REALnorth Opportunities Fund Announces Agreements to Sell Assets and Intention to Wind-up the Fund

VANCOUVER, BC, Jan. 24, 2024 /CNW/ - REALnorth Opportunities Fund (the "Fund") announced today that it has entered into separate definitive agreements (collectively, the "Sale Agreements") for the sale of its remaining properties, all of which are located in and around Fort St. John, British Columbia. The Fund also announced today that following the closing of the transactions contemplated by the Sale Agreements, it plans to wind-up the Fund and return the remaining capital of the Fund to its unitholders after satisfying its outstanding liabilities. The Fund intends to call a special meeting of unitholders of the Fund on or about March 21, 2024 (the "Meeting") where unitholders will be asked to approve the transactions contemplated by the Sale Agreements as well as the termination of the Fund in accordance with the Fund's declaration of trust (the "Declaration of Trust").

Despite continued economic activity in British Columbia's north, including significant natural gas exploration and development and the construction of major projects such as the Site C dam, high interest rates and other macroeconomic forces have created downward pressure on real estate values and cooled transactional demand, particularly on bare land development assets such as those held by the Fund. These negative market factors are persisting and raise concerns for the trustees, management and unitholders alike that the economic prospects for the Fund will not change, at least in the short term. Meanwhile, the Fund continues to incur significant ongoing administrative and other costs, including costs associated with being a reporting issuer under applicable Canadian securities laws, that are eroding the Fund's value and will likely lead to liquidity issues in the future. Additionally, over the past several years management has received numerous requests from unitholders and investment advisors to take action to sell the Fund's assets and wind-up the investment. Accordingly, following careful review of the prospects of the Fund, its trustees and management believe that the transactions contemplated by the Sale Agreements as well as the termination of the Fund are the best option for the Fund and its unitholders as such actions will allow the Fund to realize the remaining value of its assets and provide liquidity to unitholders.

Garrison Landing Residential Property

The Fund, through certain of its subsidiaries, has agreed to sell its bare land residential properties located in Fort St. John, British Columbia (the "Garrison Landing Residential Property") for an aggregate purchase price of $2,705,000, excluding customary closing adjustments, pursuant to a purchase and sale agreement (the "Garrison Landing PSA"). The purchase price for the Garrison Landing Residential Property will be satisfied through a cash payment of $705,000 on closing (subject to customary closing adjustments) and through the issuance by the purchaser of up to a $2.0 million secured, interest-bearing vendor take back promissory note (the "Garrison VTB Note"). The purchaser of the Garrison Landing Residential Property may elect to dispense with or otherwise reduce the principal amount of the Garrison VTB Note by paying all or a greater portion of the purchase price in cash at closing. However, if the Garrison VTB Note is not fully dispensed with at closing, the minimum principal amount of the note is required to be $1.0 million. The closing of the transactions under the Garrison Landing PSA is subject to various customary closing conditions, as well as a condition in favour of the Fund's subsidiaries that the Fund's unitholders approve the transactions contemplated by the Garrison Landing PSA.

The Fund, through certain of its subsidiaries, has also entered into a non-binding letter of intent with an arm's length third-party to sell the Garrison VTB Note, if need be, at closing in order to secure additional liquidity for the Fund's unitholders and allow for the timely wind-up of the Fund (the "VTB Note LOI"). Pursuant to the terms of the VTB Note LOI, if the purchaser of the Garrison Landing Residential Property elects to pay the entirety of the purchase price in cash in lieu of issuing the Garrison VTB Note, the Fund, through its relevant subsidiaries, will be required to pay a $25,000 break fee to the proposed purchaser of the Garrison VTB Note. The transactions contemplated by the VTB Note LOI remain subject to the negotiation and execution of a definitive note purchase agreement and other customary closing conditions.

The Fund, through certain of its subsidiaries, has agreed to sell its bare industrial zoned land located in Fort St. John, British Columbia (the "FSJ Industrial Property") for an aggregate purchase price of $1,900,000, excluding customary closing adjustments, pursuant to a purchase and sale agreement (the "FSJ Industrial PSA"). The FSJ Industrial Property is held through a joint venture entity in respect of which the Fund has an indirect 87.5% ownership interest. The purchase price for the FSJ Industrial Property is payable in cash at closing. The FSJ Industrial PSA includes a "go-shop" provision which allows the Fund's subsidiaries that own the FSJ Industrial Property to actively solicit alternative offers for the FSJ Industrial Property up to and including February 22, 2024. If an alternative offer is received that the Fund, through its subsidiaries, wishes to proceed with, such subsidiaries may terminate the FSJ Industrial PSA subject to the payment of a break fee of $25,000. The closing of the transactions under the FSJ Industrial PSA is subject to various customary closing conditions, as well as a condition in favour of the Fund's subsidiaries that the Fund's unitholders approve the transactions contemplated by the FSJ Industrial PSA.

The Fund, through certain of its subsidiaries, has agreed to sell its indirect 50% interest in bare land located in Fort St. John, British Columbia that is within the agricultural land reserve (the "Aurora Acreage Property"), for an aggregate purchase price of $1,080,000, excluding customary closing adjustments, pursuant to a securities purchase agreement (the "Aurora Purchase Agreement") entered into with a group of investors (collectively, the "Aurora Purchasers") that include, among others, entities controlled by Stephen Evans (a trustee and acting Chief Financial Officer of the Fund), Brian Canfield (acting Chief Executive Officer of the Fund and a director of certain of the Fund's subsidiaries), James Redekop (a director of certain of the Fund's subsidiaries), and Randy Cockrill (acting Vice President of the Fund and a director and officer of certain of the Fund's subsidiaries). The Aurora Acreage Property is held through a joint venture entity in respect of which the Fund has an indirect 50% ownership interest, with the remaining 50% being owned by the Aurora Purchasers. The purchase price under the Aurora Purchase Agreement is payable in cash at closing.

The Aurora Purchase Agreement includes a "go-shop" provision which allows the joint venture entity that owns the Aurora Acreage Property to actively solicit alternative offers for the entirety of Aurora Acreage Property up to and including February 22, 2024. If an alternative offer is received by the joint venture entity during such go-shop period that constitutes a superior proposal in accordance with the terms of the Aurora Purchase Agreement, the joint venture entity may proceed with such transaction and terminate the Aurora Purchase Agreement, unless the Aurora Purchasers exercise their right to match any such offer. There is no break fee or other fee payable to the Aurora Purchasers in the event a superior proposal is consummated and the Aurora Purchase Agreement is terminated in connection therewith.

If completed, the transactions contemplated by the Aurora Purchase Agreement would constitute a "related party transaction" as that term is defined in Multilateral Instrument 61-101 ? Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The transactions contemplated by the Aurora Purchase Agreement are exempt from the formal valuation requirements under MI 61-101 but are subject to minority approval at the Meeting in accordance with MI 61-101. The Aurora Purchase Agreement was negotiated on behalf of the Fund by its independent trustees (the "Independent Trustees") with the assistance of independent legal counsel retained by the Independent Trustees.

After considering the recommendations of the Independent Trustees, the Aurora Purchase Agreement was approved by the trustees of the Fund (with Stephen Evans abstaining given an entity he controls is one of the Aurora Purchasers). The trustees of the Fund also approved the Garrison PSA (with Stephen Evans abstaining given an entity in respect of which he is a shareholder has entered into certain commercial arrangements with the purchaser of the Garrison Residential Property) and FSJ Industrial PSA (with William Randall abstaining given he is acting as the licensed real estate agent in respect of such sale). In making such approvals, the trustees of the Fund have determined that the transactions contemplated by the Sale Agreements are in the best interests of the Fund and its unitholders and recommend that unitholders vote in favour of such transactions at the Meeting.

The completion of the transactions contemplated by the Sale Agreements will allow for the wind-up of the Fund and the return to unitholders of the net proceeds received from such transactions after the payment of all liabilities, taxes and transaction related other expenses of the Fund and its direct and indirect subsidiaries (collectively, the "Obligations").

At the Meeting, unitholders will also be asked to pass a special resolution to approve the termination of the Fund in accordance with the Declaration of Trust. The termination of the Fund would constitute a "business combination" as that term is defined in MI 61-101. The termination of the Fund is exempt from the formal valuation requirements under MI 61-101 but is subject to minority approval at the Meeting in accordance with MI 61-101.

There is no guarantee as to the amount of distributions to unitholders following the completion of the transactions under the Sale Agreements and the approval of the termination of the Fund. A decision in respect of the timing and the amount of any distribution will be made by the trustees of the Fund following completion of the transactions contemplated under the Sale Agreements (assuming such agreements and the termination of the Fund are approved at the Meeting).

In accordance with the Declaration of Trust, the trustees have approved the estimated net asset value of the fund as of December 31, 2023 to be $229.00 per unit. The estimated net asset value is based on various assumptions made by the trustees with input from management, including that the transactions under the Sale Agreements will be completed without modification and that there will be no superior alternative offer under the "go-shop" clauses contained in either of the FSJ Industrial PSA or the Aurora Purchase Agreement.

If unitholders approve the transactions contemplated by the Sale Agreements and the termination of the Fund at the Meeting, the Fund intends to apply to cease to be a reporting issuer so as to be relieved of further continuous disclosure obligations under applicable Canadian securities laws following closing of the transactions contemplated by the Sale Agreements.

Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable Canadian securities laws, which information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information. Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such information includes, without limitation, statements with respect to: the expected date of the Meeting and expected record date for determining unitholders of the Fund entitled to receive notice of and attend and vote at the Meeting; the expected contents of the Information Circular; the transactions contemplated by the Sale Agreements; whether the Garrison VTB Note will be issued and the principal amount thereof; the anticipated execution of a definitive note purchase agreement as contemplated by the VTB Note LOI and terms and timing thereof; the estimated timing of the payment of distributions to unitholders; the repayment of all of the Fund's Obligations; the Fund's intention to make an application to cease to be a reporting issuer; and the process and timing of ceasing to be a reporting issuer; the trustees' and management's concerns that the economic prospects of the Fund will not change, at least in the short term; the trustees' and management's belief that the ongoing administrative and other costs of the Fund will likely lead to liquidity issues in the future; and the trustees' and management's belief that the transactions contemplated by the Sale Agreements as well as the termination of the Fund are the best option for the Fund and its unitholders as such actions will allow the Fund to realize the remaining value of its assets and provide liquidity to unitholders.

Although the forward-looking information contained in this news release is based upon what the Fund's trustees and management believe to be reasonable assumptions, the Fund cannot assure unitholders that actual results will be consistent with such information. Certain key expectations and assumptions made by the Fund and reflected in the forward-looking information in this news release include without limitation: the sale of the Garrison Landing Residential Property, the FSJ Industrial Property and the Aurora Acreage Property under each of the respective Sale Agreements will be completed in accordance with the terms of the Sale Agreements and with the timing currently anticipated; if the Garrison VTB Note is issued, the sale of the Garrison VTB Note under a definitive note purchase agreement as contemplated by the VTB Note LOI will be completed in accordance with the terms of the definitive note purchase agreement and with the timing currently anticipated; all conditions under each of the Sale Agreements and, if applicable, a definitive note purchase agreement as contemplated by the VTB Note LOI, to the completion of the transactions contemplated thereby will be obtained, including the approval of the transactions by the Fund's unitholders and the timely receipt of any and all regulatory approvals and third party consents to the transactions; there will be no material negative purchase price adjustments under the Sale Agreements; there will be no intervening events that will materially reduce the amount funds available for distribution to unitholders of the Fund following completion of the transactions under each of the Sale Agreements, the definitive note purchase agreement (if applicable), or that delay the distribution of such funds; interest rates for mortgages and financing generally in Canada will not materially change; the impact of the current economic climate in Canada on the Fund's operations and properties will remain consistent with the Fund's current expectations, and the supply and demand for the Fund's properties and the related impact on the pricing on such properties will remain consistent with the Fund's current expectations and management's assessment of future plans and operations.

Forward-looking information reflects current expectations of management regarding future events and operating performance as of the date of this news release. Such information involves significant risks and uncertainties, 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. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, including, without limitation: the risk that the transactions contemplated by each of the Sale Agreements and, if applicable, the VTB Note LOI, will not be completed within the time frames contemplated, on terms previously announced, or at all; the risk that conditions precedent to the closing of the transactions contemplated by each of the Sale Agreements, including the receipt of unitholder approval at the Meeting and any applicable regulatory approval and third party consents, may not be satisfied or waived; the risk that the Fund may be required to pay the break fee of $25,000 under the VTB Note LOI; the risk that the Fund may be required to pay the break fee of $25,000 under the FSJ Industrial PSA, regardless of whether any transaction contemplated by an alternative offer in fact closes; the risk that the Fund will not be permitted to terminate either or both of the FSJ Industrial PSA and the Aurora Purchase Agreement by their respective terms if a superior alternative transaction arises; the risk that the Fund will not be permitted to terminate the VTB Note LOI in accordance with its terms if the Garrison VTB Note is not issued; the risk that material negative purchase price adjustments arise under the terms of any of the Sale Agreements; the risk that the net proceeds of the transactions contemplated by the Sale Agreements will be less than estimated and expenses of the Fund will exceed the amount estimated by the Fund; the risk that distributions to unitholders will be delayed; and the risk that distributions to unitholders will be less than anticipated. Should any of the foregoing risks materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance, activities or achievements could vary materially from those expressed or implied by any forward-looking information contained in this news release. Readers are cautioned that the foregoing list of risks is not exhaustive. Additional information on these and other risk factors that could affect the operations or financial results of the Fund can be found under "Risks and Uncertainties" in the Fund's Management's Discussion & Analysis dated November 27, 2023 for the period ended September 30, 2023, which is currently available on SEDAR+ (www.sedarplus.ca). In addition, the Fund encourages all unitholders to read the Information Circular, once available, as it will include a more detailed discussion of the material risks and uncertainties with respect to the proposed transactions under each of the Sale Agreements, the VTB Note LOI and related wind-up of the Fund, which is expected to follow the closing of the transactions contemplated by the Sale Agreements and, if applicable, the definitive note purchase agreement.

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information reflects management's current beliefs and is based on information currently available to the Fund. The forward-looking information is made as of the date of this news release and the Fund assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

The terms and conditions of the transaction contemplated by the Sale Agreements, as well as details of the estimated distributions to unitholders, will be disclosed in more detail in the Fund's information circular (the "Information Circular") that will be mailed to unitholders as of the record date expected to be on or about February 2, 2024 for the Meeting.

Copies of the Sale Agreements and the Information Circular for the Meeting will be filed with Canadian securities regulators and will be available under the Fund's profile on SEDAR+ at www.sedarplus.ca in due course. Unitholders are urged to read the Information Circular and the other relevant materials when they become available because such materials will contain important information about the transactions described in this news release.

Additional information relating to the Fund and other public filings, are available on SEDAR+ at www.sedarplus.ca.

SOURCE REALnorth Opportunities Fund