Star Metro - Redishred Capital Corp. to be Acquired by VRC Companies, LLC

Transaction Details

The Transaction is the result of a comprehensive strategic review process beginning in 2023 under the supervision of a committee of independent directors (the "Special Committee"), which was advised by independent and highly qualified legal and financial advisors. The strategic review included a comprehensive process focused on maximizing value for the Corporation's shareholders and involved discussions with a broad range of potential strategic buyers and financial sponsors. The Transaction is the outcome of that process, and is unanimously supported by the Special Committee and Redishred's board of directors (the "Board").

The Special Committee, in making its unanimous determination to recommend approval of the Transaction to the Board, and the Board, in making its unanimous decision to approve the Transaction, considered, among other things, the following factors:

• Superior Strategic Alternative and Extensive Sale Process. The Transaction is the result of a comprehensive strategic review process beginning in September 2023 under the supervision of the Special Committee, with the assistance of legal and financial advisors. In conducting the strategic review process, the Special Committee and Board assessed the business, operations, assets, financial condition, operating results and future prospects of the Corporation and the relative benefits and risks of various alternatives reasonably available to the Corporation, including the continued execution of the Corporation's existing strategic plan. During the course of the strategic review process, a significant number of potential bidders were contacted and the Purchase Price of CA$5.00 per Share in cash represents the highest offer received by the Corporation under the sale process and is more favourable (and can be achieved with less risk) than the value that might have been realized through pursuing a number of other strategic alternatives reasonably available to the Corporation.

• Certainty of Value and Immediate Liquidity. The all-cash consideration provides shareholders with certainty of value and immediate liquidity.

• Attractive Premium for Shareholders. The Transaction price of $5.00 per Share represents a premium of approximately 34.8% to the 90-trading day volume weighted average trading price per Share on the TSX Venture Exchange (the "TSX-V") and a premium of approximately 21.7% to the closing price of the Shares on November 21, 2024, the last trading day prior to the announcement of the Transaction.

• Voting and Support Agreements. The Transaction is supported by the two largest shareholders of the Corporation and each of the Corporation's directors and senior executives who, in aggregate, hold approximately 41% of the issued and outstanding Shares and who have entered into agreements to vote all of their Shares in favour of the Transaction.

• Terms of the Arrangement Agreement. The terms of the Arrangement Agreement are the result of a comprehensive arm's length negotiation process with the oversight and participation of the Special Committee and the Board and their advisors, which resulted in an agreement with terms and conditions that are reasonable in the judgment of the Special Committee and the Board.

• Limited Conditions to Closing. The Transaction is not subject to a financing condition or any regulatory approvals (other than court approval) and is otherwise subject to a limited number of customary closing conditions.

• Fairness Opinions. Each of Stifel Nicolaus Canada Inc. ("Stifel") and Cormark Securities Inc. ("Cormark") has provided to the Special Committee and the Board an opinion to the effect that the consideration to be received by the holders of Shares pursuant to the Transaction is fair, from a financial point of view, to such shareholders, in each case subject to the respective limitations, qualifications and assumptions set out in those opinions.

• Ability to Respond to Superior Proposals. The terms and conditions of the Arrangement Agreement do not prevent the Board, in the exercise of its fiduciary duties, to respond, prior to the Shareholders Meeting, to certain unsolicited acquisition proposals that are more favourable, from a financial point of view, to the shareholders than the Transaction, subject to compliance with certain terms and conditions and certain 'rights to match' in favour of the Purchaser.

• Shareholder and Court Approval. The Transaction must be approved by two-thirds of the votes cast by Shareholders, and approval of a majority of shareholders excluding those whose votes are required to be excluded in accordance with Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). In addition, the Transaction will only become effective if the Ontario Superior Court of Justice (Commercial List) determines that it is fair and reasonable.

• Termination Fee. The termination fee payable by the Corporation of CA$3.7 million is reasonable in the view of the Board and the Special Committee and only payable in customary and limited circumstances.

• Availability of Dissent Rights. Registered Shareholders may, upon compliance with certain conditions, exercise dissent rights with respect to the Transaction.

Transaction and Shareholder Meeting Details

The Transaction is to be completed by way of a plan of arrangement under the Canada Business Corporations Act (CBCA). The Transaction is subject to certain approvals at the Shareholders' Meeting, including by: (i) at least two-thirds of the votes cast by Shareholders (voting together as a single class, with each holder of Shares being entitled to one vote per Share); and (ii) a simple majority of the votes cast by holders of Shares (excluding shares required to be excluded pursuant to MI 61-101). Completion of the Transaction is subject to other customary conditions, including receipt of court approval. The Transaction is not subject to a financing condition or any regulatory approvals. The Transaction is expected to close in the first quarter of 2025.

The Arrangement Agreement includes customary non-solicitation provisions, which are subject to customary "fiduciary out" provisions that entitle the Corporation to terminate the Arrangement Agreement and accept a superior proposal subject to the Purchaser's matching rights.

The Corporation expects to hold the Shareholders' Meeting to consider the Transaction in January 2025 and to mail the management information circular for the Shareholders' Meeting in December 2024. Further information regarding the terms of the Arrangement Agreement, the background to the Transaction, the rationale for the recommendations made by the Special Committee and the Board and how shareholders can participate in and vote at the Shareholders' Meeting will be provided in the management information circular for the Special Meeting which will also be filed on SEDAR+ at www.sedarplus.ca. Shareholders are urged to read these and other relevant materials when they become available.

Upon closing of the Transaction, the Purchaser intends to cause the Shares to cease to be listed on the TSX-V and to cause the Corporation to submit an application to cease to be a reporting issuer under applicable Canadian securities laws.

The foregoing summary is qualified in its entirety by the provisions of the Arrangement Agreement, a copy of which, together with the voting support agreements, will be filed on SEDAR+ at www.sedarplus.ca.

Advisors

Stifel is acting as exclusive financial advisor to the Special Committee, other than with respect to the independent fairness opinion. Cormark is acting as independent financial advisor to the Special Committee and the Board. Stewart McKelvey is acting as legal advisor to the Corporation and to the Special Committee.Jefferies LLC and BofA Securities are acting as financial advisors to the Purchaser. Kirkland & Ellis LLP is acting as U.S. legal advisor to the Purchaser, and Stikeman Elliott LLP is acting as Canadian legal advisor to the Purchaser.

About Redishred Capital Corp.

Redishred Capital Corp. is the owner of the PROSHRED®, PROSCAN and secure e-Cycle brands, trademarks and intellectual property in the United States. Redishred digitizes, secures, shreds and recycles confidential documents and proprietary materials for thousands of customers in the United States in all industry sectors. Redishred is a pioneer in the mobile document destruction and recycling industry and has the ISO 9001:2015 certification. It is Redishred's vision to be the 'system of choice' in providing digital retention, secure shredding and recycling services on a global basis. Redishred Capital Corp. grants PROSHRED` and PROSCAN franchise businesses in the United States. Redishred also operates 17 corporate businesses directly. The Corporation's plan is to grow its business by way of both franchising and the acquisition and operation of information security businesses that generate stable and recurring cash flow through a scheduled client base, continuous paper recycling and concurrent unscheduled shredding service.

About VRC Companies, LLC

VRC Companies, LLC, dba Vital Records Control® (VRC®), is a national information governance (IG) leader with locations in 80+ U.S. markets serving 49 states. VRC helps Enterprise and SMB sized companies reduce costs and increase productivity throughout the information life cycle with document conversion, enterprise content management, cloud and offsite storage, release of information services, and secure destruction services. With its commitment to high-quality solutions and exceptional service, VRC has become the trusted partner for businesses seeking compliant and cost-effective management of their physical and digital information assets including the final disposition

Forward Looking Information

This news release contains "forward-looking information" as defined in applicable Canadian securities legislation. Such forward-looking statements typically contain statements with words such as "anticipate", "expect", "intend", "estimate", "propose", "believes" or similar words suggesting future outcomes or statements regarding an outlook. More particularly and without limitation, this news release contains forward-looking information and statements including, but not limited to, statements concerning the anticipated completion and timing of the Transaction, including timing and receipt of shareholder and court approvals and timing for filing materials on SEDAR+, the anticipated delisting of the Common Shares from the TSX-V and the Corporation ceasing to be a reporting issuer under Canadian securities laws. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. In respect of forward-looking statements and information concerning the anticipated benefits and timing of the completion of the Transaction, the Corporation has provided such statements and information in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary court and shareholder approvals; the ability of the parties to satisfy, in a timely manner, the other conditions for the completion of the Transaction, and other expectations and assumptions concerning the proposed Transaction. The anticipated dates indicated may change for a number of reasons, including the necessary court and shareholder approvals, the necessity to extend the time limits for satisfying the other conditions for the completion of the Transaction or the ability of the Board to consider and approve, subject to compliance by the Corporation of its obligations under the Arrangement Agreement, a superior proposal for the Corporation. Although the Corporation believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct, that the Transaction will be completed or that it will be completed on the terms and conditions contemplated in this press release.

Forward-looking information is provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking information involves significant risks and uncertainties and should not be read as guarantees of future performance or results as actual results may differ materially from those expressed or implied in such forward-looking information. Those risks and uncertainties include, among other things: the possibility that the proposed Transaction will not be completed on the terms, or in accordance with the timing, currently contemplated or at all; the ability or inability to obtain, in a timely manner or at all, all necessary shareholder, court and other third party approvals required to consummate the Transactionor to otherwise satisfy the conditions for the completion of the Transaction; significant transaction costs or unknown liabilities; the ability of the Board to consider and approve, subject to compliance by the Corporation with its obligations under the Arrangement Agreement, a superior proposal for the Corporation; the failure to realize the expected benefits of the Transaction; the possibility of litigation relating to the Transaction; the possibility of adverse reactions or changes in business relationships resulting from the announcement or completion of the Transaction; and general economic conditions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding future plans and objectives of the Corporation, constitute forward-looking information that involve various known and unknown risks, uncertainties, and other factors outside management's control. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect.

Forward-looking statements and information are provided for the purpose of providing information about the current expectations and plans of management of the Corporation relating to the future. Readers are cautioned that reliance on such statements and information may not be appropriate for other purposes, such as making investment decisions. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. There can be no assurance that such information will prove to be accurate and actual results and future events could differ materially from those anticipated in such forward-looking information.

For additional information with respect to risk factors applicable to Redishred, reference should be made to Redishred's continuous disclosure materials filed from time to time with securities regulators, including, but not limited to, Redishred's Annual Information Form. The forward-looking information contained in this release is made as of the date of this release and the Corporation disclaims any intent or obligation to update or revise the forward-looking information contained in this release, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

Contacts

For additional information from Redishred:

Redishred Capital Corp. (TSX.V - KUT)
Jeffrey Hasham, MBA, CPA, CA
Chief Executive Officer
[email protected]
www.redishred.com
Phone: (416) 849-3469 Fax: (905) 812-9448

For additional information from VRC Companies, LLC:

VRC Companies, LLC
Danny Palo
Chief Executive Officer
[email protected]
www.vitalrecordscontrol.com
Phone: (901) 310-2005

SOURCE: RediShred Capital Corp.

Bouchard--SMC