EMERGE Announces Signing of Definitive Agreement to Sell WholesalePet for US$9.25M, and Plans Major Debt Reduction

• EMERGE has entered into a definitive agreement to sell WholesalePet for US$9.25M in cash to Tiny Fund I, LP
• In conjunction, EMERGE expects to pay down the majority of its senior credit facility on closing, in addition to fully satisfying the deferred payment owed to WholesalePet
• Following the Transaction, the Company will retain 4 brands across 2 main verticals, Grocery and Golf
• Additional cost savings expected from reduced HQ overheads

TORONTO, Jan. 24, 2024 /CNW/ - EMERGE Commerce Ltd. (TSXV: ECOM) ("EMERGE", or the "Company"), a diversified acquirer and operator of niche e-commerce brands, announces that Emerge US Holdings LLC ("EMERGE US") and Retail Store Networks, Inc. (dba "WholesalePet.com") ("WSP" or the "Target"), a direct and indirect subsidiary of the Company respectively, have entered into a share purchase agreement (the "Agreement") dated January 23, 2024, with Tiny Fund I, LP (the "Buyer"), an arm's length third party to the Company and a private partnership of Tiny Ltd. ("Tiny"), Emerge US and the Target, pursuant to which EMERGE US intends to sell to the Buyer all of the issued and outstanding shares in the capital of WSP (the "Transaction").

Ghassan Halazon, Founder and CEO of EMERGE commented, "Consistent with the strategy we laid out in 2023 to prioritize debt paydown by exploring all strategic options available to the Company, the sale of WSP marks our most substantial transaction to date, eliminating the majority of our debt, saving us an estimated $1.38M in annual interest expense, and paving the way for a refresh scenario to double down on our profitable grocery and golf businesses, with a focus on driving organic growth in 2024. We anticipate additional HQ savings in relation to servicing a more focused set of brands, and we plan to continue to explore strategic opportunities that further strengthen our foundation,"

Pursuant to the Agreement and in consideration for the Transaction, the Buyer has agreed to pay to EMERGE US, cash consideration of US$9,250,000 on closing of the Transaction ("Closing"), subject to certain transaction closing adjustments.

Subject to the satisfaction of all conditions precedent to the completion of the Transaction, including receipt of TSXV approval, Closing is expected to occur prior to the end of January, 2024 or such other date as EMERGE US, the Target and the Buyer may mutually agree.

Following the Transaction, EMERGE will retain 4 brands across 2 main verticals, Grocery and Golf, in Canada and the U.S., namely truLOCAL, Carnivore Club, UnderParandJustGolfStuff.

truLOCAL, our premium meat subscription/ grocery brand, is EMERGE's largest business by revenue. truLOCAL has also experienced our most significant increase in profitability in 2023, following our various cost savings initiatives and gross margin improvements over the last 15 months. Carnivore Club, a premium artisanal subscription brand, is housed under truLOCAL.

In addition, EMERGE also operates a golf vertical, across Canada and the U.S., which includes UnderPar, our discounted experiences/ tee-times business, and JustGolfStuff, our fast-growing golf products and apparel business.

In conjunction with the sale of WSP, EMERGE expects to utilize the majority of the transaction proceeds to pay down its senior credit facility on closing, which is expected to be reduced to C$5.85M from C$15.85M prior to the completion of the Transaction, and C$25M originally. The Company's interest expense savings following the aforementioned debt repayment is expected to be approximately C$1.38M annually.

Following the transaction, EMERGE will no longer have any deferred payment obligations owed to WSP shareholders.

INFOR Financial Inc. acted as the exclusive financial advisor to EMERGE in connection with the Transaction.

EMERGE is a diversified acquirer and operator of niche e-commerce brands in Canada and the U.S. Our subscription and marketplace e-commerce properties provide our members with access to offerings across a variety of verticals.

Tiny is a Canadian-based investment company focused primarily on investing and acquiring majority stakes in businesses that it expects to hold over the long-term.

To learn more visit https://www.emerge-commerce.com/

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

This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including, without limitation, statements related to the closing of the Transaction and the timing thereof, the satisfaction of all conditions precedent to the closing of the Transaction, including, without limitation, TSXV approval in respect of the Transaction and any benefit that may be derived by the Company from the Transaction, including, without limitation, any material benefit to the working capital or financial position of the Company as a result of the Transaction, interest savings, including the reference to interest expense savings of approximately C$1.38 million annually, which is based on a principal repayment of $10,000,000 and an annual interest rate of 13.75% over a period of 12 months, and the ability of the Company to pay down its senior credit facility, as well as other statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. There is no guarantee the Transaction will be completed as contemplated or at all, and the forward-looking information contained herein is based on the assumptions of management of the Company as of the date hereof including, without limitation, assumptions with respect to the financial position and working capital of the Company and the Target, the ability of the Company to obtain TSXV approval for the Transaction and the satisfaction of any other conditions thereto, and the conditions of the financial markets and the e-commerce markets generally, among others. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results (as applicable). Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including risks related to the disposition of a operating business by the Company, risks that the benefits derived from the Transaction may not be as expected or that the Company may not see any benefit from the Transaction, risks that each party to the Agreement may not satisfy its obligations or covenants, risks that the Company may be subject to litigation as a result of the Transaction including allegations of misrepresentation or breach of conditions or covenants, risks that the TSXV may not approve the Transaction, as well as the risk factors discussed in the Company's MD&A, and other public disclosure filings which are available through SEDAR+ at www.sedarplus.ca. The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

On Behalf of the Board
Ghassan Halazon
Director, President, and CEO

SOURCE EMERGE Commerce Ltd.

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