Chesswood Group Limited
TSX : CHW

Chesswood Group Limited

May 31, 2011 16:49 ET

Chesswood to Enter the Litigation Finance Industry

Case Funding to Join Chesswood's Specialty Finance Portfolio

TORONTO, ONTARIO--(Marketwire - May 31, 2011) - Chesswood Group Limited ("Chesswood") (TSX:CHW) is pleased to announce that it has signed a binding agreement with the shareholders of a New York based litigation finance company (the "Current Company"), that will, subject to closing, launch Case Funding Inc. ("Case Funding") as a provider of litigation financing to plaintiffs and attorneys throughout the United States.

The entire team of the Current Company will join Case Funding and will combine their litigation finance experience with Chesswood's specialty finance expertise and financial resources, to build a growth-oriented litigation finance business.

Chesswood has committed to providing at least US$6 million in capital to Case Funding, from its existing cash resources.

"The litigation finance market is a large underserved market that has been growing rapidly over the last decade" said Barry Shafran, Chesswood's President and CEO. "The industry expertise of Case Funding's team coupled with our risk management discipline, offers Chesswood a great opportunity to expand its portfolio in specialty finance and enjoy healthy risk-adjusted returns" added Shafran.

The transaction is expected to close before June 30, 2011.

The agreement provides for a purchase price of US$1.0 million, of which US$950,000 will be satisfied through the issuance to the vendors of 119,647 Chesswood common shares based on Chesswood's market average trading price, volume adjusted for the 10 days prior to execution of the Agreement, of $7.94. The agreement also provides for the future conditional acquisition by Chesswood of the Current Company, based on its net cash position following certain wind-down milestones being met, for a maximum purchase price of U.S.$1.8 million to be satisfied through the issuance to the vendors of Chesswood common shares at the same issue price used for the purchase of Case Funding.

About Chesswood Group Limited

Chesswood is a specialty finance company with operating businesses in both Canada and the U.S.

This press release contains forward-looking statements that involve a number of risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Many factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.

NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.

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