Morneau Shepell Inc. Announces $75 Million Bought Deal Offering of 4.75% Convertible Debentures and the Redemption of Outstanding 5.75% Convertible Debentures

TORONTO, ONTARIO--(Marketwired - May 12, 2016) -

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Morneau Shepell Inc. ("Morneau Shepell" or the "Company") (MSI.TO) 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 $75 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.

The debentures will bear interest at a rate of 4.75% per annum, payable semi-annually on June 30 and December 31 each year, commencing on December 31, 2016. The debentures will be convertible at the holder's option into Morneau Shepell common shares at a conversion price of $25.10 per share, representing a conversion rate of 39.8406 Morneau Shepell shares per $1,000 principal amount of debentures. The debentures will mature on June 30, 2021 and may be redeemed by Morneau Shepell, in certain circumstances, on or after June 30, 2019.

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 $11 million principal amount of additional debentures at the offering price of $1,000 per debenture, for market stabilization purposes and to cover over-allotments, if any.

Morneau Shepell also announced that it has issued a notice of redemption to the holders of its currently outstanding 5.75% convertible unsecured subordinated debentures maturing on March 31, 2017 (the "5.75% Convertible Debentures"). As set out in the notice of redemption, Morneau Shepell intends to redeem all of the 5.75% Convertible Debentures issued and outstanding on June 13, 2016 (the "Redemption Date"). The 5.75% Convertible Debentures are redeemable at a redemption price equal to their principal amount, plus accrued and unpaid interest thereon up to, but excluding, the Redemption Date. As of the close of business on May 9, 2016, there was $74.7 million principal amount of 5.75% Convertible Debentures issued and outstanding.

Morneau Shepell intends to use the net proceeds of the offering to initially repay indebtedness under its credit facility which will then be available to be drawn, as required, to fund the redemption of the 5.75% Convertible Debentures and for general corporate purposes, including future acquisitions. The redemption of the 5.75% Convertible Debentures is not conditional upon the completion of the debenture offering.

In connection with the debenture offering, Morneau Shepell will file a preliminary short form prospectus in all provinces of Canada by May 18, 2016. 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 June 2, 2016.

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.

About Morneau Shepell Inc.

Morneau Shepell is the only human resources consulting and technology company that takes an integrative approach to employee assistance, health, benefits and retirement needs. The Company is the leading provider of employee and family assistance programs, as well as the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity and improve their competitive position. Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With almost 4,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (MSI.TO). For more information, visit www.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.