Rockwater Capital Corp. has entered into agreements to complete a private placement of $35 million of senior unsecured convertible debentures due Dec. 31, 2010.

Caisse de depot et placement du Quebec has subscribed for $30 million of the debentures and members of senior management of Rockwater have subscribed for $5 million.

The debentures will bear interest at 6.75% per annum reducing to 6.50% per year.

The net proceeds of the private placement will be used to repay the bridge loan in connection with the acquisition of KBSH Capital Management Inc. and for general working capital purposes.

Commencing June 30, 2005, the debentures are convertible at the holders’ option into common shares of Rockwater at a price based on an average market price calculated at the time of closing, subject to adjustment if Rockwater completes a public offering of common shares on or before June 30, 2005.

Rockwater may not redeem the debentures prior to Dec. 31, 2008. From then through to the maturity date, Rockwater may, at its option, redeem the debentures, in whole or in part, subject to specified conditions.

Rockwater will have the right to repay the outstanding principal amount of the debentures, on maturity or redemption, through the issuance of Rockwater common shares.

Completion of the private placement is subject to receipt of all requisite regulatory approvals. Closing is scheduled to occur in January 2005.