Oaktree Announces Investment in SunOpta

LOS ANGELES--()--Oaktree Capital Management, L.P. ("Oaktree"), a leading global alternative investment management firm, announced today that, on October 7, 2016, funds managed by Oaktree (the "Investors") invested US$85 million in SunOpta Foods, Inc. ("SunOpta Foods"), a subsidiary of SunOpta Inc. ("SunOpta"), a leading global company focused on organic, non-genetically modified and specialty foods.

The private placement (the "Private Placement") was completed in connection with SunOpta's previously announced review of strategic alternatives. The net proceeds from the Private Placement have been used by SunOpta to reduce its second lien debt. The Investors intend to work with SunOpta to assist in the development and execution of a long-term strategic and operational plan which is expected to benefit all SunOpta stakeholders. The Investors are active in the consumer and retail industry, with a track record of driving growth in complex consumer businesses, including AdvancePierre Foods, Campofrio Food Group and Diamond Foods.

The Investors purchased US$85 million of newly created Series A preferred shares of SunOpta Foods (the "Preferred Shares") that are exchangeable into common shares of SunOpta at an initial exchange price of US$7.50, subject to adjustments. The Preferred Shares entitle the holder to a cumulative dividend of 8% per year that may be paid-in-kind or in cash at SunOpta's option. The cumulative dividend will increase from 8% per year to 12.5% beginning in October 2025.

Concurrently with the issuance of the Preferred Shares, SunOpta created and issued to an affiliate of the Investors, as trustee for the benefit of the Investors, a series of special shares designated as Special Shares, Series 1 (the "Special Voting Shares"). The Special Voting Shares entitle the Investors to vote on an as-exchanged basis together with the holders of common shares, as a single class, on the basis of one vote per common share issuable upon exchange of the Preferred Shares, subject to certain exceptions and limitations.

Prior to the Private Placement, the Investors did not own any securities in SunOpta. The Preferred Shares that the Investors acquired in connection with the Private Placement are exchangeable into approximately 11.7% of the issued and outstanding common shares of SunOpta on a partially diluted basis.

The Investors acquired the Preferred Shares for investment purposes and the purposes set out below. The Investors continuously evaluate the businesses and prospects of SunOpta and its subsidiaries, alternative investment opportunities and all other factors deemed relevant in determining whether additional securities of SunOpta will be acquired by the Investors or by other accounts or funds associated with the Investors or whether the Investors or any such other accounts or funds will dispose of Preferred Shares or common shares. At any time, subject to the limitations set forth in the definitive agreements entered into in connection with the Private Placement, additional securities of SunOpta or its subsidiaries may be acquired or some or all of the securities beneficially owned by the Investors may be sold, in either case in the open market, in privately negotiated transactions or otherwise, including, without limitation, by electing to exchange Preferred Shares into common shares, or by increasing or decreasing holdings in Preferred Shares or in common shares.

Pursuant to the investor rights agreement entered into between SunOpta, SunOpta Foods and the Investors in connection with the Private Placement (the "Investor Rights Agreement"), the Investors have agreed not to dispose of their Preferred Shares or common shares issuable upon exchange of their Preferred Shares until April 7, 2018 and have agreed not to purchase additional common shares of SunOpta, in each case without the consent of SunOpta and subject to certain exceptions set forth in the Investor Rights Agreement. Such exceptions include the ability of the Investors to purchase up to 3,000,000 common shares of SunOpta on the market or in private transactions within 12 months of the closing date of the Private Placement without the prior written consent of SunOpta.

Pursuant to the Investor Rights Agreement, the Investors are entitled to designate two nominees for election to SunOpta's board of directors for so long as the Investors beneficially own or control at least 11.1% of the common shares, on an as-exchanged basis. If the Investors beneficially own or control less than 11.1% but more than 5% of the common shares, on an as-exchanged basis, they shall be entitled to designate one nominee.

This summary description of definitive agreements entered into in connection with the Private Placement does not purport to be complete and is qualified in its entirety by reference to the complete text of such agreements to be filed by SunOpta on the System for Electronic Document Analysis and Review (SEDAR) at www.sedar.com.

This news release is being issued pursuant to the early warning reporting provisions of applicable Canadian securities laws. An early warning report with additional information in respect of the foregoing matters will be filed and made available on the System for Electronic Document Analysis and Review (SEDAR) at www.sedar.com under SunOpta's issuer profile. The Investors are Oaktree Organics, L.P. and Oaktree Huntington Investment Fund II, L.P. In order to obtain a copy of the early warning report, you may also contact Alyssa Linn of Sard Verbinnen & Co on behalf of Oaktree, at telephone number: 310-201-2040. Oaktree's address is 333 South Grand Ave., 28th Floor, Los Angeles, CA 90071. SunOpta's address is 2233 Argentia Road, Suite 401, Mississauga, Ontario, L5N 2X7.

About Oaktree

Oaktree is a leader among global investment managers specializing in alternative investments, with US$98 billion in assets under management as of June 30, 2016. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Headquartered in Los Angeles, the firm has over 900 employees and offices in 18 cities worldwide. For additional information, please visit Oaktree's website at www.oaktreecapital.com.

About SunOpta Inc.

SunOpta Inc. is a leading global company focused on organic, non-genetically modified ("non-GMO") and specialty foods. The Company specializes in the sourcing, processing and packaging of organic and non-GMO food products, integrated from seed through packaged products, with a focus on strategic vertically integrated business models. The Company's organic and non-GMO food operations revolve around value-added grain-, seed-, fruit- and vegetable-based product offerings, supported by a global sourcing and supply infrastructure.

Forward-Looking Information

Certain statements in the press release are forward-looking statements and are prospective in nature, including statements with respect to the Investors' future intentions regarding their investment in SunOpta. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Such forward-looking statements should therefore be construed in light of such factors, and their Investors are not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Contacts

Sard Verbinnen & Co for Oaktree
Alyssa Linn, 310-201-2040

Contacts

Sard Verbinnen & Co for Oaktree
Alyssa Linn, 310-201-2040