ViveRE Communities Inc. Announces Proposed Acquisition of 124 Units and Conversion of Convertible Debentures

/NOT FOR DISTRIBUTION TO US WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

HALIFAX, Jan. 30, 2020 /CNW/ - ViveRE Communities Inc. (TSXV: VCOM) ("ViveRE" or the "Company") announces that it has entered into an exclusive letter of intent to acquire a 100% interest in three multi-unit residential properties (the "Properties" or the "Acquisition") located in Moncton, New Brunswick. The Properties are located at 150 Lewisville Road (55 units), 154 Lewisville Road (34 units) and 39 Pleasant Street (35 units), and are owned by Denaco Group Ltd. ("Denaco").

Transaction

ViveRE will acquire the Properties for a purchase price of $13.5 million, subject to customary adjustments at closing. ViveRE will satisfy the purchase price as follows: (i) the payment to Denaco of a refundable deposit of $50,000; (ii) the issuance to Denaco of 2,083,333 common shares of ViveRE at a price of $0.24 per share representing consideration of $500,000; (iii) at the option of ViveRE, the assumption by ViveRE of any existing mortgage debt encumbering the Properties; and (iv) the balance paid to Denaco in cash and the placing of a collateral mortgage in the maximum amount of $9.75 million.  For the period ended August 31, 2019 the annual total revenue of the Properties was $1,366,000 (unaudited) and total operating expenses were $608,000 (unaudited). No finders fee will be paid on the Acquisition.

Concurrent with the Acquisition, Denis Arsenault, the owner of Denaco, or an entity controlled by Denis Arsenault ("Arsenault"), will subscribe for; (i) 7,291,667 common shares of ViveRE, such shares to be issued at $0.24 per share for aggregate gross proceeds of $1,750,000; (ii) an unsecured convertible debenture ("Debenture") in the principal amount of $1,750,000; and (iii) 7,000,000 common share purchase warrants ("Warrants"), having a 3-year term and an exercise price of $0.27 per common share. The Debenture will have a 2-year term, bear interest at the rate 7% per annum, to be paid annually, and will be convertible into 6,481,481 common shares of ViveRE at a price of $0.27 per common share, assuming full conversion. This subscription is expected to close at least three business days in advance of the closing of the Acquisition.

Upon completion of the Acquisition and subscription, both of which are subject to Exchange acceptance, Arsenault, directly or indirectly, would own a total of 9,375,000 common shares of ViveRE representing 14.1% ownership of the issued number of shares assuming the maximum subscription and the conversion of the 2018 convertible debentures (see below). On a fully diluted basis post Acquisition and presuming Arsenault converted the Debenture into 6,481,481 common shares of the Issuer and also exercised his Warrants for 7,000,000 common shares of the Issuer, then Arsenault would own 22,856,481 common shares of the Issuer representing 28.6% ownership of all of the issued and outstanding shares of the Issuer. As a condition of the conversion feature of the Debenture and the exercise of the Warrants, and as required by the policies of the Exchange, management will seek disinterested shareholder approval in respect of providing approval for Arsenault to exercise his conversion rights under the Debenture and his exercise rights under the Warrants, and thereby becoming a control person of the Company as defined under applicable law and the policies of the Exchange.

The Acquisition and concurrent subscription are subject to TSX Venture Exchange (the "Exchange") approval. 

2018 Convertible Debentures

As previously announced on August 22, 2018, the Company completed the private placement of Series A and Series B convertible debentures (the "2018 Debentures") for aggregate gross proceeds of $1,300,000. The 2018 Debentures mature on August 22, 2020 and bear an interest rate of 12%, payable half in shares and half in cash. The 2018 Debentures are convertible into units of the Company at a price of $0.15 per unit, such units consisting of one common share in the capital of the Company (the "Common Shares") and one Common Share purchase warrant ("Warrant"), each such Warrant entitling the holder to acquire one Common Share for a period of 24 months from the date of issuance of the Warrant at a price of $0.175 per Common Share. Concurrent with the completion of the Acquisition and related subscription disclosed above, the holders of the 2018 Debentures have agreed to convert the outstanding principal of $1,300,000 into 8,666,666 units, each unit to consist of one common share and 0.75 warrant, each full warrant entitling the holder to acquire one common share at a price of $0.175 per common share for a period of two years following issuance of the warrants, such conversion terms being the terms of the conversion set out in the applicable debenture excepting the number of warrants are reduced by 25%.

Pursuant to the 2018 Debentures, 91,955 shares of the Corporation were granted to 2018 Debenture holders at a price of $0.165 per share for the period ending November 1, 2018 to pay interest owed on the 2018 Debentures. The debt settlement for interest due on the 2018 Convertible Debentures for the periods ending on April 30, 2019, July 31, 2019 and October 31, 2019 were previously disclosed by the Corporation in press releases dated May 1, 2019, August 1, 2019 and December 3, 2019.

Concurrent Ongoing Private Placement

As previously announced, ViveRE Communities Inc. is undertaking a non-brokered private placement financing in the form of Units, comprised of 50% common shares at a price of $0.24 per common share and 50% convertible debenture, bearing interest at 7%, maturing in 2 years, convertible to common shares of ViveRE at a price of $0.27 per common share. The Corporation will raise up to $1,000,000 of Tier 1 Units which will be offered in amounts of $25,000 per Unit. The Corporation will raise up to $3,000,000 of Tier 2 Units which will be offered in amounts of $250,000 per unit. Each $250,000 Tier 2 Unit purchased will also include 500,000 share purchase warrants, exercisable at a common share price of $0.27 per common share of ViveRE for a period of two years from issuance. The proceeds from these Private Placements will be used to fund the previously announced acquisition of 75 Emma Street, Oshawa, Ontario (the "Emma Street Property") and for general working capital. The price reservation for this proposed $4,000,000 Private Placement will only apply to proceeds used to fund the acquisition of the Emma Street Property. These Private Placements are subject to Exchange approval.

Company

ViveRE Communities Inc. (TSX.V: VCOM) (the "Company") continues to execute its plans to acquire recently built or refurbished, highly leased multi-residential properties in bedroom communities across Canada. The Company aims to satisfy the needs of the newly emerging 55+ resident. The demographic that has changed the world is now changing the way residential rental apartments cater to their requirements. Their desire for community, along with service and convenience amenities has led to the emergence of the Naturally Occurring Retirement Community or "NORC". Apartments are the next "home", after years of owning they look forward to the carefree lifestyle provided through renting in a community of their peers. ViveRE Communities Inc. intends to consolidate this emerging market niche. After the acquisitions of 41 and 50 Noel Avenue, Saint John, NB, and 542 and 550 Ryan Street, Moncton NB, the Company has developed a robust pipeline of qualified properties for potential acquisition. Screening properties identified to match the criteria set out in the Company business plan (proximity to healthcare, amenities, services and shopping), management has identified a number of attractive targets for consideration by the Board. The Company intends to acquire in excess of 400 units in the coming twelve months.

On behalf of the Board of Directors of ViveRE Communities Inc.

"Mike Anaka"
Chief Executive Officer  

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

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

Forward-Looking Statements

This news release contains forward-looking statements relating to the future operations of ViveRE and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the future plans and objectives of ViveRE Communities Inc, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from ViveRE Communities Inc.'s expectations include other risks detailed from time to time in the filings made by ViveRE Communities Inc. with securities regulators.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of ViveRE Communities Inc. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and ViveRE Communities Inc. will only update or revise publicly the included forward-looking statements as expressly required by Canadian securities law.

SOURCE ViveRE Communities Inc.