CCII.P:CC - Cuspis Capital II Ltd. and Peninsula Capital Corp. Enter into Letter of Intent for Qualifying Transaction

(TheNewswire)

Toronto, Ontario – TheNewswire - June 7, 2022 – Cuspis Capital IILtd. (TSXV:CCII.P) (“ Cuspis ” or the“ Corporation ”), a capital pool company as defined under TSX VentureExchange (“ TSXV ” or the “ Exchange ”) Policy 2.4 – Capital Pool Companies (“ Policy2.4 ”), is pleased to announce it has enteredinto a letter of intent dated June 1, 2022 (the “ LOI ”) withPeninsula Capital Corp. (“ Peninsula ”), a privatecompany incorporated under the laws of the Province ofOntario , whereby Cuspis and Peninsula will complete an arrangement,amalgamation, share exchange, or similar transaction to ultimatelyform the resulting issuer (the “ Resulting Issuer ”)that will continue on the business of Peninsula (the “ Transaction ”),subject to the terms and conditions outlined below.  Cuspis intendsthat the Transaction will constitute its Qualifying Transaction, assuch term is defined in the policies of the Exchange. Followingcompletion of the Transaction, the Resulting Issuer intends to list asa Tier 1 Real Estate Issuer on the Exchange.

Cuspis completed its initial public offering inDecember, 2020. The common shares of Cuspis (the “ Cuspis Shares ”) arelisted for trading on the TSXV under the stock symbol “CCII.P”.Cuspis has not commenced commercial operations and has no assets otherthan cash. Cuspis was incorporated under the laws of the Province ofOntario.

Peninsula has built, and continues to grow, a portfolioof affordable single family rental (“SFR”) housing in US markets,that are undergoing revitalization, and that provide stable, highyielding and growing rental cash flow. Peninsula provides affordable,quality, safe and secure housing to its tenants. Peninsula is focusedon growth and specializes in identifying and acquiring stabilized andnear stabilized houses with strong tenant bases. Peninsula is based inToronto, Ontario and was incorporated on August 24, 2015.

For its year ended December 31, 2021, Peninsula hadtotal assets of US$56.4 million and total liabilities of US$29.2million, for net tangible assets of $27.0 million.  Peninsula hadUS$2.7 million revenues in its fiscal 2021, and net income of US$12.4million.  All figures are unaudited. Peninsula is in the final stagesof its initial audit which includes the process of converting itsaccounting systems and processes to International Financial ReportingStandards (“IFRS”). This process includes the fair valuing ofPeninsula’s rental properties which has resulted in a US$13.5million unrealized gain on the fair value of such properties and isreflected in the US$12.4 million net income amount.

Cuspis’ management believes that Peninsula’s focuson affordable housing, and disciplined approach to propertyacquisition and management, makes for a particularly attractiveopportunity in the current environment.

The LOI was negotiated at arm’s length and iseffective as of June 1, 2022.  William Ollerhead, the CEO and adirector of Cuspis, holds 150,000 common shares of Peninsula. Thisrepresents less than four-tenths-of-one-percent of the total currentlyissued and outstanding Peninsula shares.  None of the currentdirectors or officers of Cuspis hold any director or managementposition with Peninsula.  The Transaction does not constitute aNon-Arm’s Length Qualifying Transaction, and the approval of theshareholders of Cuspis will not be required.  In the event thatapproval from the shareholders of Peninsula is required, such approvalwill be sought as a condition to the closing of the Transaction.

The material terms and conditions outlined in the LOIare non-binding on the parties and the LOI is, among other things,conditional on the execution of a definitive agreement (the“ DefinitiveAgreement ”) to be negotiated between theparties. It is currently anticipated that, immediately prior to the completion of the Transaction,Cuspis will effect a share consolidation (the “ Consolidation ”) ona basis to be determined.

The LOI contemplates that as a condition of closing,Peninsula will complete a private placement of equity securities forgross proceeds of a minimum of $20,000,000 (the “ Concurrent Financing ”).Pursuant to the Transaction, post-Consolidation Cuspis Shares, in anamount and in a ratio to be determined, will be issued in exchange foroutstanding common shares of Peninsula (such ratio being the“ Exchange Ratio ”). The Exchange Ratio will be determined once theproportionate ownership of the resulting issuer has been establishedby the parties, which will be a function of the Concurrent Financing. The value of Cuspis has been established at $2.875 million, or $0.23per share.

The LOI contemplates that the Transaction will becompleted no later than December 1, 2022, or such other date as may bemutually agreed to in writing between Cuspis and Peninsula. There canbe no assurance that a Definitive Agreement will be successfullynegotiated or entered into, or that the Concurrent Financing or theTransaction will be completed.

Upon completion of the Transaction, the parties intendfor the following individuals to comprise the board of directors andmanagement of the Resulting Issuer, while Cuspisand Peninsula may, at their option, each nominate an additionaldirector acceptable to Peninsula.

Director & CEO: Mike Appelton
Toronto, Ontario

Mike is the Founder, President and CEO of PeninsulaCapital Corp. He is responsible for asset management of the existingportfolio, directing the acquisition strategy and coordinating allfinancing activities.

Prior to entering the entrepreneurial world, Mikeworked for 15 years in commercial and corporate banking, the majorityof which were with GE Capital where he held positions of increasingresponsibility in risk management, portfolio management and sales. Inhis last role with GE Capital he was responsible for structuring andunderwriting transactions totaling over $500 million in annualvolume.

Director and Chairman of the Board:Michael Newman
Toronto, Ontario

Michael founded InterRent International Properties Incin 1997, taking it public on the TSX-V in 1999.  He was the CEO andPresident from 1997 to 2006 and led its conversion to a REIT structurein 2006 and transfer to the TSX.  Michael was the CEO, President andTrustee of InterRent REIT from 2006 until retirement in 2009 Michaelsuccessfully grew InterRent to 4,000 units before his retirement fromthe company.

He has served as an independent director on the Boardof Directors of 18 TSX-V, CSE or TSX listed companies since 1995, andon the Board of Advisors of two private equity funds.

Michael serves on the Independent Review Committee oftwo TSX listed Mutual Fund Trusts, and is the President of KE RealEstate Holdings Inc., a private real estate company that owns rentalproperties in the GTA.

Director: Robert Macdonald

Ridgeway, Ontario

Robert was the Founder, and a Director and CEO foralmost 20 years, of Afton Food Group Ltd. (TSE-AAF) and its’predecessor companies, companies involved in the food servicesindustry. Afton grew from a standing start to over 440 corporate andfranchised restaurants, in three countries, generating more than $180million in system sales per annum. He retired from Afton in2003.

Robert served as a Director and the Chair of the AuditCommittee of the Skor Food Group (TSX-V-SKF) for 8 years, until it wassold in 2009. During that time Skor, which operated as a wholesaler offood products to the food service industry throughout Ontario, grewits’ sales from $10 million to more than $100 million perannum.

Robert has also served as a Director or Investor inseveral private companies which successfully merged with CPCs on theTSX-V. He also has experience in mergers and acquisitions and haspersonally acted in substantial capital raises.

Director: Scott Samuel
Burlington, Ontario

Scott was an investment banker and lawyer for more thanthree decades on Bay Street with Midland Walwyn Capital, ABN AMROBank, Gordon Capital and others. He founded C15 Solutions, Inc. wherehe is the CEO. He also sits on the boards of C15 Solutions Inc., withPoseidon Investment Management (shareholder) and The CanadianMotorsport Hall of Fame (non-profit). He has extensive experience inM&A, capital raising, and governance with public companies.

Director: Mark Hansen
Toronto, Ontario

Mark is President of CHC Group of Companies. He oversawthe operations and management of a group of companies that include aprivate limited partnership with assets in excess of $160 million(1,991 bed student housing), a development company and a small publiccompany with assets in excess of $70 million (first ever publiccompany in Canada focused on student housing).

Mark was previously the Vice President Operations ofCAP REIT, responsible for over 14,000 residential units and over250,000 square feet of commercial space from Ontario to BritishColumbia. He oversaw revenues in excess of $250 million annually,capex of $30 million annually and the management of over 200employees.

Mark sat on the Board of Directors of InterRent REITfrom 2004 to 2007.

Peninsula’s management team includes:

CFO: Jared Friedberg, CPA
Stouffville, Ontario

Jared is responsible for all aspects of financialreporting and data analytics for Peninsula Capital Corp. Jared waspreviously Divisional Business Controller at a TSX listed chemicalcompany where he had P&L accountability, shared with thecommercial and operational lead, for a $500 million revenuebusiness.

COO: Mark Thiessen

Leamington, Ontario

Mark is responsible for all aspects of PeninsulaCapital Corp’s day to day operations. Mark brings 30 years ofexperience owning and operating businesses in agriculture, e-commerceand energy, specifically companies that are operations and logisticsintensive and operated in multiple locations. Mark founded ane-commerce company in 1992 to sell greenhouse grown fresh cut flowersdirectly to consumers throughout North America.

Principal Shareholders

Mr. Appelton owns 29.6% of the issued and outstandingcommon shares of Peninsula.  No other shareholder of Peninsula holds10% or more of its outstanding voting securities.

Conditions to the Transaction

Completion of the Transaction  is subject to a numberof conditions, including but not limited to, acceptance by the TSXV,approval of certain matters by the holders of the Cuspis Shares andother customary conditions including:

• completion of the Concurrent Financing;

• entry into the Definitive Agreement on or before July31, 2022;

• receipt of all director, shareholder, third party andrequisite regulatory approvals (including Peninsula shareholderapproval) relating to the negotiation and execution of a DefinitiveAgreement in respect of the Transaction and as may be contemplated bythe Definitive Agreement;

• preparation and filing of a disclosure document, asrequired by the TSXV, (the Disclosure Document ”) outlining thedefinitive terms of the Transaction and describing the business to beconducted by Cuspis following completion of the Transaction, inaccordance with the policies of the TSXV;

• receipt by the TSXV of a Sponsor Report (as defined inthe policies of the TSXV), if required, satisfactory to the TSXVand

• completion of the Consolidation.

There can be no assurance that the Transaction will becompleted as proposed or at all.

Sponsorship

Cuspis intends to make an application for exemptionfrom the sponsorship requirements of the TSXV in connection with theTransaction, however there is no assurance that the TSXV will exemptCuspis from all or part of applicable sponsorship requirements.

Further Information

Cuspis will provide further details in respect of theTransaction and the Concurrent Financing by way of updating pressreleases as the Transaction advances, in accordance with the policiesof the TSXV

All information contained in this press release withrespect to Peninsula and Cuspis (but excluding the terms of theTransaction) was supplied by the parties respectively, for inclusionherein, without independent review by the other party, and each partyand its directors and officers have relied on the other party for anyinformation concerning the other party.

Completion of the Transaction is subject to a number ofconditions, including but not limited to, TSXV acceptance and ifapplicable pursuant to TSXV requirements, majority of the minorityshareholder approval. Where applicable, the Transaction cannot closeuntil the required shareholder approval is obtained. There can be noassurance that the transaction will be completed as proposed or atall.

Investors are cautioned that, except as disclosed inthe Disclosure Document to be prepared in connection with theTransaction, any information released or received with respect to the Transaction may not be accurate or complete andshould not be relied upon. Trading in the securities of a capital poolcompany should be considered highly speculative.

The TSXV has in no way passed upon the merits of theTransaction and has neither approved nor disapproved the contents ofthis press release.

For further information:

William Ollerhead

Cuspis Capital II Ltd.

Will@CuspisCapital.com

Tel. (416) 214-0876

Forward-Looking Information

This press release contains“forward-looking information” and “forward-looking statements”(collectively, “ forward-looking statements ”) within the meaning of applicableCanadian securities legislation. All statements, other than statementsof historical fact, are forward-looking statements and are based onexpectations, estimates and projections as at the date of this pressrelease. Any statement that involves discussions with respect topredictions, expectations, beliefs, plans, projections, objectives,assumptions, future events or performance (often but not always usingphrases such as “expects”, or “does not expect”, “isexpected” “anticipates” or “does not anticipate”,“plans”, “budget”, “scheduled”, “forecasts”.“estimates”, “believes” or intends” or variations of suchwords and phrases or stating that certain actions, events or results“may” or “could, “would”, “might” or “will” be takento occur or be achieved) are not statements of historical fact and maybe forward-looking statements. In this press release, forward-lookingstatements relate, among other things, to: the Transaction and certainterms and conditions thereof; the business of Peninsula, including thecashflow from its portfolio of SFR properties and the growth of itsportfolio of SFR properties; the negotiation and completion of theDefinitive Agreement; the terms and completion of the ConcurrentFinancing; the board of directors and management of the ResultingIssuer upon completion of the Transaction the Consolidation of CuspisShares; the Exchange Ratio, TSXV sponsorship requirements and intendedapplication for exemption therefrom; shareholder, director andregulatory approvals; and future press releases and disclosure.

The forward-looking statementscontained in this news release are based on current expectations,estimates, projections and assumptions, having regard to Peninsula andCuspis’ experience and their perception of historical trends, andincludes, but is not limited to, expectations, estimates, projectionsand assumptions pertaining to Peninsula’s business and Peninsula andCuspis’ ability to continue as going concern. Risks anduncertainties that may cause actual results to differ materially fromthose contemplated in those forward-looking statements andinformation, including but not limited to: any risks related to theuncertainties surrounding the duration and the direct and indirectimpact of the COVID-19 pandemic and general economic conditions,including rising interest rates and inflation, on the business,operations and financial condition of  Peninsula and its tenants, aswell as on consumer behavior and the economy in general, including theability to enforce leases, perform capital expenditure work, increaserents, raise capital through the issuance of common shares or othersecurities of Peninsula and/or the Resulting Issuer and obtainmortgage financing on Peninsula’s properties; labour availability;changes to regulatory environment; armed hostilities and geopoliticalconflicts; failure to obtain necessary regulatory, corporate and thirdparty approvals in a timely fashion, or at all; and risks related tothe development and potential development of the Company's SFRportfolio. By their nature, forward-looking statements involve knownand unknown risks, uncertainties and other factors which may cause ouractual results, performance or achievements, or other future events,to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements.

The forward-looking informationcontained in this press release represents the expectations ofPeninsula and/or Cuspis as of the date of this press release and,accordingly, are subject to change after such date. Readers should notplace undue importance on forward-looking information and should notrely upon this information as of any other date. Cuspis does notundertake to update this information at any particular time except asrequired in accordance with applicable laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (asthat term is defined in policies of the TSX Venture Exchange) acceptsresponsibility for the adequacy or accuracy of this release.

This press release does notconstitute an offer to sell or a solicitation of an offer to buy anyof the securities in the United States. The securities have not beenand will not be registered under the United States Securities Act of1933, as amended (the “ U.S. Securities Act ”) or any state securities laws and maynot be offered or sold within the United States unless registeredunder the U.S. Securities Act and applicable state securities laws,unless an exemption from such registration is available.

NOT FORDISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION,DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR INPART, IN OR INTO THE UNITED STATES.

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