Grasslands Entertainment Inc.
TSX VENTURE : GEE

Grasslands Entertainment Inc.

May 26, 2009 10:12 ET

Grasslands Entertainment Inc. Announces Merger With 2190879 Ontario Inc. and Change of Business

TORONTO, ONTARIO--(Marketwire - May 26, 2009) - Grasslands Entertainment Inc. (TSX VENTURE:GEE) ("Grasslands" or the "Company") is pleased to announce that it has entered into a letter of intent (the "Letter of Intent") dated May 25, 2009 with an Ontario incorporated private company 2190879 Ontario Inc. ("TargetCo."), a wholly-owned subsidiary of Foundation Financial Holdings Corp. ("FFHC"), pursuant to which Grasslands and TargetCo. have agreed to complete a business combination to form a new company ("Newco"). The business combination shall constitute a Reverse Takeover (the "RTO") of the Company as defined in the policies of the TSX Venture Exchange (the "TSX-V").

In conjunction with the RTO, Newco will undergo a change in business to a merchant bank focused on the mineral and energy sectors. TargetCo. currently has investments in the following companies: Quia Resources Inc., a private company with gold exploration properties in Colombia; Enerasia Renewable Corp., a private company focused on hydro, wind and geothermal opportunities in the Philippines; Caldera Geothermal Inc., a private company focused on geothermal exploration and development in the Western United States; and Silver Shield Resources Corp. (TSX VENTURE:SSR), a TSX-V listed company focusing on advanced-stage silver properties in Northern Ontario and Mexico.

Summary of the Proposed Reverse Takeover

Under the terms of the Letter of Intent: (i) Grasslands shall consolidate (the "Share Consolidation") its Class A voting shares on a four (4) old shares ("Pre-Consolidated Shares") for one (1) new share basis (a "Consolidated Share"), such Share Consolidation to become effective prior to completion of the RTO; and (ii) the holders of TargetCo. common shares (the "TargetCo. Common Shares") will receive one (1) Consolidated Share for each TargetCo. Common Share (the "Consideration Ratio").

The number of outstanding stock options, warrants, and broker options of Grasslands will be adjusted based on the same 4:1 ratio as the Pre-Consolidated Shares of Grasslands and, subject to the approval of the Exchange, the exercise price of certain of those convertible securities will be amended to $0.14 per Consolidated Share on a post-Consolidation basis. The Consolidated Shares will be issued at an ascribed price of $0.14 per share. On completion of the RTO, on both a basic and fully diluted basis, the shareholders of Grasslands and TargetCo. will own approximately 35% and 65% of Newco, respectively. There are currently 16,997,696 Pre-Consolidated Shares issued and outstanding and 7,857,143 TargetCo. Common Shares issued and outstanding.

Under the terms of the Letter of Intent, Targetco's audited financial statements will include net tangible assets ("NTA") equal to at least $900,000. If the NTA is less than $900,000, the Consideration Ratio will be adjusted so that the holders of TargetCo. Common Shares will receive less than one (1) Consolidated Share for each TargetCo. Share based upon a percentage equal to the amount by which the NTA is less than $900,000. For example, if the NTA is $800,000, the Consideration Ratio will be adjusted to 0.8888 Consolidated Share for each TargetCo. Share.

Grasslands may also complete a financing of up to $3 million worth of Grasslands securities (the "RTO Financing") in conjunction with the completion of the RTO. The units issued pursuant to the RTO Financing will have an issue price of $0.14 per unit on a post-Share Consolidation basis and be comprised of one Consolidated Share and one-half of one Consolidated Share purchase warrant with exercise terms of the warrant to be determined in the context of the market.

Concurrent with the closing of the RTO, Grasslands will enter into a Management Services Agreement with Foundation Opportunities Inc. ("FOI"). FOI, among other things, will: (i) identify qualified candidates to assume the roles of Chief Investment Officer and alternative energy, mining and oil & gas advisors; (ii) administer the day-to-day business and affairs of Grasslands; (iii) provide due diligence and market research on potential investments; and (iv) source investment opportunities. As consideration for the services provided by FOI to Grasslands, FOI will receive a monthly service fee of $10,000 plus reasonable expenses and a performance fee (the "Performance Fee") equal to (1) 10% of: (a) the pre-tax profits, including both realized and unrealized profit on investments, for the financial year, minus (b) the weighted average month-end net asset value of Grasslands through the financial year multiplied monthly by the percentage return of an appropriate benchmark (the "Hurdle"), plus (2) 10% of realized after tax income. Furthermore, any bonuses payable to officers, directors and advisors of Grasslands who are not an officer, director, employee or shareholder of FOI shall be paid by FOI from the Performance Fee.

No Non-Arm's Length Party (as that term is defined in the TSX-V Policies) of the Company has any direct or indirect beneficial interest in TargetCo. or is an insider of TargetCo., and there is no relationship between any Non-Arm's Length Party of the Company and any Non-Arm's Length Party of TargetCo.

The RTO is subject to certain regulatory approvals and is conditional upon the completion of satisfactory due diligence by both Grasslands and TargetCo. and the negotiation of a definitive agreement.

It is anticipated that on closing, without including any securities to be issued pursuant to the RTO Financing and assuming there is no downward adjustment to the Consideration Ratio, Newco will have outstanding approximately 19,249,424 million Consolidated Shares and approximately 18,750 options, 4,124,848 warrants and 87,700 broker options.

Upon completion of the RTO, it is anticipated that Mendel Ekstein and Gerald Goldberg, currently directors of Grasslands, shall remain directors of Newco. TargetCo. shall appoint up to an additional five (5) directors. In addition, it is expected that upon completion of the RTO, the following persons will be appointed to positions as executive officers of Newco: Jeremy Goldman, Chief Executive Officer and Yannis Banks, President. Randy Koroll, the current Chief Financial Officer of Grasslands, is expected to continue to serve as Newco's Chief Financial Officer.

It is anticipated that following completion of the RTO, FFHC shall be the only holder of more than 10% of the issued and outstanding Consolidated Shares (approximately 40%, assuming full subscription of the RTO Financing).

Completion of the transaction is subject to a number of conditions, including but not limited to, TSX-V acceptance and disinterested shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

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

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

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