Mr. Shawn Klerer reports

LOYALIST ANNOUNCES FIRST STAGE CLOSING OF NON-BROKERED PRIVATE PLACEMENT AND CHANGES TO SENIOR MANAGEMENT AND BOARD

Loyalist Group Ltd. has completed the first-stage closing of its non-brokered private placement for approximately $2.1-million, appointed Shant Poladian as chairman and chief restructuring officer, appointed Salim Maherali to the board of directors, and has accepted resignations from each of Martin Bernholtz and Rehan Huda as independent directors. The first-stage closing and the changes to senior management and the board are effective as of July 3, 2015.

"We are pleased to have completed the first-stage closing of our non-brokered private placement for $2.1-million and look forward to closing $700,000 of firm orders during the second stage this week. This $2.8-million financing was a key condition of the forbearance agreement with Bank of Montreal, our senior lender. Shant and Salim are well-qualified additions to our board, with extensive backgrounds in capital markets and strategy, respectively. They are also significant investors in the first tranche of the offering. Their appointment is part of our various initiatives to put Loyalist back on sound footing and rebuild confidence with all parties," said Shawn Klerer, chief executive officer.

Under the first tranche of the offering, the company issued 211,500 units, with each unit consisting of one first preferred share, Series A, and 83.33 common share purchase warrants, for a total of 17,624,295 warrants. Each whole warrant will entitle the holder to acquire one common share of the company at a price of 12 cents per share for a period of 24 months following the closing of this tranche of the offering. If at any time following July 3, 2016, the closing price (or the average of the bid and the ask, if not traded) of the common shares of the company exceeds 25 cents per share for a period of 20 consecutive trading days, the company may in its sole discretion elect to accelerate the expiry of the warrants issued under this tranche of the offering to the date that is 20 trading days after the date of issuance of a news release announcing the new expiry date.

Pursuant to applicable Canadian securities laws, the preferred shares and warrants (and the common shares issuable upon exercise of the warrants) will be subject to a hold period until Nov. 4, 2015.

Certain directors, officers and insiders subscribed for an aggregate of 95,500 units under this tranche of the offering. The participation of these parties in the offering constitutes a related-party transaction within the meaning of Multilateral Instrument 61-101 -- protection of minority security holders in special transactions -- and the policies of the TSX Venture Exchange. The company is relying upon the exemptions from the formal valuation and minority shareholder approval requirements pursuant to sections 5.5(b) and 5.7(1)(a), respectively, of MI 61-101 on the basis that the company is not listed on a specified stock exchange and, at the time the offering was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction insofar as it involves interested parties (within the meaning of MI 61-101) in the offering, exceeds 25 per cent of the company's market capitalization calculated in accordance with MI 61-101.

The company was not in a position to file a material change report more than 21 days in advance of the closing of this tranche of the offering as the details of participation of the interested parties were not known at such time.

The offering is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the final approval of the TSX-V.

Appointment of chief restructuring officer

During the period of forbearance with the company's senior lender, the board has unanimously determined that it is in the best interests of the company and its stakeholders to appoint Mr. Poladian as chief restructuring officer.

Shawn Klerer, chief executive officer, and Frank Salvati, chief financial officer, will report directly to the chief restructuring officer. Mr. Poladian's former appointment as division president, student housing, of the company will be placed on hold during the forbearance period. Mr. Poladian is expected to return to his former position following completion of the company's recapitalization and restructuring activities.

The primary purpose of the newly created chief restructuring officer role is to oversee key aspects of the recapitalization and restructuring of the company in order to allow the chief executive officer and chief financial officer to focus on normal course business operations. This new chief restructuring officer role is intended to ensure a proper flow of communication between internal and external parties and to limit the number of possible distractions which would otherwise impede the abilities of the chief executive officer and the chief financial officer to dedicate their time and energy to the essential day to day activities of the company.

"Over the past several weeks, I have worked closely with our new senior management team and board on the recapitalization initiatives. Shawn and Frank have been strong partners during this important time frame and it would not have been possible to execute the forbearance agreement without their focus on the tasks at hand. By formalizing my new role as chief restructuring officer, we will continue to work as partners, while ensuring that the normal duties of our chief executive officer and chief financial officer are not compromised by the additional workload as a result of our recapitalization and restructuring," said Mr. Poladian, chairman and chief restructuring officer.

Board changes

The company is pleased to appoint Mr. Poladian as chairman of the board of directors and Salim Maherali as an independent director.

Mr. Maherali is presently managing director, digital marketing, for Adobe Canada. He is a well-qualified professional with over 15 years of business experience. His employment and educational background include the following:

• Sears Canada -- chief information officer and senior vice-president, eCommerce and digital marketing;
• McKinsey & Company -- associate partner;
• Harvard Business School/John F. Kennedy School of Government -- dual masters in business administration and public administration, international development;
• University of Toronto -- bachelor of commerce and recipient of the Governor General's silver medal.

The company has accepted the resignations of Mr. Bernholtz and Mr. Huda as independent directors and wishes them all the best in the future.

We seek Safe Harbor.