single Voting Shares") at a price of $0.40 per share which could result in the issuance of up to an additional 30,000,000 Single Voting Shares.

About the TransactionThe Transaction proposes an investment of at least $20 million from companies affiliated with Paul Rivett to transform Western into an insurance and investment holding company. The concurrent rights offering has the potential to raise up to an additional $30 million. Upon the successful closing of the Transaction, Paul Rivett is to be appointed to President and Chief Executive Officer of Western with the following initial priorities:

• Grow the Fortress platform to $100 million per annum in written premiums by 2028 through a combination of prudent organic growth and accretive acquisitions; and
• Continue managing Western’s non-insurance holdings as long-term investments.

You can watch a recording of the webcast that took place on March 27, 2024 here.

Completion of the Transaction (including any rights offering) is subject to a number of conditions including, but not limited to, acceptance of the TSX Venture Exchange (the "Exchange" or "TSXV"), shareholder approval, and various other conditions. The Transaction as contemplated constitutes a Change of Business under the policies of the TSXV. There is a risk that the Transaction will not be accepted or that the terms of the Transaction may change substantially prior to acceptance.

About SM2 Holdings Ltd.SM2 Holdings Ltd, operating as SM2 Capital Partners, is a private family-owned holding company that oversees its activities in a range of operating businesses in hospitality (hotels and casinos), car rental and parking businesses, and the related investments of the Ali Family Office. Headquartered in Calgary, Alberta, Canada, SM2 Capital’s management team has been building companies together across Canada and the United States of America for over fifty years.

For more information on SM2 Capital, please visit its website at www.sm2capital.com.

About The Western Investment Company of Canada Limited Western is a unique publicly traded, private equity company founded by a group of successful Western Canadian businesspeople, and dedicated to building and maintaining ownership in successful Western Canadian companies, and helping them to grow. Western's shares are traded on the Exchange under the symbol WI.

For more information on Western, please visit its website at www.winv.ca.

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CONTACT INFORMATION - The Western Investment Company of Canada Limited

Scott Tannas President and Chief Executive Officer (403) 652-0408 or stannas@winv.ca  

Advisories Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable, disinterested shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Western should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this news release.

This news release may contain certain forward-looking information and statements, including without limitation, statements pertaining to future plans for Western and its associated companies, acquisitions, financings and returns. Statements containing the words: 'believes', 'intends', 'expects', 'plans', 'seeks' and 'anticipates' and any other words of similar meaning are forward-looking. All statements included herein involve various risks and uncertainties because they relate to future events and circumstances beyond Western's control.

More particularly, this document contains statements concerning: the completion of the transactions contemplated by the Definitive Agreement (as defined in the March 22, 2024 news release), including the completion of the Transaction, the appointment of the new CEO and additional directors; the use of proceeds from the Transaction; the future strategy and focus for Western; and future acquisitions and growth opportunities. Readers are cautioned that the foregoing list of factors should not be construed as exhaustive.

The forward-looking statements are based on certain key expectations and assumptions made by Western, including expectations and assumptions concerning the ability of Western to successfully implement its strategic plans and initiatives, the timing of receipt of required shareholder and regulatory approvals (including TSXV approval) and third party consents and the satisfaction of other conditions to the completion of the Transaction.

Although Western believes that the expectations and assumptions on which the forward-looking statements made by Western are based are reasonable, undue reliance should not be placed on the forward-looking statements because no assurance can be provided that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks that required shareholder, TSXV, regulatory and third party approvals and consents are not obtained on terms satisfactory to the parties within the timelines provided for in the Definitive Agreement, or at all, and risks that other conditions to the completion of the Transaction are not satisfied on the timelines set forth in the Definitive Agreement or at all, the ability of management to execute its business strategy, and the impact of general economic conditions in Canada and the United States. A description of additional assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in Western's disclosure documents on the SEDAR+ website at www.sedarplus.ca.

The forward-looking statements contained in this news release are made as of the date hereof and Western undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The rights issued under any rights offering and underlying Single Voting Shares and the Multiple Voting Shares (as defined in the March 22, 2024 news release) being offered have not been, nor will they be, registered under the 1933 Act or under any U.S. state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act, as amended, and applicable state securities laws.

"Neither the TSX Venture Exchange nor its Regulatory Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."