Mr. David Watson reports

MEDICAL FACILITIES CORPORATION ANNOUNCES SUBSTANTIAL ISSUER BID FOR UP TO $80,750,000 OF ITS COMMON SHARES

Medical Facilities Corp. intends to commence a substantial issuer bid to purchase, for cancellation, a number of common shares of the corporation for an aggregate purchase price not exceeding $80.75-million. The corporation anticipates that the offer will commence on or about Jan. 20, 2025, and will expire at 11:59 p.m. Toronto time on Feb. 24, 2025, unless extended, varied or withdrawn by Medical Facilities. All amounts are expressed in Canadian dollars.

Medical Facilities determined to proceed with the offer following the completion of the corporation's previously announced sale of Black Hills Surgical Hospital LLP, one of its specialty surgical hospitals, a substantial portion of the net proceeds from which will be distributed to shareholders in the offer. Medical Facilities is making the offer because its board of directors believes, based on a number of factors, including recommendations from management, that the purchase of common shares is in the best interests of the corporation and represents an appropriate use of its available cash on hand in furtherance of the corporation's corporate strategy to return capital to shareholders. After giving effect to the offer, Medical Facilities will continue to have sufficient financial resources and working capital to conduct its continuing business and operations in accordance with its stated strategy.

Details of the offer

Details of the offer, including instructions for tendering common shares, will be included in the formal offer to purchase and issuer bid circular, letter of transmittal, and the notice of guaranteed delivery. The offer documents will be mailed to shareholders and filed with applicable Canadian securities regulatory authorities on or about Jan. 20, 2025, and made available without charge on SEDAR+ as well as posted on the corporation's website. Shareholders should carefully read the offer documents prior to making a decision with respect to the offer.

Auction process

The offer will proceed by way of a modified Dutch auction. Shareholders who wish to participate in the offer will be able to do so through either one of the two following options: (i) auction tenders, which will allow shareholders who choose to participate in the offer to individually select the price, within a range of not less than $15.50 and not more than $17 per common share (in increments of 10 cents per common share), at which they are willing to sell their common shares; or (ii) purchase price tenders in which participating shareholders will agree to have a specified number of common shares purchased at a purchase price to be determined pursuant to the auction and have their common shares considered as having been tendered at the minimum price of $15.50 per common share. Shareholders who validly deposit common shares without specifying the method in which they are tendering such common shares will be deemed to have made a purchase price tender.

Purchase price determination

Upon expiry of the offer, Medical Facilities will determine the purchase price of the common shares (which will not be less than $15.50 per common share and not more than $17 per common share) that will allow it to purchase the maximum number of common shares properly tendered to the offer pursuant to the auction tenders and the purchase price tenders outlined above, with an aggregate purchase price under the offer not exceeding $80.75-million. All common shares purchased by the corporation pursuant to the offer (including common shares tendered at prices below the purchase price) will be purchased at the same purchase price, subject to the terms and conditions of the offer documents. Common shares not taken up in connection with the offer, including common shares deposited pursuant to auction tenders at prices above the purchase price, will be returned to the shareholders.

As of today's date, Medical Facilities has 22,932,462 common shares issued and outstanding. If the purchase price is determined to be $15.50 per common share (which is the minimum price per common share under the offer), the maximum number of common shares that may be purchased by the corporation is 5,209,677 common shares, or approximately 22.7 per cent of the total number of common shares issued and outstanding. If the purchase price is determined to be $17 per common share (which is the maximum price per common share under the offer), the maximum number of common shares that may be purchased by the corporation is 4.75 million common shares or approximately 20.7 per cent of the total number of common shares issued and outstanding.

No director, officer or insider of the corporation has advised the corporation that he, she or it intends to deposit common shares under the offer. However, they may decide to deposit common shares to the offer in the event that the circumstances or decisions of any such persons change and, subject to applicable securities laws, such persons may sell their common shares through the facilities of the Toronto Stock Exchange or otherwise during the period prior to the expiry date.

The offer is not conditional upon any minimum number of common shares being properly deposited under the offer. The offer is, however, subject to other conditions and Medical Facilities reserves the right, subject to applicable laws, to withdraw, extend or vary the offer if, at any time prior to the payment of any common shares, certain events occur.

The corporation was authorized by the TSX to purchase up to 2,339,066 common shares pursuant to a normal course issuer bid that commenced on Dec. 1, 2024, and expires on Nov. 30, 2025. The corporation has purchased 459,900 common shares through the NCIB. There will be no further purchases of common shares under the NCIB until after the expiry of the offer or the date of termination of the offer.

Medical Facilities has engaged National Bank Financial to act as financial adviser, Shorecrest Group Ltd. to act as information agent and Computershare Investor Services Inc. to act as depositary for the offer. Any questions or requests for information regarding the offer may also be directed to the information agent or depositary.

This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell Medical Facilities common shares. The solicitation and the offer to buy the common shares will only be made pursuant to the offer documents to be filed with the applicable securities regulatory authorities in Canada. The offer will be optional for all shareholders, who will be free to choose whether to participate, how many common shares to tender and, in the case of auction tenders, at what price to tender within the specified range. Any shareholder who does not deposit any common shares (or whose common shares are not repurchased under the offer) will realize a proportionate increase in its percentage equity interest in Medical Facilities, to the extent that common shares are purchased and cancelled under the offer. The offer will not be made to, nor will tenders be accepted from or on behalf of, holders of common shares in any jurisdiction in which the making or acceptance of offers to sell common shares would not be in compliance with the laws of that jurisdiction. Medical Facilities' board of directors has approved the offer. However, none of Medical Facilities or its board of directors, the financial adviser, the information agent or the depositary makes any recommendation to any shareholder as to whether to deposit or refrain from depositing any or all common shares under the offer. Shareholders are strongly urged to review and evaluate carefully all information in the offer documents, to consult their own financial, tax and legal advisers, and to make their own decisions as to whether to deposit common shares under the offer. Shareholders should carefully consider the income tax consequences of accepting the offer and depositing common shares under the offer.

About Medical Facilities Corp.

Medical Facilities, in partnership with physicians, owns a portfolio of highly rated, high-quality surgical facilities in the United States. Medical Facilities' ownership includes controlling interests in three specialty surgical hospitals located in Arkansas, Oklahoma and South Dakota and an ambulatory surgery centre (ASC) located in California. The specialty surgical hospitals perform scheduled surgical, imaging, diagnostic and other procedures, including primary and urgent care, and derive their revenue from the fees charged for the use of their facilities. The ASC specializes in outpatient surgical procedures, with patient stays of less than 24 hours.

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