Imperial Ginseng Products Ltd. Announces Debt Settlement and Debt Reorganization

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 16, 2013) - Imperial Ginseng Products Ltd. (TSX VENTURE:IGP) (TSX VENTURE:IGP.PR.A) (the "Company") announces that it has entered into a debt settlement and debt reorganization agreement (together the "Debt Settlement Agreement") with certain officers, directors and significant shareholders of the Company (the "Debt Holders"). As at June 30, 2013, the Company was indebted to the Debt Holders in the amount of $2,984,944 consisting of a current debt of $2,707,578 and unpaid dividends on Class "A" preference shares of $277,366. Under the Debt Settlement Agreement, $1,114,944 of the indebtedness will be settled by the issuance of 4,129,422 common shares of the Company at the deemed price of $0.27 per share and the remaining $1,870,000 of the indebtedness will be repaid under the terms of debentures (the "Debentures") having a term of eight years commencing January 1, 2014, and to be secured by all of the assets of the Company. The Debentures will be subordinate to the Company's indebtedness to its commercial bank. During the first four years of the term of the Debentures, they will not bear interest and no repayments of principal will be required. During the next four years of the term of the Debentures, principal shall be repayable as to 25% per annum each January 1, commencing January 1, 2018, and shall bear interest thereafter at the rate of 9% per annum. The Company has the right to pre-pay any amount of the Debentures at any time with a 5% prepayment fee.

All shares issued pursuant to the debt settlement will be subject to a negotiated long term hold period expiring as to one-third of the shares at the end of each of the third, fourth and fifth years after issuance.

An Independent Committee of the Board of Directors was formed in 2011 to negotiate the settlement of the indebtedness to the Debt Holders. The Independent Committee has recommended the Debt Settlement Agreement and believes it is in the best interest of the Company and all shareholders as it (i) removes uncertainly with respect to the debt by converting the cash settled portion of the debt from a current liability to a long term liability with specific repayment terms, (ii) reduces the Company's total debt from approximately $3 million to $1.87 million, (iii) conserves the Company's cash for the next four years, and (iv) because the interest rate drops from 12% to 9% and no interest is charged for the first four years, saves the Company over $3 million in interest charges over the next eight years.

The transaction is subject to the approval of the TSX Venture Exchange and the shareholders of the Company.

The Debt Holders include Trilogy Bancorp Ltd. ("Trilogy"), a private company, and Stephen McCoach, Hugh Cartwright and Maurice Levesque, all officers and directors of the Company. Trilogy, of 310 - 650 West Georgia Street, Vancouver, BC, is owned and controlled equally by the family trusts of Stephen McCoach, Hugh Cartwright and Maurice Levesque. Accordingly, the following information is provided in relation to the shareholdings of each of these Debt Holders.

Upon the receipt of the requisite approvals and the closing of the Debt Settlement Agreement, Trilogy will acquire 166,459 common shares (the "Trilogy Shares") of the Company, representing 2.6% of the issued and outstanding shares of the Company calculated as at October 15, 2013, at the deemed price of $0.27 per Trilogy Share. After the acquisition of the Trilogy Shares, Trilogy will own 1,014,943 common shares representing 15.6% of the issued and outstanding common shares of the Company calculated as at October 15, 2013. Trilogy will be acquiring the securities for investment purposes and may acquire further common shares or dispose of its holdings of common shares of the Company both as investment conditions warrant.

Upon the receipt of the requisite approvals and the closing of the Debt Settlement Agreement, Stephen McCoach ("McCoach"), of Vancouver, BC, will acquire 2,222,222 common shares (the "McCoach Shares") of the Company, representing 34.1% of the issued and outstanding shares of the Company calculated as at October 15, 2013, at the deemed price of $0.27 per McCoach Share. After the acquisition of the McCoach Shares, McCoach will own 2,252,091 common shares representing 34.6% of the issued and outstanding common shares of the Company calculated as at October 15, 2013. In addition, McCoach's family trust will hold its one-third interest in Trilogy, which will hold the number of shares set out above. McCoach will be acquiring the securities for investment purposes and may acquire further common shares or dispose of its holdings of common shares of the Company both as investment conditions warrant.

Upon the receipt of the requisite approvals and the closing of the Debt Settlement Agreement, Hugh Cartwright ("Cartwright"), of Vancouver, BC, will acquire 851,852 common shares (the "Cartwright Shares") of the Company, representing 13.1% of the issued and outstanding shares of the Company, calculated as at October 15, 2013, at the deemed price of $0.27 per Cartwright Share. After the acquisition of the Cartwright Shares, Cartwright will own 900,387 common shares representing 13.8% of the issued and outstanding common shares of the Company calculated as at October 15, 2013. In addition, Cartwright's family trust will hold its one-third interest in Trilogy, which will hold the number of shares set out above. Cartwright will be acquiring the securities for investment purposes and may acquire further common shares or dispose of its holdings of common shares of the Company both as investment conditions warrant.

Upon the receipt of the requisite approvals and the closing of the Debt Settlement Agreement, Maurice Levesque ("Levesque"), of North Vancouver, BC, will acquire 888,889 common shares (the "Levesque Shares") of the Company, representing 13.7% of the issued and outstanding shares of the Company, calculated as at October 15, 2013, at the deemed price of $0.27 per Levesque Share. After the acquisition of the Levesque Shares, Levesque will own 897,359 common shares representing 13.8% of the issued and outstanding common shares of the Company calculated as at October 15, 2013. In addition, Levesque's family trust will hold its one-third interest in Trilogy, which will hold the number of shares set out above. Levesque will be acquiring the securities for investment purposes and may acquire further common shares or dispose of its holdings of common shares of the Company both as investment conditions warrant.

ON BEHALF OF THE BOARD OF DIRECTORS

Stephen McCoach, Chief Executive Officer and Director

For additional information or for a copy of the early warning report, please contact Imperial Ginseng Products Ltd.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.