Counsel Corporation Raises US$15 Million Via Convertible Preferred Share Issue.

Business Editors

TORONTO--(BUSINESS WIRE)--Dec. 19, 2003

Counsel Corporation ("Counsel") (NASDAQ:CXSN) (TSX:CXS) announced today that it has completed a private placement of a new series of convertible preferred shares for proceeds of US$15 million. The proceeds from the private placement will be used for working capital purposes.

Counsel issued 10 million Series A Preferred Shares at a price of US$1.50 per share to Sherfam Inc. The Series A Preferred Shares are convertible into Common Shares on a one-for-one basis, subject to typical anti-dilution adjustments. Holders of Series A Preferred Shares will be entitled to vote, on an "as converted" basis, together with the holders of Common Shares on all matters submitted to a vote of shareholders. The Series A Preferred Shares are entitled to a dividend of 6% per annum, payable semi-annually on January 1 and July 1 on each year, commencing on July 1, 2004. As an alternative to cash dividends, Counsel may issue additional Series A Preferred Shares as a stock dividend, subject to an aggregate maximum of 2,000,000 Series A Preferred Shares.

The Series A Preferred Shares are redeemable at the option of the holder commencing on January 1, 2009 at their original issue price plus all accrued and unpaid dividends. Commencing on December 19, 2004, Counsel may force the conversion of 25% of the Series A Preferred Shares into Common Shares if the Common Shares have not traded at or below the Canadian dollar equivalent of US$3.00 on the TSX for 30 consecutive trading days, and may force the conversion of additional 25% tranches at minimum trading levels of US$3.50, US$3.75 and US$4.00, respectively. Consequently, if the Common Shares trade consistently above the Canadian dollar equivalent of US$4.00 per share on the TSX for at least 30 consecutive trading days, Counsel can require the conversion of all of the Series A Preferred Shares into Common Shares.

Counsel has agreed not to issue any Common Shares (or securities convertible into Common Shares), other than employee stock options, at less than US$1.50 per share as long as any Series A Preferred Shares remain outstanding. Sherfam Inc. will have the right to nominate one director of Counsel, which right it had not exercised as of closing. Counsel has also agreed that dividends on its common shares shall not exceed US$0.09 per share per annum, on a non-cumulative basis, as long as any Series A Preferred Shares are outstanding.

Allan Silber, Chairman and Chief Executive Officer of Counsel, stated, "We are very pleased to have arranged this share issue. It greatly strengthens our financial position and ensures that we will be able to fund the growth of our businesses."

About Counsel Corporation

Headquartered in Toronto, Ontario, Counsel Corporation (TSX:CXS / NASDAQ:CXSN) is a diversified company focused on acquiring and building businesses using its financial and operational expertise in two specific sectors: communications and real estate. Counsel's communications platform is focused on building upon its existing communications businesses through organic growth and by acquiring substantial additional customer revenues. Counsel's real estate platform has a focused strategy of investing in and developing income producing commercial properties, primarily retail shopping centres.

FORWARD-LOOKING STATEMENTS 

The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, other than statements of historical facts, which address Counsel Corporation's expectations, should be considered as forward-looking statements. Such statements are based on knowledge of the environment in which it currently operates, but because of the factors herein listed, as well as other factors beyond its control, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that may cause actual results to differ from anticipated results include, but are not limited to, obtaining necessary approvals and other risks detailed from time to time in the Company's securities and other regulatory filings.