SMS Sustainco Inc

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES

SustainCo Inc. (the "Company" or "SustainCo") (TSX VENTURE:SMS) announces its
corporate and debt restructuring plans in anticipation of the Company's
determination to focus on building out its existing SustainCo Solutions and
Services and Clean Energy Development groups. 


Corporate Restructuring and Recapitalization 

As part of its plan to concentrate its focus on its existing SustainCo Solutions
and Services and Clean Energy Development groups, the Company has undertaken a
number of steps to reposition and recapitalize the Company in an effort to
execute on its strategic plan, which include: 


1 - The completion of the sale of all of the issued and outstanding shares of
Urban Mechanical Contracting Ltd. ("Urban Mechanical"). The sale of the
Company's Urban Mechanical Contracting division will provide the Company with $3
million in cash and will allow the Company to concentrate its efforts on its
sustainable infrastructure solutions. 


2 - Finalized the terms of a proposed debt issuance along with a consolidation
of the Company's pre-existing debt of $4,688,000, which includes $500,000 of
debt assumed from Urban Mechanical. The Company is proposing to convert all of
its existing indebtedness into the Secured Note Offering (as hereinafter
defined) discussed below. 


3 - Finalized the terms of a proposed non-brokered private placement of common
shares (the "Common Shares") of the Company (the "Private Placement"). The
proceeds of the Private Placement, together with the proceeds of the Secured
Note Offering, are intended to provide the Company with sufficient working
capital to operate and execute on its strategic focus and acquisition strategy. 


The strategic disposition of Urban and the financial restructuring of the
Company are expected to allow SustainCo to more fully concentrate its efforts in
higher growth areas with a recurrent revenue model. Specifically the Company
intends to focus on two core strategic areas: 




     Solutions and Services - The Company will continue to develop this     
     group focusing on energy and efficiency retrofits, mechanical controls 
     solutions and operation maintenance services. The Company's goal is to 
     become a leader in providing energy alternatives and to be the driver  
     of leading edge solutions, including thermal energy, LED lighting and  
     advanced resource management and performance monitoring technologies.  
                                                                            
     Clean Energy Developments - Through the Company's wholly-owned         
     subsidiary, CleanEnergy Developments Corp., SustainCo will continue to 
     engage in the design and development of large-scale alternative energy 
     solutions, including waste to energy, biomass generation, as well as   
     district thermal energy projects. The Company will then pass on the    
     development and long term servicing of these projects to its Solutions 
     and Services group.                                                    



The Company will also continue to strive to be a thought leader on
sustainability issues in the real estate asset management sector, investing in
and developing technologies and solutions to support its two core groups. 


"With SustainCo's focused strategy concentrating on higher growth areas and
recurrent servicing and maintenance opportunities we are moving SustainCo to
become one of the leading growth stories in the design, development, and
servicing of alternative energy and sustainable solutions," commented Emlyn
David, CEO of SustainCo.


Sale of Urban Mechanical and Special Meeting of Shareholders

The Company reports that it has completed the previously announced sale of 100%
of the issued and outstanding shares of Urban Mechanical, to Urban Holdings Inc.
for an aggregate purchase price of CAD $3,000,000 (the "Urban Sale"). 


At the Company's special meeting of shareholders held on December 10, 2013 (the
"Meeting"), the Company's shareholders approved the Urban Sale, as a special
resolution of the shareholders, with over 87% of the votes cast. Shareholders
also approved, by ordinary resolution, the revocation of By-Law No. 1 and the
adoption of By-Laws Nos. 2 and 3 of the Company. This ordinary resolution was
approved by 87% of the votes cast at the Meeting. 74.63% of the shareholders of
the Company were present at the meeting in person or by proxy.


Equity and Debt Restructuring

Private Placement - Equity 

The Company announces that it intends to complete a non-brokered private
placement of Common Shares at a price of $0.07 per Common Share for gross
proceeds to SustainCo of up to $900,000 (the "Private Placement"). Proceeds of
the Private Placement are intended to be used for targeted acquisitions and
general working capital purposes. 


Closing of the Private Placement is subject to the receipt of all necessary
regulatory approvals, including the approval of the TSX Venture Exchange (the
"Exchange"). The Common Shares to be issued in connection with the Private
Placement will be subject to a hold period expiring four months and one day from
the date of issuance.  


As at the date hereof there are 29,440,217 issued and outstanding Common Shares.
The Company has outstanding options to purchase an aggregate of 2,570,440 Common
Shares, outstanding warrants to purchase an aggregate of 7,322,492 Common
Shares, and outstanding agent options to purchase an aggregate of 1,363,118
Common Shares (assuming warrants obtained from exercising of the agent options
are also exercised). 


Additional Indebtedness and Consolidation of Pre-Existing Debt

SustainCo announces today that it has finalized the terms of its proposed
issuance of additional indebtedness and that it intends to consolidate its
pre-existing debt (the "Pre-Existing Debt") in an aggregate amount of
$4,688,000, which existing indebtedness includes $500,000 of debt assumed by the
Company from Urban Mechanical as part of the terms and conditions of the Urban
Sale. SustainCo intends to convert all Pre-Existing Debt into a secured term
note unit (a "Unit") offering (the "Secured Note Offering"), as previously
announced May 28, 2013. Each Unit to be issued pursuant to the Secured Note
Offering shall be comprised of: (i) one CAD $1,000.00 principal amount secured
term note (each, a "Term Note") of the Company; and (ii) one hundred (100)
common share purchase warrants (each common share purchase warrant, a "Warrant")
of the Company. The Term Notes will bear interest at a rate of 12% per annum and
will have a maturity date that is five (5) years following the closing of the
Secured Note Offering (the "Closing"), with a redemption feature exercisable by
the Company after a period of 24 months following the Closing. Each Warrant,
initially intended to be exercisable for a period of 24 months following the
Closing at an exercise price of $1.00 per Common Share, will now be exercisable
for a period of 36 months following the Closing at an exercise price of $0.25
per Common Share, subject to adjustment in certain events. Following the Debt
Consolidation Closing, the Corporation intends to apply to list the Term Notes
with the Canadian National Stock Exchange.


In connection with the Secured Note Offering, SustainCo has agreed to pay a
finder's fee equal to six per cent (6%) of any and all proceeds received by
SustainCo as a result of a finder's referral, and will issue that number of
Warrants as is equal to six per cent (6%) of the total number of Units sold by
the Company as a result of a finder's referrals. 


Closing of the Secured Note Offering is subject to receipt of all necessary
regulatory approvals, including the approval of the Exchange. The securities
issued in connection with the Secured Note Offering will be subject to a hold
period expiring four months and one day following the Closing.


Proceeds of the Secured Note Offering are intended to be used for general
working capital purposes and targeted acquisitions in furtherance of the
Company's business strategy. 


About SustainCo

SustainCo is a leading provider of sustainable infrastructure solutions and
services. SustainCo solutions and services offer long-term customer value and
environmental sustainability through a broad offering including alternative
energy solutions, energy efficiency, innovative facility technology solutions,
and facility maintenance services to customers in the multi-residential and ICI
"industrial commercial and institutional" sectors across Canada. SustainCo
focuses on both new build and retrofit markets. 


The securities being offered have not, nor will they be, registered under the
United States Securities Act of 1933, as amended, or any state securities laws
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons absent U.S. registration or an applicable
exemption from the U.S. registration requirements. This press release does not
constitute an offer for sale of securities in the United States.


Certain statements in this press release are forward-looking statements. The
reader is cautioned that assumptions used in the preparation of such
information, although considered reasonable by the Company at the time of
preparation, may prove to be incorrect. Forward-looking statements, specifically
those concerning future performance, the completion of the Private Placement,
consolidation of indebtedness and the Secured Note Offering and other statements
that are not historical fact, are subject to certain risks and uncertainties,
and actual results may differ materially from the Company's plans and
expectations. These plans, expectations, risks and uncertainties are detailed
herein and from time to time in the filings made by the Company with the
Exchange and securities regulators. The Company does not assume any obligation
to update or revise its forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law. Trading in
the securities of the Company should be considered highly speculative. All
forward-looking information contained in this news release is expressly
qualified in its entirety by this cautionary statement.


Neither the Exchange, nor its Regulation Services Provider (as that term is
defined in the policies of the Exchange) accepts responsibility for the adequacy
or accuracy of this release. No stock exchange, securities commission or other
regulatory authority has approved or disapproved the information contained
herein.


FOR FURTHER INFORMATION PLEASE CONTACT: 
SustainCo Inc.
Emlyn David
President, Chief Executive Officer and Chairman
(416) 840-5002

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