Dr. Alex MacGregor reports

KGIC ANNOUNCES AGREEMENT IN PRINCIPLE WITH BANK OF MONTREAL

KGIC Inc. has reached an agreement in principle with the company's senior lender, Bank of Montreal, to immediately remove the company's debt facilities from forbearance for the purposes of converting the facilities into a term loan to be repaid over three years on terms acceptable to the company and BMO.

In addition, the company is pleased to announce that it is presently undertaking a proposed non-brokered preferred share financing to raise gross proceeds of up to $3.0-million to be completed in multiple stages, with the first stage intended to close prior to Dec. 31, 2015. Additional details regarding the offering will be provided once key terms and conditions are determined.

"These arrangements, once completed, will represent a significant step in the restructuring of the company and will be, in the belief of new management and the directors of the company, a building block towards financial stability for the company and its stakeholders. In addition, the stabilization of the company's senior debt will give the company's new management the appropriate time and resources to implement the changes they believe are needed to restore the company to profitability," said Geoffrey Smith, the recently appointed chairman of KGIC.

The company and BMO have agreed to work together to formalize the term loan as soon as possible. However, the company cautions investors that there is no assurance that an agreement regarding the term loan, or the offering, will be completed on terms acceptable to the company or at all.

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