Builders Capital Mortgage Corp Announces Anticipated First Closing of Bond Offering

Calgary, Alberta--(Newsfile Corp. - September 10, 2024) - Builders Capital Mortgage Corp. (TSXV: BCF) ("Builders Capital" or "the Company") had previously announced its intention to proceed with a participating bond offering (the "Bonds") to raise gross proceeds of up to $50 million closing in one or more tranches (the "Offering"), the details of which are set forth in a news release dated April 8, 2024. The first tranche of the Offering is now expected to close on October 1, 2024. The net proceeds of the Offering will be used in the Company's ongoing mortgage lending business to fund or acquire short-term, residential construction mortgages in Alberta and British Columbia. The Bonds will participate on a pari passu (equal) basis with the existing shares of the Company relative to returns and risk based on capital contributed to the business of the Company, and accordingly shares and shareholders of the Company are not exposed to additional leverage risk by virtue of the Offering.

The Company has been advised that one or more of its directors, officers and insiders ("Related Parties") may participate in the Offering for an amount not to exceed 25% of the market capitalization of the Company, with such participation constituting a "related party transaction" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101").

In connection with the Offering, Builders Capital 2019 Ltd. ("2019"), a private company owned and controlled by Mr. Sandy Loutitt, a director and CEO of the Company, intends to participate in the Offering to acquire Bonds with a principal amount of $7,000,000 at the closing to occur on October 1, 2024. As consideration, 2019 shall transfer mortgages held by 2019 to the Company in the aggregate amount of approximately $7,000,000. The acquisition of such mortgages are in the purview of the Company's intention to use the net proceeds from the Offering to fund or acquire additional short-term, residential construction mortgages in Alberta and British Columbia. The participation of 2019 in the Offering constitutes a "related party transaction" for the purposes of MI 61-101. Other Related Parties may participate in the Offering.

The Company is relying upon exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to sections 5.5(b) and 5.7(1)(a), respectively - Fair Market Value Not More Than 25 Per Cent of Market Capitalization, on the basis that at October 1, 2024, neither the fair market value of the Bonds to be distributed pursuant to the Offering to Related Parties, nor the consideration to be received for those Bonds, will exceed 25 per cent of the Company's market capitalization.

The terms of the Offering and 2019's participation therein were negotiated with a special committee of directors of the Company, all of whom are independent for the purposes of MI 61-101. The Board of Directors of the Company has unanimously approved the Offering (with Sandy Loutitt abstaining from voting) and participation of 2019 to acquire the Bonds and receiving mortgages from 2019 as consideration, and no materially contrary view or abstention was expressed or made by any director in relation to the Offering. The Board of Directors concluded that the Offering was entered into on commercially reasonable terms and was fair to minority security holders.

As at the date hereof, Mr. Loutitt owns or controls, directly or indirectly, a total of 20 common shares, 118,650 Class A Shares and 223,590 Class B shares of the Company, representing approximately 20% of the issued and outstanding common shares, 5.2% of the Class A Shares and 24.49% of the Class B Shares, respectively.

About Builders Capital

Builders Capital is a mortgage lender providing short-term course-of-construction financing to builders of residential, wood-frame properties in Western Canada. The Company commenced active operations on December 12, 2013 on the closing of its initial public offering, whereupon it acquired a portfolio of mortgages from two predecessor companies.

Builders Capital's investment objective is to generate attractive returns, relative to risk, in order to provide stable and consistent distributions to shareholders while remaining focused on capital preservation and satisfying the criteria mandated for mortgage investment corporations ("MIC") as defined in the Income Tax Act.

As an MIC, Builders Capital is not subject to income tax provided that it distributes all of its taxable income as dividends to shareholders within 90 days of its December 31^st year-end. Such dividends are generally treated by shareholders as interest income, so that each shareholder is in the same tax position as if their proportionate share of mortgage investments made by the company had been made directly by the shareholder.

Forward-Looking Information

This news release contains forward-looking statements within the meaning of applicable securities legislation, including statements with respect to management's beliefs, estimates and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intent", "estimate", "anticipate", "believe", "should", "plans" or "continue" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. These statements are not guarantees of future performance and are based on estimates and assumptions that are subject to risks and uncertainties which could cause actual results to differ materially from the forward-looking statements contained in this news release. These include, among other things, risks associated with mortgage lending, competition for mortgage lending, real estate values, interest rate fluctuations, environmental matters and the general economic environment. The company cautions that the foregoing list is not exhaustive, as other factors could adversely affect its results, performance or achievements. Readers are cautioned against undue reliance on any forward-looking statements. Although the forward-looking information contained in this news release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Except as required by applicable law, Builders Capital undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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

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