Morneau Shepell Inc. Announces $70 Million Bought Deal Offering of Convertible Unsecured Subordinated Debentures

TORONTO, ONTARIO--(Marketwire - March 7, 2012) -

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Morneau Shepell Inc. ("Morneau Shepell") (TSX:MSI) announced today that it has entered into an agreement with a syndicate of underwriters co-led by National Bank Financial Inc. and TD Securities Inc. pursuant to which the underwriters have agreed to purchase, on a bought deal basis, convertible unsecured subordinated debentures of Morneau Shepell in an aggregate principal amount of $70 million. The debentures will be offered at a price of $1,000 per debenture by way of short form prospectus in each of the provinces of Canada. Morneau Shepell intends to use the net proceeds of the offering for general corporate purposes, to reduce indebtedness and to support its program of strategic acquisitions.

The debentures will bear interest at a rate of 5.75% per annum, payable semi-annually on March 31 and September 30 each year, commencing on September 30, 2012. The debentures will be convertible at the holder's option into Morneau Shepell common shares at a conversion price of $15.00 per share, representing a conversion rate of 66.667 Morneau Shepell shares per $1,000 principal amount of debentures. The debentures will mature on March 31, 2017 and may be redeemed by Morneau Shepell, in certain circumstances, on or after March 31, 2015.

Morneau Shepell has granted an over-allotment option to the underwriters of the offering, entitling them to purchase, for a period of 30 days from the closing of the offering, up to $5 million principal amount of additional debentures at the offering price of $1,000 per debenture, to cover over-allotments and for market stabilization purposes, if any.

In connection with the debenture offering, Morneau Shepell will file a preliminary short form prospectus in all provinces of Canada by March 13, 2012. The prospectus offering is subject to all standard regulatory approvals, including that of the Toronto Stock Exchange, and is expected to close on or about March 27, 2012.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction. The debentures being offered, and the common shares issuable upon the conversion or redemption of the debentures, have not been and will not be registered under the U.S. Securities Act of 1933 or state securities laws. Accordingly, the debentures may not be offered or sold to U.S. persons except pursuant to applicable exemptions from registration.

Morneau Shepell

Morneau Shepell is the largest Canadian‐based firm offering benefits and pension consulting, outsourcing, as well as health and productivity solutions. The company works with clients to develop end-to-end insights and solutions that integrate with their business strategies to achieve results. Through Benefits and Health Solutions Consulting, Pension Consulting, Health Management, Administration Solutions and Shepell·fgi's Employee Assistance Program, Morneau Shepell helps clients reduce costs, increase employee productivity, and improve their competitive positions by supporting their employees' financial security, health and well-being.

Established in 1966, Morneau Shepell serves over 8,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 2,500 employees in offices across North America, we provide services to organizations across Canada, in the United States and around the globe.

Morneau Shepell Inc. is a publicly traded company on the Toronto Stock Exchange (TSX). For more information, visit morneaushepell.com.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Use of words such as "may", "will", "expect", "believe", or other words of similar effect may indicate a "forward-looking" statement. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in the Company's publicly filed documents (available on SEDAR at www.sedar.com) and in the firm's MD&A under the heading "Risks and Uncertainties". Those risks and uncertainties include ability to maintain profitability and manage growth, reliance on information systems and technology, reputational risk, dependence on key clients, reliance on key professionals and economic conditions. Many of these risks and uncertainties can affect the firm's actual results and could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statement made by the Company or on the firm's behalf. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements in this news release are qualified by these cautionary statements. These statements are made as of the date of this news release and, except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, the Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its financial or operating results or its securities.