COTEC HOLDINGS CORP. PROVIDES UPDATE ON PROPOSED CHANGE OF BUSINESS TRANSACTION - Announces Proposed Private Placement of Subscription Receipts For Gross Proceeds of up to $12 million - Seite 3

As a result of the non-arm's nature of the proposed investment in BSL, the Proposed COB and the Proposed Transactions will require the approval of a majority of the Corporation's minority shareholders pursuant to TSXV rules, which the Corporation intends, subject to TSXV approval, to obtain by way of written consent.

Sponsorship of the Proposed COB is required unless an exemption is available or a waiver from this requirement can be obtained in accordance with the policies of the TSXV. The Corporation intends to apply for a waiver to the sponsorship requirement under Policy 2.2 of the TSXV, Sponsorship and Sponsorship Requirements. There is no assurance that a waiver will be granted.

Proposed Financing

In connection with the Proposed COB, the Corporation intends to complete a private placement of a minimum of 10,909,090 and a maximum of 21,818,181 subscription receipts ("Subscription Receipts") at price of $0.55 per Subscription Receipt for gross proceeds of a minimum of $6,000,000 and a maximum of $12,000,000 (the "Proposed Financing"). The Corporation has retained Odeon Capital Group LLC ("Odeon") as agent in connection with sales of Subscription Receipts to investors in the United States. The Proposed Financing will be conducted on a non-brokered basis outside of the United States.

Immediately prior to closing of the Proposed Transactions, each Subscription Receipt will be exchanged for one common share of the Corporation (a "Common Share") and one common share purchase warrant of the Corporation (a "Warrant"), for no additional consideration. Each Warrant will be exercisable for one Common Share at an exercise price of $0.75 per share for a period of 12 months from the issuance thereof. The gross proceeds of the Proposed Financing (net of the fees payable upon the closing of the Proposed Financing, as described below) will be held in escrow at which point they will be used to pay the balance of the fees described below, with the balance released to the Corporation.

The Corporation will use the net proceeds of the Proposed Financing to fund its investment in BSL, the initial drawdown of its subscription in the Fund and for working capital and general corporate purposes.

The Corporation will pay a cash fee to the Agent in an amount equal to 5% of the aggregate proceeds raised in the Proposed Financing from subscribers identified by the Agent. 50% of this fee will be payable at the closing of the Proposed Financing and 50% will be payable upon the exchange of the Subscription Receipts for Common Shares and Warrants. In addition, upon the exchange of the Subscription Receipts, the Corporation will issue to the Agent compensation warrants equivalent to 5% of the number of Subscription Receipts issued to subscribers identified by the Agent. Each compensation warrant will be exercisable for one Common Share at an exercise price of $0.55 per share for a period of 36 months from the issuance thereof.