Mr. Bill Murray reports

GFI ANNOUNCES SIGNING OF DEFINITIVE AGREEMENTS FOR INVESTMENTS IN ITS PET FOOD DIVISION

Global Food and Ingredients Ltd. has entered into definitive agreements relating to the previously announced transactions to raise approximately $11.8-million through an investment in equity and debt in its pet food division, Big Sky Milling Inc., as well as a further injection of $500,000 in the company's core ingredients division to finance its business by 35 Oak Holdings Ltd., for a total expected investment of approximately $12.3-million.

The proceeds from the transactions will be used by the company's core ingredients division to refinance existing loans and unlock liquidity to invest in further growth of the operation. Under the terms of the pet food transaction, the company's core ingredients division will enter into a management services agreement with Big Sky, which will result in recurring annual revenue of a minimum of $180,000.

The transactions are expected to close on or about Jan. 31, 2024.

Pet food transaction

Under the pet food transaction, the company will transfer all of the assets and liabilities associated with the pet food ingredients business to a recently formed subsidiary, Big Sky. As part of the pet food transaction, the company will raise $3.45-million through the sale of 49.9 per cent of common shares of Big Sky to 35 Oak.

In addition to the subscription proceeds, Big Sky will raise a two-year committed $10.0-million debt facility consisting of two tranches, including a revolving credit facility of up to $5.0-million and a term loan in the amount of $5.0-million. The pet food loans will be issued by 35 Oak, bear interest at a rate of Canadian prime rate plus 3.8 per cent, and be secured by a first position general security agreement over all of the assets of Big Sky and a first ranking mortgage on the pet food facility. The pet food loans will have a term of two years from the closing date and be payable in full at maturity with interest payable monthly.

As consideration for providing the pet food loans, the company will issue to 35 Oak non-transferable warrants to purchase an aggregate of 3.25 million common shares of the company, with each warrant entitling 35 Oak to acquire one common share at an exercise price of 20 cents per share for a period of two years following the date of issuance. The warrants will include a forced exercise feature in the event that the closing price of the common shares on the TSX Venture Exchange reaches or exceeds 40 cents for 20 consecutive trading days. The terms and issuance of the warrants are subject to approval of the TSX Venture Exchange.

Subordinated loan

Concurrent with the close of the pet food transaction, 35 Oak will issue a $500,000 subordinated loan to the company's core ingredients division. The subordinated loan will have a term of one year from the date of issuance, accrue interest at a rate of 15 per cent per annum and be payable in full at maturity. The subordinated loan will be secured by a third position general security agreement over all of the assets of the company's core ingredients division behind its senior lenders.

The transactions are subject to customary closing conditions, and receipt of regulatory and financing approvals, including the approval of the TSX-V.

The transactions constitute related party transactions of Global Food, within the meaning of Multilateral Instrument 61-101 -- Protections of Minority Security Holders in Special Transactions (MI 61-101), as 35 Oak is a shareholder of the company. The company determined that the transactions are exempt from the formal valuation and minority approval requirements of MI 61-101 in reliance of the exemptions set forth in sections 5.5(e) and 5.7(1)(c) of MI 61-101, respectively, as the transactions are supported by a control person of the company in the circumstances described in Section 5.5(e) of MI 61-101.

About Global Food and Ingredients Ltd.

Global Food is a fast-growing Canadian plant-based food and ingredients company, connecting the local farm to the global supply chain for peas, beans, lentils, chickpeas and other high-protein specialty crops. Global Food's vision is to become a vertically integrated farm-to-fork plant-based company providing traceable, locally sourced, healthy and sustainable food and ingredients. Global Food is organized into four primary business lines: core ingredients, value-added ingredients, plant-based pet food ingredients and downstream products. Headquartered in Toronto, Global Food buys directly from its extensive network of farmers, processes its products locally at its four wholly owned processing facilities in Western Canada and ships to 37 countries across the world.

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