HOMEQ Corporation Obtains Interim Order for Plan of Arrangement and Adopts Shareholders Rights Plan

TORONTO, April 27, 2012 /PRNewswire/ - HOMEQ Corporation ("HOMEQ") (TSX: HEQ) announced today that it has obtained an interim order of the Ontario Superior Court of Justice, providing for, among other things, the holding of an annual and special meeting of the holders ("Shareholders") of common shares of HOMEQ. At the Meeting, Shareholders will be asked to approve the previously announced arrangement (the "Arrangement") under the Business Corporations Act (Ontario) under which Birch Hill Equity Partners ("Birch Hill") will indirectly acquire all of the outstanding common shares of HOMEQ for cash at a price of $9.50 per common share.

The $9.50 per share price represents a premium of approximately 22% over the volume-weighted average price of the common shares on the Toronto Stock Exchange for the 20 trading days prior to the announcement of the transaction and a premium of approximately 49% over the closing price on December 30, 2011.

The Board of Directors of HOMEQ (the "Board") previously approved the Arrangement as the result of an extensive strategic review process which concluded the Shareholders would be best served by a change of control transaction.  In making its recommendation, the Board of Directors received the advice and assistance of its Special Committee, HOMEQ's management, RBC Capital Markets ("RBC"), the Special Committee's financial advisor, and its legal advisors, and carefully evaluated HOMEQ's current financial position and future plans and prospects.

As part of the process RBC conducted a confidential, limited auction involving ten parties and Birch Hill's proposal was the only one received by HOMEQ. RBC has provided an opinion to the Board that the consideration to be received by the Shareholders under the Arrangement is fair, from a financial point of view, to Shareholders.

The Board has recommended that Shareholders vote in favour of the resolution approving the Arrangement.

Voting and support agreements have been signed with directors and certain officers of HOMEQ who hold approximately 6% of the outstanding common shares of HOMEQ in aggregate. Under the Arrangement, management and directors will be selling in aggregate, approximately 60% of their Common Share holdings.

The completion of the Arrangement is subject to certain conditions, including the receipt of the requisite approval from the Shareholders, the final approval of the Ontario Superior Court of Justice and other required regulatory approvals, including approvals or clearances under the Bank Act and the Competition Act. If all necessary approvals are obtained and the conditions to the completion of the Arrangement are satisfied or waived, HOMEQ currently expects that the Arrangement will be completed in the third quarter of 2012. It is not possible at this time, however, to state with any certainty when the effective date of the Arrangement will occur.

In early May, HOMEQ intends to mail the Notice of Annual and Special Meeting and the Management Information Circular, together with a letter of transmittal and a form of proxy (collectively, the "Meeting Materials") to Shareholders of record as of the close of business on April 27, 2012. The Meeting Materials will also be available at www.sedar.com and on HOMEQ's website at www.homeq.ca.

The annual and special meeting of HOMEQ Shareholders will be held at the Royal York Hotel, 100 Front Street, Toronto, Ontario on May 28, 2012 at 11:30 a.m. (Toronto time) (the "Meeting").

Shareholder Rights Plan

HOMEQ also announced today that, with the shareholder rights plan that is currently in effect (the "2009 Rights Plan") terminating at the conclusion of the upcoming Meeting in accordance with its terms, the Board has adopted a new shareholder rights plan (the "2012 Rights Plan"). The 2012 Rights Plan has been conditionally approved by the Toronto Stock Exchange, subject to Shareholder approval at the Meeting. If the 2012 Rights Plan is approved by Shareholders at the Meeting, it will take effect on May 28, 2012. The Board adopted the 2012 Rights Plan to ensure that Shareholders are afforded the same protection following the Meeting as they have been under the 2009 Rights Plan.

The 2012 Rights Plan is substantially similar to the 2009 Rights Plan, which was approved by over 97% of the votes cast by the securityholders who were entitled to vote on the 2009 Rights Plan.

The 2012 Rights Plan is designed to provide the Board with additional time to assess an unsolicited take-over bid for HOMEQ and, where appropriate, to give the Board additional time to pursue alternatives for maximizing Shareholder value. The 2012 Rights Plan also encourages fair treatment of all Shareholders by providing Shareholders with an equal opportunity to participate in a take-over bid.

A complete copy of the 2012 Rights Plan is being filed on SEDAR.

About HOMEQ

HOMEQ's wholly owned subsidiary HomEquity Bank is the only national provider of reverse mortgages to homeowners aged 55 and over, Canada's fastest growing demographic segment. HomEquity Bank originates and administers Canada's largest portfolio of reverse mortgages under the CHIP Home Income Plan brand. As of December 31, 2011, the mortgage portfolio comprised approximately 9,000 reverse mortgages with an accrued value of $1.2 billion, secured by residential properties across Canada worth approximately $3.3 billion. HomEquity Bank has been the main underwriter of reverse mortgages in Canada since its predecessor, Canadian Home Income Plan, pioneered the concept in 1986.

HOMEQ's shares trade on the Toronto Stock Exchange under the symbol HEQ.  Additional information on HOMEQ, including annual and quarterly reports can be viewed at www.homeq.ca.

Forward-Looking Information

Certain statements included herein constitute "forward-looking statements". All statements, other than statements of historical fact, included in this release that address future activities, events, developments or financial performance are forward-looking statements. These forward-looking statements can be identified by the use of forward-looking words such as "may", "should", "will", "could", "expect", "intend", "plan", "estimate", "anticipate", "believe", "future" or "continue" or the negative thereof or similar variations. In particular, statements about the proposed Arrangement between Birch Hill and HOMEQ, including the expected timetable for completing the Transaction, the receipt of Shareholder and regulatory approvals and any other statements regarding HOMEQ's future expectations, beliefs, goals or prospects are or involve forward-looking information. These forward-looking statements are based on certain assumptions and analyses made by HOMEQ and its management, in light of their experiences and their perception of historical trends, current conditions and expected future developments, as well as other factors they believe are appropriate in the circumstances. Shareholders are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties, assumptions and other factors, many of which are outside the control of Birch Hill and HOMEQ, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among other things, the parties' ability to consummate the Arrangement; the parties' ability to satisfy the conditions to the completion of the Arrangement, including that the receipt of Shareholder approval, court approval, or regulatory approval for the Arrangement may not be obtained, or may not be obtained on the terms expected or on the anticipated schedule; general economic and market factors (including changes in global, national or regional financial, credit, currency or securities markets), changes or developments in global, national or regional political conditions (including any act of terrorism or war), changes in government laws or regulations (including tax laws) and changes in GAAP or regulatory accounting requirements. Readers are cautioned that the foregoing lists are not exhaustive.

Such forward-looking statements should, therefore, be construed in light of such factors. If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein. All forward-looking statements attributable to HOMEQ, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements set forth above. Readers are cautioned not to place undue reliance on forward-looking statements contained herein, which reflect the analyses of the management of Birch Hill or HOMEQ, as appropriate, only as of the date of this release.

For more information regarding these and other risks, readers should consult HOMEQ's reports on file with applicable securities regulatory authorities accessible online by going to SEDAR at www.sedar.com or by going to the HOMEQ website at www.homeq.ca. HOMEQ is under no obligation, and HOMEQ expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

SOURCE HOMEQ Corporation