Tangelo Games Provides Additional Rationale About Proposed Transaction to Become a Private Company

TORONTO, July 19, 2018 — Further to the press release of July 11, 2018, Tangelo Games Corporation (“Tangelo”, or “the Company”) (TSX-VENTURE:GEL) is providing shareholders with further information with respect to the background and process regarding the proposed sale of the Company to GoGel Holdings Inc. (“GoGel”), an affiliate of Third Eye Capital (“TEC”) — the Company’s primary lender.

Under the terms of the arrangement agreement with GoGel, GoGel will acquire all the issued and outstanding common shares of Tangelo for C$0.02565 per share in cash by way of a statutory plan of arrangement (the “Arrangement”). The transaction was unanimously approved by the Company’s Board of Directors (the “Board”) following a comprehensive exploration and review of strategic alternatives for Tangelo.

“Over the past two years, given the Company’s financial obligations and changing industry landscape, Tangelo, with the assistance of its legal and financial advisors, has carefully reviewed and considered potential alternatives available to the Company, including detailed discussions with potential strategic partners and financial investors,” said James Lanthier, Chief Executive Officer of Tangelo. “After our comprehensive review and consultation process, the Company concluded that the sale to GoGel represents the best available alternative to shareholders.”

Sale to GoGel is the only available alternative that will provide value to shareholders

At the beginning of 2016, when it became apparent that the Company could not raise the equity needed to partially pay down or retire the balance of its term loan, Tangelo’s management began a review of strategic alternatives.

This exhaustive process resulted in the Company entering into over 30 non-disclosure agreements and eight different non-binding proposals with prospective strategic and financial investors.

Other than the proposal from GoGel, however, all of the proposals required significant concessions from TEC, in respect of repayment under the term loan, or equity raises that were unachievable given the Company’s capital structure.

Given Tangelo’s debt obligation to TEC, the Company’s only alternative to the arrangement agreement with GoGel is to seek creditor protection, where common shareholders would most likely receive no consideration. The Company is eager to avoid this scenario.

Based, in part, on a fairness opinion from Echelon Wealth Partners Inc. (see details below), the Board believes that the proposal that it has agreed to with GoGel is fair, and more importantly, is the only workable alternative that preserves value for common shareholders. The cash purchase price under the agreement represents a 71% premium to Tangelo’s closing share price of C$0.015 on July 10, 2018, the last trading day prior to the announcement of the arrangement agreement.

Arrangement Details

The transaction will be implemented by way of the Arrangement under the Business Corporations Act (Ontario). The implementation of the Arrangement will be subject to approval by the Tangelo shareholders at an annual and special meeting (the “Meeting“), which is expected to be held in the third quarter of 2018. The Arrangement will require the approval of 66 2/3% of all votes cast by shareholders of Tangelo at the Meeting. The Arrangement is also subject to the approval of the Ontario Superior Court of Justice and certain closing conditions customary for a transaction of this nature. The Arrangement is not subject to any financing contingency and the Purchaser will pay cash at closing.

The Arrangement has been reviewed by the Special Committee of Tangelo and has been unanimously approved by the Board of Directors of Tangelo following the unanimous recommendation of the Special Committee. The Board of Directors has also unanimously determined that the transaction is fair to the Tangelo shareholders, and that it is in the best interests of Tangelo and unanimously recommends that the Tangelo shareholders vote in favour of the transaction. The Special Committee has received a fairness opinion from Echelon Wealth Partners Inc. (“Echelon“) to the effect that the consideration payable under the Arrangement Agreement is fair, from a financial point of view, to the shareholders of Tangelo. The directors and certain officers of Tangelo have entered into voting agreements whereby they have agreed to, among other things, vote their securities in favour of the Arrangement.

Additional Information About the Arrangement

Copies of the fairness opinion put forth by Echelon, and a description of the various factors considered by the Board of Directors of the Company in its determination to approve the transaction and recommend that the Tangelo shareholders approve the transaction, as well as other relevant background information, will be included in the management information circular to be sent to the Tangelo shareholders in advance of the Meeting. The management information circular, the Arrangement Agreement, and certain related documents will be filed with the Canadian securities regulators and will be available on SEDAR at www.sedar.com.

GoGel (and TEC) is a “related party” of the Company pursuant to Multilateral Instrument 61-101- Take Over bids and Special Transactions (“M1 61-101”) and as such, entering into the Arrangement Agreement is a “related party transaction” within the meaning of MI 61-101. The Company is not required to obtain a formal valuation in connection with the Arrangement Agreement as it is listed on the TSX Venture Exchange. GoGel is a related party of the Company as its parent company, TEC has “beneficial ownership” of approximately 16% of the shares of the Company on a partially diluted basis as TEC holds 35 million warrants of the Company at an exercise price of $0.06 per common share. As a result of the completion of the Arrangement, the outstanding warrants held by TEC will be cancelled. Neither TEC nor GoGel holds any Tangelo shares and neither entity will vote at the Meeting.

About Tangelo Games Corp.:

Tangelo Gaming Corp., the parent company of Tangelo Israel and Tangelo Spain, is a developer of social and mobile gaming for desktop, iOS and Android platforms. Tangelo Israel and Tangelo Spain design, develop and distribute their top ranked social casino-themed games within online social networks (such as Facebook) and mobile platforms (such as Android and iPhone). All of the Tangelo Israel and Tangelo Spain games are free to play and generate revenue primarily through the in-game sale of virtual coins.

For further information, please contact:

Spyros P. Karellas
President & CEO
Pinnacle Capital Markets LTD.
Mobile/Office: 416-433-5696
[email protected]
Skype: spyros.karellas

Cautionary Note Regarding Forward Looking Statements

This press release contains “forward-looking statements” and “forward-looking information” within the meaning of applicable securities laws. These statements and information appear in this document and include estimates, forecasts, information and statements as to management’s expectations with respect to, among other things, the completion of the Arrangement, receipt of all approvals, including from the Ontario Superior Court of Justice and the Tangelo shareholders, necessary to complete the Arrangement and the timing of the Meeting and the completion of the Arrangement. Often, but not always, forward-looking statements and information can be identified by the use of words such as “may”, “will”, “should”, “plans”, “expects”, “intends”, “anticipates”, “believes”, “budget”, and “scheduled” or the negative thereof or variations thereon or similar terminology. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Readers are cautioned that any such forward-looking statements and information are not guarantees and there can be no assurance that such statements and information will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company’s expectations are disclosed in the Company’s continuous disclosure documents which are filed with Canadian regulators on SEDAR (www.sedar.com), including in the circular to be sent to the Tangelo shareholders in advance of the Meeting. Such factors include, amongst others, the receipt of all necessary approvals to complete the Arrangement, the timing of the Meeting, the receipt of any superior proposals, and the completion of all conditions to the Arrangement. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise, except as required by applicable law. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

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