Mr. Ken Coulson reports

ICPEI HOLDINGS INC. ENTERS INTO DEFINITIVE AGREEMENT FOR GOING-PRIVATE TRANSACTION

ICPEI Holdings Inc. has entered into an arrangement agreement dated Dec. 9, 2022, pursuant to which key members of management of the company and certain other employees and shareholders of the company, Desjardins General Insurance Group Inc., and certain other investors (collectively with Desjardins and the rollover shareholders, the consortium) will indirectly acquire all of the issued and outstanding common shares of the company for cash consideration of $4 per company share pursuant to a statutory plan of arrangement under the Business Corporations Act (Ontario). The parties to the arrangement agreement include the company, 1000379990 Ontario Ltd. (Rollover Holdco), the entity through which the rollover shareholders and certain other investors will ultimately hold their indirect interest in the company, and 1000379969 Ontario Ltd. (the purchaser), an entity that is 72.5 per cent owned by Rollover Holdco and the remainder of which is owned by Desjardins.

The purchase price of $4 per company share reflects a 90.5-per-cent premium to the company's closing price of $2.10 per share on the TSX Venture Exchange on Dec. 8, 2022, a 74.7-per-cent premium to the volume-weighted average price of the company's shares over the last 30 trading days and represents an estimated price-to-book-value multiple of 2.1 times based on the company's balance sheet as at Sept. 30, 2022.

Upon closing of the transaction, the rollover shareholders, which, among others, include Serge Lavoie, president and chief executive officer of the company, Murray Wallace, chairman of the board of directors of the company, Robert Ghiz, a director of the company, Teddy Chien, chief financial officer of the company, and Ken Coulson, general counsel of the company, are expected to own as a group, directly and indirectly, approximately 66.1 per cent of the company; certain other investors are expected to own as a group, directly and indirectly, approximately 6.4 per cent of the company; and Desjardins is expected to hold an indirect interest in the remaining 27.5 per cent. The rollover shareholders currently beneficially own, or exercise control or direction over, approximately 33.1 per cent of the company's shares.

Sharon Ranson, director and co-chair of the special committee of independent directors, stated: "After careful deliberation, the special committee considers that the transaction represents the best available path forward for the company and its shareholders. The transaction will provide shareholders, other than the rollover shareholders, with immediate and certain cash value, while providing the company with additional flexibility to operate as a private company in the hands of a committed long-term investor."

Special committee and board approval

The special committee, comprising Sharon Ranson and James Falle, was constituted to consider the transaction. Origin Merchant Partners, the financial adviser to the special committee, has provided an opinion to the special committee to the effect that, as of the date thereof and subject to the various assumptions, limitations and qualifications set out therein, the consideration to be received by the shareholders of the company (other than the rollover shareholders and their respective affiliates) pursuant to the transaction is fair, from a financial point of view, to such shareholders.

The board (excluding conflicted directors), following receipt of the unanimous recommendation of the special committee, unanimously approved the arrangement agreement. Both the special committee and the board determined that the transaction is in the best interests of the company and fair to the shareholders of the company (other than the rollover shareholders) and the board (excluding conflicted directors) unanimously recommends that shareholders of the company (other than the rollover shareholders) vote in favour of the transaction at the special meeting of shareholders to be held to approve the transaction.

Transaction details and timing

The transaction is to be effected by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario). The consummation of the transaction is subject to the approval of the transaction at the special meeting by: (i) at least two-thirds of the votes cast by the company's shareholders; and (ii) a simple majority of the votes cast by the company's shareholders (other than the rollover shareholders and any other company shareholder required to be excluded for the purpose of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions). Completion of the transaction is also subject to other customary conditions, including receipt of court approval. The transaction is not subject to a financing condition.

The arrangement agreement includes customary deal-protection provisions. The company is subject to non-solicitation provisions, and, in certain circumstances, the board may terminate the arrangement agreement in favour of an unsolicited superior proposal, subject to the payment of a termination fee of $2.4-million and subject to a right of the purchaser to match such superior proposal. The arrangement agreement also provides for payment by the purchaser of a reverse termination fee of $2.4-million if the arrangement agreement is terminated in certain specified circumstances, including if the purchaser does not satisfy its obligation to provide sufficient funds to complete the transaction.

The company expects to hold the special meeting to consider and vote on the transaction in February, 2023. If approved at the special meeting, the transaction is expected to close in the first quarter of 2023, subject to court approval and other customary closing conditions. Following closing of the transaction, the company's shares are expected to be delisted from the TSX-V.

Support and voting agreements

In connection with the transaction, the rollover shareholders have each entered into irrevocable support and voting agreements pursuant to which they have agreed to vote their company shares in favour of the transaction at the special meeting. The members of the special committee have also entered into support and voting agreements to vote their company shares in favour of the transaction at the special meeting, subject to certain customary exceptions.

The company shares subject to support and voting agreements represent approximately 33.8 per cent of outstanding company shares.

Advisers

Origin Merchant Partners is acting as the exclusive financial adviser to the special committee in connection with the transaction. Blake, Cassels & Graydon LLP is acting as legal counsel to the special committee.

McCarthy Tetrault LLP is acting as legal counsel to the purchaser and Desjardins Capital Markets is acting as financial adviser to the purchaser.

Additional information about the transaction

Further details regarding the terms and conditions of the transaction are set out in the arrangement agreement, which will be publicly filed by the company under its profile on SEDAR. Additional information regarding the transaction will be provided in the information circular to be sent to shareholders in advance of the special meeting, which will also be filed on SEDAR.

About ICPEI Holdings Inc.

Founded in 1998, ICPEI Holdings operates in the Canadian property and casualty insurance industry through its wholly owned subsidiary, the Insurance Company of Prince Edward Island (ICPEI). ICPEI provides commercial and personal lines of insurance products exclusively through the broker channel.

The company's name was changed from EFH Holdings Inc. to ICPEI Holdings after receiving approval from shareholders on July 15, 2021. It trades on the TSX-V under the symbol ICPH, effective Aug. 20, 2021, and, prior to Dec. 23, 2020, it traded on the Toronto Stock Exchange.

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