Ms. Linda McCurdy reports

K-BRO LINEN INC. ADOPTS SHAREHOLDER RIGHTS PLAN

K-Bro Linen Inc. has approved the adoption of a shareholder rights plan pursuant to a shareholder rights plan agreement entered into with AST Trust Company (Canada), as rights agent, dated April 23, 2019. The rights plan is similar to shareholder rights plans adopted by other public companies.

The rights plan has been conditionally accepted by the Toronto Stock Exchange. While the rights plan is effective as of the effective date, it is subject to shareholder ratification within six months of its adoption. The rights plan will be submitted for ratification by the corporation's shareholders at the upcoming 2019 annual and special meeting of the corporation's shareholders. If the rights plan is not ratified by the corporation's shareholders, it will automatically terminate. If ratified by shareholders, the rights plan will remain in effect until the close of the third annual meeting of shareholders following the meeting.

The rights plan has been adopted to ensure, to the extent possible, that all shareholders of the corporation are treated fairly in connection with any unsolicited takeover bid or other acquisition of control of the corporation. The rights plan is not being adopted in response to any specific proposal to acquire control of the corporation, and the board is not aware of any pending or threatened takeover bid for the corporation.

At the close of business on the effective date, one right will be issued and attached to each common share outstanding at that time. A right will also be attached to each common share issued after the effective date. The issuance of the rights will not change the manner in which shareholders trade their common shares. Subject to the terms of the rights plan, the rights issued under the rights plan become exercisable only if a person, together with certain related persons, acquires or announces its intention to acquire 20 per cent or more of the common shares without complying with the "permitted bid" provisions of the rights plan. Upon the acquisition by an acquiring person of 20 per cent or more of the common shares, each right would, upon exercise, entitle a rights holder, other than the acquiring person and certain related persons, to purchase common shares of the corporation at a 50-per-cent discount to the market price at the time. At any time prior to the rights becoming exercisable, the board may waive the operation of the rights plan with respect to certain events before they occur.

Under the rights plan, a permitted bid is a takeover bid made in compliance with the Canadian takeover bid regime. Specifically, a permitted bid is a takeover bid that is made to all shareholders, that is open for 105 days (or such shorter period as is permitted under the bid regime) and that contains certain conditions, including that no shares will be taken up and paid for unless 50 per cent of the shares that are held by independent shareholders are tendered to the takeover bid.

The description of the rights plan in this press release is qualified in its entirety by the full text of the rights plan, which will be made available shortly under the corporation's profile on SEDAR.

About K-Bro Linen Inc.

K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada.

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