Clarke Inc. (TSX:CKI) entered into an arrangement agreement to acquire the remaining 47.98% stake in Holloway Lodging Corporation (TSX:HLC) (‘Holloway') from Letko, Brosseau & Associates Inc. (“Letko”) and other shareholders for CAD 62.7 million on August 8, 2019. Clarke will exchange 0.65 of a Clarke share for every Holloway share acquired. Upon completion of the acquisition, Holloway's Series B 6.25% convertible unsecured debentures due February 28, 2023 with a CAD 50.87 million principal amount will cease to be convertible into Holloway shares and will only be convertible into 52 Clarke shares for each CAD 1,000 principal amount at a conversion price of CAD 19.23 per Clarke Share.

The acquisition will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario). In connection with the transaction, the Board of Directors agreed to cease Holloway's regular quarterly dividend. Upon closing, Holloway will become a wholly-owned subsidiary of Clarke. The agreement contains a termination fee of CAD 1.5 million payable to Clarke in certain circumstances, including if Holloway accepts a superior proposal from a third party. Following the acquisition, Clarke intends to appoint Marc Staniloff, currently a director of Holloway, as a director of Clarke.

The acquisition is subject to customary conditions including the Clarke Shareholders shall have approved the issuance by Clarke of the Clarke Shares to the Shareholders (other than Clarke) pursuant to the Arrangement in accordance with the requirements of the TSX by way of written consent or at a meeting of the Clarke Shareholders, the arrangement resolution shall have been approved at the Meeting of Holloway shareholders in accordance with the Interim Order, Court and regulatory approvals, the Letko Support Agreement shall not have been terminated, the Arrangement shall be exempt from the requirement to obtain a formal valuation under MI 61- 101, consideration shares having been approved for listing on the TSX, the shares of Clarke to be issued pursuant to the arrangement being exempt from the registration requirements of Section 3(a)(10) of the U.S. Securities Act pursuant, dissent rights not having been exercised in respect of more than 5% of the shares of Holloway and if the Debentureholder Resolution shall have been approved by the Debentureholders on or prior to the Effective Date, Clarke shall have entered into the Clarke Debenture Indenture; or not have been approved by the Debentureholders on or prior to the Effective Date, Clarke shall have entered into the Supplemental Debenture Indenture. Holloway intends to seek the approval of holders of the debentures for Clarke to assume the debentures, conditional on completion of the acquisition. As of September 4, 2019, Holloway Lodging will conduct a Special shareholder meeting on September 25, 2019 to approve the transaction.

Clarke has received expressions of support for the acquisition from holders of 32% of the Holloway shares, including Letko which exercises control or direction over 20% of the Holloway shares and which has entered into a voting support agreement pursuant to which it has agreed to vote its Holloway shares in favour of the acquisition. The Boards of Directors of both Clarke and Holloway have, based on recommendation of respective special committees, unanimously approved the transaction. As of September 25, 2019, shareholders of Holloway approved the transaction. The transaction is expected to close by the end of the third quarter of 2019. As of September 25, 2019, the parties expect the Arrangement to close and the assumption of Debentures to occur on or about September 30, 2019. Bill Maslechko, Lindsay Cox and Jeff Oke of Burnet, Duckworth & Palmer LLP acted as legal advisor to Clarke. Kris Hanc and Alan P. Gardner of Bennett Jones LLP acted as legal advisor for Holloway. AST Trust Company (Canada) acted as transfer agent to Holloway. Computershare Investor Services Inc. acted as transfer agent and registrar to Clarke and as depository to Holloway and Clarke.

Clarke Inc. (TSX:CKI) completed the acquisition of remaining 47.98% stake in Holloway Lodging Corporation (TSX:HLC) (‘Holloway') from Letko, Brosseau & Associates Inc. (“Letko”) and other shareholders on September 30, 2019. As part of the acquisition, 4.8 million shares were issued as consideration.