Mr. Rafi Hazan reports

KNOWLTON CAPITAL PROVIDES UPDATE ON PROPOSED REVERSE TAKE-OVER WITH LENI GAS CUBA LIMITED

Knowlton Capital Inc. has provided an update on a proposed reverse takeover of Knowlton by Leni Gas Cuba Ltd. As previously announced, Knowlton entered into a letter of intent dated April 28, 2016, with LGC with respect to the reverse takeover, which will constitute a reverse takeover for Knowlton under the policies of the TSX Venture Exchange. LGC was incorporated under the laws of the British Virgin Islands (BVI) on March 3, 2015, as an investment vehicle for the purpose of making investments and/or acquisitions in Cuba. LGC has its corporate office in London, England, and has been listed since November, 2015, on the ISDX Growth Market under the stock symbol ISDX:CUBA. LGC and Knowlton are at arm's length.

Knowlton, which was incorporated under the laws of Canada, is listed on the NEX board of the TSX-V. Since 2013, Knowlton's main activity has been to identify and evaluate businesses or assets with the aim of completing a transaction to reactivate the company.

Proposed reverse takeover

The reverse takeover will involve the acquisition by Knowlton of all of the issued and outstanding shares of LGC from its shareholders. In order to effect the reverse takeover, Knowlton and LGC have entered into an arrangement agreement and LGC and its shareholders will effect a scheme of arrangement under the laws of the BVI, subject to court approval. The arrangement agreement between LGC and Knowlton provides that the reverse takeover will be accomplished through, among other things:

• The consolidation by Knowlton of its 46,575,500 issued and outstanding common shares on the basis of one common share for every 1.27795529 common shares issued and outstanding, so that after the Knowlton share consolidation, 36,445,328 Knowlton shares will be issued and outstanding;
• The acquisition by Knowlton of 100 per cent of the issued and outstanding shares of LGC through the issuance by Knowlton of an aggregate of 197.6 million common shares to the shareholders of LGC in exchange for their shares of LGC, on the basis of one Knowlton share (postconsolidation), at a deemed price of 12.77 cents per share, for every 2.5 shares of LGC;
• The change of the corporate name of Knowlton to LGC Capital Ltd., or other similar name, so as to reflect the reverse takeover;
• The conversion of LGC's 95 million outstanding stock options and 4.94 million share purchase warrants into stock options and warrants of LGC Capital on the same basis as set out above (one for every 2.5), with appropriate adjustments in their respective exercise prices;
• The appointment to the board of directors of LGC Capital of two nominees of LGC (expected to be David Lenigas and Anthony Samaha), who will join three of the current directors of Knowlton (Mazen Haddad, Guy Charette and Rafi Hazan) and one nominee for election as a director of Knowlton (Sebastien Bellefleur) on the board of directors of LGC Capital;
• The appointment of a new management team for LGC Capital, comprising the LGC management team.

At the closing of the reverse takeover, there will be 234,045,328 common shares of LGC Capital issued and outstanding, of which the current shareholders of LGC will hold an aggregate of 197.6 million shares, representing 84.43 per cent of LGC Capital's outstanding shares, and the current shareholders of Knowlton will hold an aggregate of 36,445,328 shares, representing 15.57 per cent of LGC Capital's outstanding shares. LGC Capital will own 100 per cent of the shares of LGC.

Upon completion of the reverse takeover, LGC Capital intends to be listed on the TSX-V as a tier-two investment issuer and will carry on business as an investment company.

The business

LGC's objective is to acquire stakes in one or more listed or unlisted projects, businesses, joint ventures, production agreements or companies (in whole or in part), creating a platform for possible further acquisitions in sectors where the opportunity exists to create value for LGC's shareholders. It is intended that LGC will invest and acquire an appropriate percentage holding, possibly including management of a company or companies and businesses with part or whole connections or relationships to Cuba's oil and gas, agribusiness, manufacturing, industrial, transport and logistics, biotech, construction, utilities, business services, support services, retail, and/or tourism sectors.

In line with its investment policy, LGC currently holds the four investments and has entered into the strategic alliance and joint ventures. Details as follows.

Petro Australis Ltd.

LGC owns approximately 15.14 per cent of the outstanding shares of Petro Australis Ltd., an unlisted public company incorporated in Australia. Petro Australis's principal activity is sourcing oil and gas opportunities in the Americas with a focus on Latin America (including Cuba). Petro Australis holds a conditional 40-per-cent back-in option to the onshore oil block, Block 9 PSC, in Cuba.

MEO Australia Ltd.

In February, 2016, LGC made a strategic investment in Cuban oil explorer MEO Australia Ltd., a company incorporated under the laws of Australia and listed on the Australian Securities Exchange, as a result of which LGC became the single largest shareholder of MEO, with a 15.8-per-cent interest. MEO is prequalified as a foreign onshore and shallow water operator in Cuba, and was awarded a 100-per-cent interest in the 2,380-square-kilometre onshore oil block, Block 9 PSC, in Cuba, in September, 2015. As LGC also holds a 15.14-per-cent interest in Petro Australis, as noted above, which holds a conditional 40-per-cent back-in option to Block 9 PSC, the investment by LGC in MEO significantly increased LGC's underlying interest in Block 9 PSC.

Under the placement agreement, MEO issued 140,716,573 shares to LGC at an issue price of one Australian cent per share, payable in cash, totalling $1.4-million Australian (730,000 British pounds sterling), to be used for Block 9 oil exploration and assessment.

Travelwelcome Ltd. and the InCloud9 Group

In September, 2015, LGC acquired 40 per cent of the issued share capital of Travelwelcome Ltd., a private company incorporated in the United Kingdom. Through its representative office in Havana, Travelwelcome provides the services of a specialist Cuban ground handler which works with other specialist travel companies around the world to assist with tailor-made trips to Cuba for their clients. This includes booking local hotels, transport, local tours and guides, as well as other specialist activities such as art tours, horse riding, deep-sea fishing, fly fishing and scuba diving. In addition, Travelwelcome has the capacity to assist with the organization of special events, such as conferences, weddings and group activities around Cuban festivals such as the Cigar Festival and the Film Festival.

In November, 2015, LGC announced that it had finalized arrangements for Travelwelcome to combine with the Cuban music, TV and film industry specialist InCloud9 Group in Havana. LGC's interest in the combined Travelwelcome and InCloud9 Group remains at 40 per cent.

Cuba Professional Inc.

In March, 2016, LGC secured a 49-per-cent equity interest in Cuba Professionals Inc., to be paid in staged instalments totalling 180,000 euros over a nine-month period. Cuba Professionals is a company operating in Cuba that specializes in providing human resources, mainly in the field of culture, as well as consulting services. Established in 2009, the Panama-registered Cuba Professionals has offices in Havana and Spain.

The financing provided by LGC will enable Cuba Professionals to grow significantly by assisting in establishing larger offices in Havana and employing more specialized management staff in the entertainment and consultancy sectors.

Cuba Professionals contracts Cuban artists in the field of music, dance, circus and fully choreographed productions to clients around the world, and provides logistical support and production services for visiting companies and individuals, as well as consultancy services and business analysis to foreign entities exploring the possibility of investing and conducting business within Cuba.

Strategic alliance -- Rushmans Ltd.

LGC has formed a strategic alliance with Rushmans Ltd., a company incorporated in England, to provide in-country consultancy advice. Rushmans will provide a wide range of services to assist LGC with identifying investment and acquisition opportunities in Cuba's fast-developing energy, agribusiness, manufacturing, commercial and tourism sectors. Rushmans has significant experience in Cuba and will service the strategic alliance through senior personnel that have been based in Havana for more than 20 years.

In April, 2016, LGC announced that LGC and Rushmans had formalized a 50/50 joint venture to explore the opportunities available for international entities to participate in the development financing for Cuban sport. Under the terms of the joint venture agreement, Rushmans will grant the Rushmans JV an exclusive licence to use the Rushmans brand and intellectual property in respect to Cuban sporting opportunities, in consideration for LGC paying 100,000 pounds sterling. LGC will finance the Rushmans JV projects accepted by LGC, as well as provide an initial 40,000 pounds sterling in working capital for the Rushmans JV, with the financing by LGC first deducted from the Rushmans JV revenue and repaid to LGC before any pro rata distributions to the Rushmans JV parties.

Joint venture with Groombridge Trading Corp.

In November, 2015, LGC entered into an agreement with Cuban-centric trading company Groombridge Trading Corp. to form a 50/50 joint venture designed to expand GTC's existing business of supplying products, machinery and equipment to the fast-growing Cuban tourism sector and exporting agricultural products from Cuba.

GTC, established in 2013, is a Canadian corporation that is approved to trade in Cuba by the Cuban Ministry of Foreign Trade and Investment and the Ministry of Agriculture, and is further authorized to trade with other Cuban government entities.

The GTC JV assists GTC with its existing order book of imports for the hotel and tourism sectors and will become a financial partner in new business moving forward. The GTC JV has an exclusive, first right of refusal to participate on a deal-by-deal 50/50 basis in any current and new transactions originated and operated by GTC. In addition to growing GTC's current trading activities, the GTC JV also works with GTC to develop a number of agricultural projects and initiatives currently under negotiation in Cuba and assist with new export orders of agricultural products to Europe and Canada.

Joint venture with Commercial Funded Solar Ltd.

In May, 2016, LGC entered into an agreement with Commercial Funded Solar Ltd., a United Kingdom solar power and storage specialist designed to assess the potential for installing and operating renewable energy and hybrid power solutions (solar power, energy storage and integrated power management systems) in Cuba.

CFS is a multinational company with operations in the U.K., Africa and South America, specializing in the installation of medium-sized, commercially financed renewable power and storage systems of between 30 kilowatts and one megawatt each.

CFS is currently focused on delivering a large number of investor-financed commercial systems to academy and school groups in the U.K. public and private education sectors, as well as providing a commercially financed model for investors wanting a higher return, short-term investment (one to three years) in countries with supportive governments with immediate requirements to replace diesel generation, such as Cuba.

CFS and LGC intend to lead the development and construction of each project with the financing coming from external investors. Under the terms of the agreement, CFS and LGC will share, on a 50/50 basis, the development, financing and construction revenues for each renewable power plant built, and share, on a 75/25, basis the 10-to-20-year operational contracts for all the systems.

On May 17, 2016, the Bank of Canada noon exchange rate was one pound sterling to $1.8661.

Directors and officers of LGC Capital

If the reverse takeover is successfully completed, it is expected that the board of directors of LGC Capital will comprise Mr. Lenigas and Mr. Samaha, each of whom is currently a director of LGC; Mr. Haddad, Mr. Charette and Mr. Hazan, each of whom is currently a director of Knowlton; and Mr. Bellefleur, a nominee for election as a director of Knowlton. It is expected that the executive management of LGC Capital will comprise LGC's executive management team, and that the officers of LGC Capital will be Mr. Lenigas (co-chairman), Mr. Haddad (co-chairman), Mr. Samaha (chief financial officer) and Mr. Hazan (secretary).

The following are brief resumes of the proposed directors and executive officers of LGC Capital.

David Lenigas, co-chairman and director

Mr. Lenigas has extensive experience operating in global public markets having served in a senior executive capacity on many public company boards. He served as the executive chairman of Rare Earth Minerals PLC until December, 2015, and was responsible for the company's significant involvement in the discovery of the Sonora lithium project in northern Mexico with its joint venture partner Bacanora Minerals Ltd. Mr. Lenigas also served as executive chairman of the London-main-board-listed Lonrho PLC for six years until September, 2012, and was responsible for its expansion into more than 17 countries in Africa in sectors covering agriculture, infrastructure, hotels, IT and aviation. In addition, he served as the executive chairman of LGO Energy PLC, leading the company from its creation as an investment company through a series of acquisitions (including a reverse takeover), acquiring projects in the Gulf of Mexico, Malta, Spain and Trinidad. Mr. Lenigas identified the investment opportunity in Trinidad for LGO Energy and then built a management team to assist him in negotiating the terms of the investment with the local Trinidadian partners.

Mr. Lenigas holds a bachelor of applied science (mining engineering) with distinction from Curtin University's Western Australian Kalgoorlie School of Mines, and also holds an unrestricted first-class mine manager's certificate from the Western Australian Government.

Mazen Haddad, co-chairman and director

Mr. Haddad is a private investor and is currently the chairman, president and chief executive officer of Knowlton. Mr. Haddad holds a BA degree in economics from Emory University of Atlanta, Ga. Mr. Haddad is interim president and CEO and a director of Argex Titanium Inc., a company listed on the Toronto Stock Exchange. Mr. Haddad was president of Township Capital Inc., a private company whose primary role was to act as a consultant for Palos Capital Pool LP from 2006 to 2010. Prior to that, he served as chairman of SGI Properties Canada Fund LP, a private real estate investment trust (REIT) focused on residential real estate in Montreal, Que., and as vice-president of SGI Capital Corp., a private investment company.

Anthony Samaha, chief financial officer and director

Mr. Samaha is a chartered accountant (Australia) with more than 20 years of experience in accounting and corporate finance. Mr. Samaha worked for more than 10 years with international accounting firms, including Ernst & Young, principally in corporate finance, gaining significant experience in valuations, initial public offerings, independent expert reports, and mergers and acquisitions. Mr. Samaha's experience includes more than 10 years as finance director for several companies listed on AIM exchange; he also served as CFO of a TSX-V-listed resource company.

Guy Charette, director

Mr. Charette has been interim CEO of Carpathian Gold Inc., an exploration and development company listed on the TSX, since January, 2014. Prior thereto, Mr. Charette was executive VP, corporate, of Carpathian Gold, from September, 2010. Mr. Charette has been a director of Carpathian Gold since 2003. Mr. Charette has more than 25 years of experience in securities law with an emphasis on structuring resource industry transactions, as well as exploration and development finance in North America, Europe and in developing nations. Before joining Carpathian Gold, Mr. Charette worked as a lawyer and independent consultant.

Rafi Hazan, director and corporate secretary

Mr. Hazan is the CFO of Knowlton. Prior thereto, he co-founded Buzz Telecommunications Services Inc., a company listed on the TSX-V, and served as its chairman, president and CEO from 2006 until its privatization in 2012. Prior to that position, he co-founded and was the chief operating officer of Cartel International Inc., a company specialized in the distribution of prepaid calling cards and other services via electronic terminals (POS). He also co-developed one of the first prepaid switching platforms for the telephone calling card industry in Canada. For more than 15 years, Mr. Hazan held various positions in both engineering and management in the telecom industry at companies such as SR Telecom, NHC Communications Inc. and Israel Aircraft Industry. Mr. Hazan holds a bachelor of science degree from the Technion, Israel Institute of Technology in Aerospace and Telecommunications, an MBA from Paris-Dauphine University in France, and an MBA from Universite du Quebec in Montreal (UQAM). Mr. Hazan is a member of the Ordre des Ingenieurs du Quebec.

Sebastien Bellefleur, director

Mr. Bellefleur is a business lawyer in the Montreal office of Fasken Martineau DuMoulin LLP. Mr. Bellefleur specializes in business law, more specifically, in securities, mergers, acquisitions, corporate governance and mining law. He also helps set up financing, whether in the form of loans or equity financings. He has implemented a number of complex transactions on behalf of public and private corporations, such as the purchase, sale, financing and restructuring of businesses throughout Canada and abroad. He has represented issuers and brokers in connection with IPOs and other distributions of equity securities and debt instruments, as well as securities investments such as prospectus offerings and private placements. He has played a role in several corporate reorganizations, restructurings, takeover bids and proxy solicitations for shareholders' meetings. A major portion of his practice consists of advising public corporations of the obligations imposed on them by regulatory authorities, such as corporate governance, and assisting them in their interactions with the market and securities authorities. Over the course of his practice, he has also acquired specific expertise on legal issues relating to the mining industry. Mr. Bellefleur is regularly called upon to represent mining exploration companies, and advises them through the process of discovering deposits in Canada and elsewhere, as well as selling mines or bringing them into production. He is a specialist in the legal issues, with which mining exploration companies are often faced. Before joining Fasken Martineau in February, 2014, Mr. Bellefleur practiced with another national and international law firm, where he worked on many major financial transactions.

Principal shareholders of LGC

As noted above, LGC has been listed since November, 2015, on the ISDX Growth Market under the stock symbol ISDX: CUBA. Knowlton has been advised by LGC that, to its knowledge, the only persons who hold more than 10 per cent of LGC's outstanding shares are Mr. Lenigas, resident in Monaco, who holds 143,000,001 shares (28.94 per cent); Donald Strang, resident in the U.K., who holds 71 million shares (14.4 per cent); and JIM Nominees Ltd., which holds 62,575,000 shares (12.7 per cent). Mr. Lenigas and Mr. Strang are directors of LGC, and Mr. Lenigas is its executive chairman. To the knowledge of LGC, JIM Nominees is a nominee company incorporated under the laws of England and Wales, whose shares are indirectly owned by Jarvis Securities PLC, as reported in that company's financial statements for the year ended 2015.

Non-arm's-length parties

Jeremy Edelman, who holds 9,756,495 common shares of Knowlton, representing 20.95 per cent of its issued and outstanding shares, is a director of LGC and holds 40.5 million common shares of LGC, representing approximately 8.2 per cent of LGC's issued and outstanding shares. Mr. Edelman is therefore a non-arm's-length party as regards the reverse takeover.

Mr. Haddad, chairman, president and CEO of Knowlton, owns, directly or indirectly, an aggregate of 4.7 million common shares of LGC, representing approximately 0.95 per cent of LGC's issued and outstanding shares. Mr. Haddad is therefore a non-arm's-length party as regards the reverse takeover.

Change of corporate name

Knowlton's board of directors has approved a change of corporate name to LGC Capital Ltd., or other similar corporate name, to reflect the reverse takeover and Knowlton's new business direction.

Sponsorship

Knowlton will apply to the TSX-V for a waiver from the requirement to engage a sponsor with respect to the reverse takeover; however, there is no assurance that a waiver will be granted. Knowlton intends to include any additional information regarding sponsorship in a subsequent press release.

Financing

Completion of the reverse takeover is not subject to any financing by Knowlton, LGC or LGC Capital.

Shareholder approval

Under the Canada Business Corporations Act, the Knowlton share consolidation and change of name must be approved by at least two-thirds of the votes cast by shareholders either present in person or represented by proxy at a meeting of Knowlton shareholders.

Pursuant to the policies of the TSX-V, the reverse takeover must be approved by a simple majority of the votes cast by Knowlton's disinterested shareholders either present in person or represented by proxy at a meeting of Knowlton shareholders. Knowlton's disinterested shareholders will be all shareholders other than Mr. Edelman, Mr. Haddad, and their respective associates and affiliates.

The board of directors of Knowlton has called an annual and special meeting of shareholders, to be held in Montreal on July 6, 2016. Knowlton will mail a detailed management information circular to shareholders in connection with the meeting and will file the circular on SEDAR.

Conditions to complete the reverse takeover

In addition to approval by Knowlton's shareholders as referred to above, completion of the reverse takeover will be subject to a number of conditions, including, but not limited to:

• The completion of satisfactory due diligence by both Knowlton and LGC;
• The execution of definitive agreements in respect of the reverse takeover;
• The receipt of regulatory approvals;
• The acceptance of the Knowlton share consolidation and reverse takeover by the TSX-V;
• The receipt of customary legal opinions;
• The approval by the shareholders of LGC of the reverse takeover;
• The approval by the BVI courts of the scheme of arrangement under the laws of the BVI.

Trading halt

Trading in Knowlton's common shares on the TSX-V is currently halted. Knowlton has applied to the TSX-V for reinstatement of trading.

Loan to Mogul Ventures Corp.

As previously announced, Knowlton has terminated its amended and restated arrangement agreement with Mogul Ventures Corp., a mining exploration company with properties in Mongolia. In December, 2014, Knowlton loaned $50,000 to Mogul Ventures, which amount (plus accrued interest) is now due. Knowlton intends to pursue repayment from Mogul Ventures.

Information relating to LGC

All information contained in this news release relating to LGC, including information on LGC's directors and officers and its various investments, has been provided to Knowlton by LGC. Knowlton has relied upon this information without having made independent inquiries as to its accuracy or completeness. Knowlton assumes no responsibility for the inaccuracy or incompleteness of any information provided by LGC, or for any failure of LGC to disclose events that may have occurred or that may affect the significance or accuracy of any such information, or for any failure of LGC to update or amend such information, whether as a result of new information, future events or otherwise.

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