Rinoa Enterprises Ltd.
TSX VENTURE : RIN.P

October 12, 2006 19:47 ET

Rinoa Enterprises Ltd. and Paragon Pharmacies Ltd. Announce Filing of Interim Financial Statements and Proposed Share Transfer

CALGARY, ALBERTA--(CCNMatthews - Oct. 12, 2006) -

(Not for dissemination in the United States of America)

Rinoa Enterprises Ltd. ("Rinoa" or the "Corporation") (TSX VENTURE:RIN.P), a capital pool company, and Paragon Pharmacies Ltd. ("Paragon") are pleased to announce, further to the media release issued by Rinoa on October 2, 2006, that Paragon's interim unaudited financial statements for the nine month period ended May 31, 2006 (the "Interim Statements") have been filed on SEDAR (www.sedar.com). Paragon's management believes that the Interim Statements do not disclose a material adverse change to Paragon or its financial results from that which was disclosed in the financial statements of Paragon contained in the joint proxy circular of Rinoa and Paragon dated August 11, 2006 (the "Information Circular"). Paragon's auditors will be providing a comfort letter to the TSX Venture Exchange in relation to the Interim Statements prior to and as a condition to closing the proposed amalgamation of Paragon and Rinoa.

As a result of certain purchase and sale agreements which have or are intended to be entered into in relation to the sale of common shares of Paragon ("Paragon Shares"), subject to receipt of TSX Venture Exchange approval, prior to the closing of the proposed amalgamation of Rinoa and Paragon (the "Amalgamation"), 1215685 Alberta Ltd. (as to 1,875,000 Paragon Shares), 485416 Alberta Limited (up to 200,000 Paragon Shares) and 485419 Alberta Limited (up to 200,000 Paragon Shares) (collectively, the "Vendors"), corporations which are owned and controlled, directly or indirectly, by Reginald Hihn, Dennis Shewchuk and their spouses, all of whom are officers or employees of Paragon, intend to transfer and sell up to an aggregate of 2,275,000 Paragon Shares to certain arm's length third party purchasers (the "Purchasers"). 650,000 of the 2,275,000 Paragon Shares to be sold are intended to be acquired by Rupertsland Holdings Inc. ("Rupertsland"). The shares of the resulting issuer acquired by Rupertsland on completion of the Amalgamation will all be subject to escrow as a result of Alan Macleod, a proposed director of the resulting issuer, being a director and officer of Rupertsland. An additional and currently unknown number of Paragon Shares may be acquired by other insiders or purchasers who will, if they acquire Paragon Shares, acquire shares of the resulting issuer that may also be subject to escrow and/or a 4 month hold period pursuant to the policies of the TSX Venture Exchange ("Exchange Policies"). The remaining Paragon Shares to be sold by the Vendors to other Purchasers will not be subject to escrow after giving effect to the Amalgamation. As a result, assuming completion of the proposed share transfer (and prior to any additional escrow or hold period requirements that may be required pursuant to Exchange Policies) and after giving effect to the Amalgamation, an aggregate of 14,429,885 common shares of the resulting issuer will be subject to a Form 5D Tier 1 Value Escrow Agreement of the TSX Venture Exchange. In addition, an additional 2,000,000 common shares of the resulting issuer will remain subject to a Form 2F Tier 1 CPC Escrow Agreement of the TSX Venture Exchange. The proposed transfers are subject to TSX Venture Exchange approval and it should not be assumed that these transfers will be approved.

Completion of the transaction is subject to a number of conditions, including but not limited to TSX Venture Exchange acceptance and majority of the minority 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 Information Circular of Rinoa and Paragon prepared in connection with the transaction, any information released or received with respect to the Proposed Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Rinoa should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Rinoa Enterprises Ltd.
    Randal Matkaluk
    President, Chief Executive Officer, Chief Financial Officer
    and a Director
    (403) 287-1340
    or
    Paragon Pharmacies Ltd.
    Craig Cameron
    President
    (250) 491-3936