CPVC FINANCIAL INC.
NEX BOARD : DME.H

CPVC Tremblant Inc.
TSX VENTURE : TTT.P

August 10, 2006 18:00 ET

CPVC Financial Announces Creation of Merchant Bank

CPVC Tremblant to complete Qualifying Transaction with CPVC Financial

CALGARY, ALBERTA--(CCNMatthews - Aug. 10, 2006) -

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN.

CPVC Financial Inc. ("Financial" or the "Corporation") (NEX BOARD:DME.H) and CPVC Tremblant Inc. ("Tremblant") (TSX VENTURE:TTT.P) today announced details concerning the proposed reactivation transaction of Financial as a publicly traded merchant bank, which involves the acquisition (the "Acquisition") by Financial from certain vendors of an aggregate of 3,700,000 common shares of Extenway Solutions Inc. (TSX-V: EY) (the "Extenway Shares") and an aggregate of 7,984,850 common shares of Arura Pharma Inc. (the "Arura Shares"). The reactivation transaction will be completed concurrently with the completion of up to a $1,000,000 private placement and the business combination (the "Business Combination") of Financial and Tremblant with, which will also constitute the Qualifying Transaction of Tremblant pursuant to Policy 2.4 of the TSX Venture Exchange Inc. ("TSX Venture").

About Financial and Proposed Private Placement

As previously announced on March 23, 2006, the board of directors of Financial (the "Board of Directors") determined it was in the best interests of Financial to change its business to become an investment company. In connection therewith, the Board of Directors approved an investment policy (the "Investment Policy") (a copy of the complete Investment Policy is available by request at alambert@cpv-group.ca), pursuant to which the principal business activity of Financial is to invest in private and public emerging and established businesses that have the potential to create above average returns in their respective industries. Emerging and established businesses are considered to be those past their initial stage of development. Financial also invests in Capital Pool Companies and NEX-listed shell companies without businesses that have experienced management teams with a proven track record in investing in emerging businesses, as these publicly traded vehicles offer a unique opportunity to emerging and established businesses to gain access to the public markets to further fuel their growth.

Pursuant to the listing requirements of TSX Venture, an investment company is required to have not less than two investments and not less than $2 million in net tangible assets. Financial intends to acquire the Extenway Shares and the Arura Shares as its initial two investments. Information about Extenway Solutions Inc. and Arura Pharma Inc. is attached to this news release as Appendix "A".

In order to bolster its current working capital of approximately $700,000, Financial intends to use their "best efforts" to complete a private placement of up to 16,666,667 units ("Financial Units") at a price of $0.06 per unit for gross proceeds of up to $1,000,000, where each Unit will be comprised of a Financial Common Share and one-half of a common share purchase warrant (a "Financial Warrant"), with each Financial Warrant entitling the holder to acquire an additional Financial Common Share at a price of $0.10 per share for a period of 24 months from the date of issuance. The Financial Warrants will be required to be exercised in the event that the NewCo Common Shares (defined below) trade on a recognized stock exchange at a closing trading price of $0.15 per share or more for any twenty business day period (the "Financial Private Placement").

Financial may engage registered dealers to act as agent (the "Agents") of Financial on a "best efforts" basis for the Financial Private Placement and in connection therewith may pay a cash commission of up to 10%. The Agents may also be granted agent's options (the "Financial Agent's Options") in a number equal to 10% of the Financial Units sold under the Financial Private Placement, with each Financial Agent's Option entitling the holder to purchase a Financial Unit at a price of $0.06 per unit for a period of 18 months from the closing of the Financial Private Placement.

It is not a condition precedent of the Acquisition or the Business Combination that the Financial Private Placement is completed and consequently there is no assurance the Financial Private Placement will be completed.

Financial will also further increase its working capital by approximately an additional $1,600,000 by the completion of the Business Combination of Financial and Tremblant, as described below.

Financial is incorporated under the laws of Canada and currently has 26,996,380 common shares (the "Financial Common Shares") issued and outstanding, and no stock options, warrants, anti dilution or other rights to purchase Financial Common Shares issued or outstanding, other than 1,253,676 stock options exercisable at $0.10 per share (the "Financial Existing Options") and 3,000,000 share purchase warrants exercisable at $0.10 per share (the "Financial Existing Warrants").

Assuming the completion of the maximum Financial Private Placement, but prior to the Business Combination with Tremblant, Financial will have 43,663,047 Financial Common Shares, 1,666,667 Financial Agent's Options, 8,333,333 Financial Warrants, 1,253,676 Financial Existing Options and 3,000,000 Financial Existing Warrants outstanding.

Investment Philosophy of Financial

The investment philosophy of Financial, as described in the Investment Policy, is to invest in small and medium size growth businesses with capable, motivated and experienced management. The Corporation will support and foster management by providing direction at the board level while allowing management of investee companies to maintain its autonomy with respect to day-to-day operations of the business. The degree of the Corporation's involvement in such businesses will depend upon a number of factors including the size of its investment, the stage of development of the business and the particular needs and desires of management of the investee companies.

The Corporation may from time to time enter into arrangements with other investors whereby the Corporation and such investors will make direct investments in selected businesses.

The types of companies the Corporation will pursue as investments will usually have the following characteristics:

(a) the potential to increase capacity and expand services or products through organic and/or add-on acquisition opportunities;

(b) the capability to act as a consolidator in highly fragmented industries where profitability and market share are significantly improved by achieving lower-cost or larger-producer market status; and

(c) they are subject to time-sensitive, unique opportunities, such as financial restructuring, transfers of ownership or sales of non-core assets by larger companies.

Types of Investments of Financial

The Corporation will offer a number of financing alternatives to investee companies. The Corporation will provide a range of creative financing approaches that enables an investee company to achieve its financing goals while providing the Corporation with the types of returns it is seeking for its investment portfolio. These solutions will include:

(a) Equity and debt investments in private companies that have the potential to create above average returns in their respective industries.

(b) Equity investments in Capital Pool Companies and NEX-listed companies with proven management teams.

(c) Equity and debt investments in publicly traded small-cap companies that have the potential to create above average returns in their respective industries.

The equity instruments will take the form of an investment in shares, warrants or subscription receipts bought through market purchases, from a treasury offering by way of private placement or pursuant to a prospectus offering. The equity investments may also be in the form of an equity line.

The debt instruments will take the form of:

(a) Subordinated debt with equity features such as warrants or convertibility features with terms of three to five years.

(b) Subordinated debt with no equity features;

(c) Bridge loans with a short term of three months to twenty-four months that are used by companies to bridge a current lack of financing and to enable the borrower to reach a point where it no longer requires outside financing or it can achieve conventional debt financing or equity financing. The borrower typically uses the funds for the working capital requirements, expansion purposes or to acquire new assets.

The principal amounts of the loans vary, but are typically in the range of $500,000 to $2 million with a targeted rate of return of the loans will be a minimum of 20%.

Investment Criteria and Diversification of Financial

The Corporation intends to utilize the following investment criteria:

(a) Investments by the Corporation in any one business enterprise will be limited to a maximum of $2 million, at the initial stage, although the Corporation may participate in larger financings in conjunction with other investors in appropriate circumstances. Minimum investment size is generally deemed to be $100,000, which investment can be made over time.

(b) Investments in Capital Pool Companies and NEX listed companies with proven management teams.

(c) Investments will be in the form of debt and/or securities with, or combined with, equity features.

(d) Investments will have a time horizon to liquidity realization of two to seven years.

(e) Management of the prospective business must have capital in the business and must derive the major portion of its financial rewards from its own equity participation.

(f) Management of the prospective business must demonstrate an entrepreneurial attitude with respect to the exploitation of opportunities available to its business.

(g) Investments must have the prospect for significant long-term capital appreciation.

(h) Companies must be strategically positioned in their target markets and offer potential for domestic or global growth.

(i) The targeted rate of return of the Corporation's investments is 20%.

The Corporation will review potential investments in a broad range of industries. The Corporation will not be a mutual fund company and as such will not have the same diversification requirements. The management and the board of directors of the Corporation will review and assess the risks and potential rewards associated with a particular investment proposal including the size of such investment proposal relative to the total assets of the Corporation. Although diversification will be a factor taken into account in the investment decision process, there will no pre-established threshold with respect to diversification. In addition, a particular investment that represents a significant percentage of the overall Corporation's assets as a result of a significant appreciation in value might not necessarily be disposed of just because of that fact. Each decision with respect to making or disposing of an investment will be made on the own merits of such decision keeping in mind the long term nature of the Corporation's investment cycle.

Information Concerning Tremblant

Tremblant is a capital pool company that completed its initial public offering and the common shares of Tremblant (the "Tremblant Common Shares") are listed for trading on TSX Venture. Tremblant currently has outstanding 9,750,000 common shares (the "Tremblant Common Shares") and stock options to acquire 975,000 Tremblant Common Shares at a price of $0.25 per share until May 31, 2009 (the "Tremblant Stock Options"). As at June 1, 2006, Tremblant had cash assets net of liabilities of approximately $1,670,000.

The current directors of Tremblant are Alain Lambert, William L. Hess, J.R. Scott Pritchard and Ronald Keenan.

About the Acquisition

Financial has entered into a non-arm's length letter agreement dated July 20, 2006 with Alain Lambert, Fiducie Enfants Lambert (a trust the beneficiaries of which are members of Mr. Lambert's family), 891231 Alberta Ltd. and One & Company Capital Inc. (two private companies controlled by Mr. Lambert), Mary Lou Parise (Mr. Lambert's spouse), Robert E. Brown, William L. Hess and WWW Trust (a trust the beneficiaries of which include William L. Hess) (collectively, the "Vendors"), pursuant to which the Corporation has agreed to acquire the Extenway Shares and the Arura Shares. The Acquisition, together with the Financial Private Placement, is expected to constitute a Reactivation Transaction of Financial as defined in the policies of the TSX Venture Corporate Finance Manual.

The Vendors and Financial have agreed that since the Acquisition is non-arm's length, the purchase price (the "Purchase Price") for the Extenway Shares and the Arura Shares will be based upon an independent valuation of the Extenway Shares and the Arura Shares (the "Independent Valuation"). The Independent Valuation will be completed by a firm of qualified professionals that was selected by a special committee of the Board of Directors of Financial consisting of Danny Dalla-Longa and J.R. Scott Pritchard (the "Financial Special Committee"). The Financial Special Committee has engaged Canadian Ventures Inc. of Calgary, Alberta to complete the Independent Valuation of the Arura Shares and the Extenway Shares.

The aggregate Purchase Price for the Extenway Shares, as determined by the Independent Valuation, shall be paid by the issuance of Financial Common Shares on the basis of $0.06 of the Purchase Price per Financial Common Share issued, subject to shareholder and regulatory approval. The aggregate Purchase Price for the Arura Shares will be determined by the Independent Valuation and shall be paid by the issuance of Financial Common Shares on the basis of $0.06 of the Purchase Price per Financial Common Share issued, subject to shareholder and regulatory approval

About the Business Combination

Tremblant and Financial have agreed to complete the Business Combination pursuant to an amalgamation or arrangement, to be determined, to form a new company to be called CPVC Financial Corporation ("NewCo"). The parties recognize that as the proposed Business Combination is a non-arm's length transaction, each of Financial and Tremblant have formed special committees of their respective boards of directors to review and approve the exchange ratio of the Business Combination. Pursuant to the terms of the Business Combination: (i) the holders of the Financial Common Shares will receive one common share of NewCo (the "NewCo Common Shares") with a deemed value of $0.06 per share for each Financial Common Share owned; and (ii) the holders of the Tremblant Common Shares will receive 2.8547 NewCo Common Shares for each Tremblant Common Share owned, subject to final negotiation of the special committees of Financial and Tremblant. The Tremblant Stock Options shall be replaced with a revised number of stock options of NewCo, as applicable, with adjusted terms. The outstanding Financial Existing Options, Financial Existing Warrants, Financial Warrants and Financial Agent's Options shall be replaced with the same number of NewCo options and warrants with the same terms.

The special committee of Financial for the purposes of the Business Combination is Danny Dalla-Longa and the special committee of Tremblant is Ronald Keenan.

About NewCo the Resulting Issuer

The principal shareholders of NewCo after completion of the Acquisition, the Financial Private Placement and the Business Combination are expected to be, directly or indirectly, Alain Lambert of St. Bruno, Quebec, William L. Hess of Montreal, Quebec and Robert E. Brown of Westmount, Quebec.

After completion of the Acquisition and the Business Combination, management of NewCo will consist of Alain Lambert as President and Chief Executive Officer, a Chief Financial Officer to be determined, and William L. Hess as Chairman.

After completion of the Acquisition and the Business Combination, the NewCo board of directors will consist of five members, being William L. Hess, Alain Lambert, J.R. Scott Pritchard and Danny Dalla-Longa current directors of Financial, as well as Ronald Keenan, a current director of Tremblant.

CPVC Financial has applied to TSX Venture for an exemption from the sponsorship requirements of TSX Venture in respect of the Reactivation Transaction.

The completion of the Acquisition and the Business Combination is subject to the approval of TSX Venture and all other necessary regulatory approval. The completion of the Acquisition and the Business Combination is also subject to additional conditions precedent, including: (i) shareholder approval of each of Financial and Tremblant for the Acquisition and the Business Combination; (ii) approval of the special committees of each of Financial and Tremblant; (iii) satisfactory completion of due diligence reviews by the parties; (iv) board of directors approval of Financial and Tremblant; (v) the entering into of formal agreements in connection with each of the Acquisition and the Business Combination; (vi) the entering into of employment agreements with Alain Lambert and William L. Hess; (vii) the completion of the Financial Private Placement; and (viii) certain other conditions.

Financial announces it has reserved a price of $0.10 per share for the grant of stock options to acquire up to 10% of the outstanding NewCo Common Shares (the "NewCo Stock Options") in the event the Acquisition, the Business Combination and the Financial Private Placement are completed. The grant of the NewCo Stock Options is subject to regulatory approval. The NewCo Stock Options will be granted to directors, officers, employees and consultants of NewCo, as determined by the Board of Directors of NewCo following the completion of the Acquisition and the Business Combination.

The Acquisition will be a non-arm's length transaction as Alain Lambert and William L. Hess, directors, officers and principal shareholders of Financial, are also Vendors, directly or indirectly. In addition, the Business Combination will also be a non-arm's length transaction as Alain Lambert and William L. Hess are directors, officers and principal shareholders of each of Financial and Tremblant, and J.R. Scott Pritchard is a director of each of Financial and Tremblant.

Trading in the Financial Common Shares and the Tremblant Common Shares will remain halted until such time as the independent valuations have been received and the final purchase price of the Acquisition and exchange ratio of the Business Combination are agreed to.

As indicated above, completion of the Acquisition and the Business Combination is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. The Acquisition and the Business Combination cannot close until the required shareholder approval is obtained. There can be no assurance that the Acquisition and the Business Combination will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Information Circular of Financial and Tremblant to be prepared in connection with the Acquisition and the Business Combination, any information released or received with respect to the Acquisition and the Business Combination may not be accurate or complete and should not be relied upon. Trading in the securities of Financial and Tremblant should be considered highly speculative.

The securities of Financial and Tremblant being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

APPENDIX A

Information Concerning Extenway Solutions Inc.

Extenway Solutions Inc. ("Extenway") is a technology company based in Montreal, Quebec that specializes in the development of software and hardware products for the lodging industry. The shares of Extenway are listed on TSX Venture under the symbol EY. The following information and description of Extenway is based upon public filings of Extenway.

Extenway provides hotels with a comprehensive and interactive in-room entertainment system that offers on-demand movies, high-speed Internet access and TV programming on a high-definition HDTV-compliant LCD flat-panel television. Using patent-pending proprietary television and computer technologies, Extenway's products enable guests to turn the in-room television into a virtual personal computer, or PC, thereby providing them with the unique opportunity to access and work on business documents in the privacy of their room without having to carry a laptop (the "Extenway Solution").

The Extenway Solution also enables hotels to operate their businesses more profitably by monitoring the habits of their guests on one integrated platform which allows the hotel to customize the television interface to market directly to guests and promote their brand and hotel services. The Extenway Solution also has the capability of acting as a customer relationship management tool that allows hotels to better know their guests and to thereby personalize service. Further, when interfaced with existing enterprise management software solutions, the Extenway Solution provides hotel staff management services to enable a hotelier to operate their property more efficiently.

The Extenway Solution is comprised of three functional units, including: (i) an LCD flat-panel widescreen digital display monitor or television (which can be purchased from Extenway or a third-party vendor, an in-room media center computer hub along with a remote control and a wireless keyboard located in the hotel room; (ii) an on-site network and applications server; and (iii) a network operating system and support centre.

Extenway has installed as part of its pilot project the Extenway Solution in one hotel located in Montreal, Quebec where it is currently installed in all 136 hotel rooms.

Further information about Extenway is available at www.sedar.com.

Information Concerning Arura Pharma Inc.

Arura is a private specialty pharmaceutical company based in Montreal, Quebec that is focused on the manufacturing of health and beauty products and the marketing of oncology and skin & wound care products delivered, administered or prescribed in a hospital setting.

Arura defines speciality pharma as a pharmaceutical company that markets pharmaceutical products acquired from big pharmaceutical companies which prefer to focus marketing efforts on big-selling blockbusters or biotechnology companies that seek to commercialise their drugs in new markets and wish to increase product sales using increased targeted marketing. Specialty pharma companies typically have their own sales force which tend to be small and they focus most of their business efforts on sales and marketing to one or two therapeutic areas that are tightly focused physician populations (such as oncologists, dermatologists, psychiatrists or gastro-enterologists). Another characteristic of specialty pharma is the fact that they license-in drugs that are already on the market generating sales and income and have little or no research & development organization.

Arura operates its health and beauty products operations under the name Laboratoire Cosmepro and its specialty pharmaceutical business operates under the corporate name Arura Pharma Inc.

Further information concerning Arura and Extenway will be available in the Information Circular.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Acquisition and the Business Combination and has neither approved nor disapproved the contents of this press release.

Contact Information

  • CPVC Financial Inc. and CPVC Tremblant Inc.
    Alain Lambert
    President
    (514) 395-1191