EarthFirst Canada Inc. provides a corporate update; strategic review process and Dokie construction continue

    /NOT FOR DISSEMINATION IN THE UNITED STATES OR OVER UNITED STATES WIRE
    SERVICES/

    CALGARY, Nov. 13 /CNW/ - EarthFirst Canada Inc. ("EarthFirst" or the
"Corporation" or the "Company") (TSX: EF, EF.WT) today provides a corporate
update. During the third quarter, EarthFirst continued to work on its
strategic review process and constructing its 144 MW Dokie I wind energy
project ("Dokie I Project") located in the Peace River area of northeast
British Columbia.
    On August 21, 2008, the Board of Directors of EarthFirst announced that
they had decided to commence a formal review of the Company's strategic
alternatives in order to maximize shareholder value. The Board of Directors
appointed a Special Committee of the Board to oversee the strategic review
process, and engaged Blair Franklin Capital Partners Inc. of Toronto, Ontario,
together with GMP Securities Ltd., to provide independent strategic advice to
the Special Committee. Independent legal counsel was also retained to provide
independent legal advice to the Special Committee. The Special Committee and
their advisors undertook a review of all the Company's alternatives and on
September 22, 2008, the Board of Directors decided to proceed with the sale of
EarthFirst and actively solicit interest from third party purchasers.
Following this decision, the assets and liabilities of the Corporation were
classified as held for sale. The net assets of the Corporation must also be
written down to their net realizable value.
    On November 4, 2008 the Corporation made an application to the Court of
Queen's Bench of Alberta, Judicial Centre of Calgary (the "Court") and
obtained an Order for creditor protection under the Companies' Creditors
Arrangement Act (Canada) (the "CCAA"). EarthFirst's efforts to pursue
strategic alternatives have been severely hindered by the unprecedented crisis
in the global financial markets which has impacted EarthFirst's ability to
raise financing or to complete a sale of the Company. As a result of
EarthFirst's current financial resources and the inability of the Corporation
to complete a fulsome sale process in sufficient time to address its financial
condition, EarthFirst's Board of Directors determined that seeking CCAA
protection would be in the best interests of the Corporation and its
stakeholders. While under CCAA protection, the Corporation will continue with
its day-to-day operations and its efforts to pursue strategic alternatives.
EarthFirst further expects CCAA protection will allow parties currently
engaged in the sale process additional time for due diligence.
    EarthFirst has sought protection under the CCAA as its cash in hand would
not allow it to meet its current obligations and its obligations with respect
to the ongoing construction of its 144 MW Dokie I Project in British Columbia.
CCAA protection stays creditors and others from enforcing rights against the
Corporation and affords it the opportunity to restructure its financial
affairs. The Court has granted CCAA protection for an initial period of 30
days, expiring December 4, 2008, to be extended thereafter as the Court deems
appropriate. If by December 4, 2008, the Corporation has not filed a Plan of
Arrangement (the "Plan"), or obtained an extension of the CCAA protection,
creditors and others will no longer be stayed from enforcing their rights.
    While under CCAA protection, the Corporation's Board of Directors
maintains its usual role and its management remains responsible for the
day-to-day operations of the Corporation, under the supervision of Ernst &
Young Inc., who is the Court-appointed Monitor (the "Monitor"), and who will
be responsible for reviewing the Corporation's ongoing operations, assisting
with the development and filing of the Plan, liaising with creditors and other
stakeholders and reporting to the Court. The Board of Directors and management
of the Corporation will be primarily responsible for formulating the Plan for
restructuring EarthFirst's affairs. The Corporation will continue with its
efforts to find a buyer for the company or its assets while under CCAA
protection.
    Although CCAA protection enables EarthFirst to continue with its
day-to-day operations until its CCAA status changes, the implications for
EarthFirst's shareholders are less clear. EarthFirst continues to explore a
number of alternatives, including a sale of EarthFirst and the repayment of
all creditors in full. However, the Plan must be approved by the requisite
number and value of the affected creditors, as required by law, as well as by
the Court. At the end of the restructuring process, the value of what is left
for shareholders will depend upon the terms of the Plan approved by the
affected stakeholders. If the Plan is not so approved, it is possible that
EarthFirst would be placed into receivership or bankruptcy.
    On November 3, 2008, EarthFirst received a Notice of Intention to Enforce
Security from WestLB AG ("WestLB"), a secured creditor of EarthFirst,
notifying the Corporation that it intends to enforce its security over the
project assets comprising the Dokie I Project pursuant to a Turbine Supply
Loan Agreement dated May 14, 2008 between EarthFirst and WestLB. The total
amount of indebtedness secured is $131 million. Pursuant to the notice, WestLB
will not have the right to enforce its security until after the expiry of 10
days following the sending of the notice. Prior to receiving CCAA protection,
EarthFirst and WestLB entered into a Forbearance Agreement in respect of the
indebtedness owed to WestLB by EarthFirst agreeing, among other things, that
WestLB would be exempted from the stay in the CCAA initial order but would
forbear from enforcing it's claim under the negotiated terms of the agreement
until January 4, 2009, and to other matters relating to the conduct of
EarthFirst during the period of CCAA protection.

    Operational Update

    During the third quarter, construction activities at the Dokie I Project
progressed to building foundations and erecting turbines. In the third
quarter, 11 foundations were completed and an additional five were excavated
and then winterized in order to conserve cash and reduce the exposure to
winter construction. Construction of the substation also began during the
third quarter. The first eight turbines and their blades along with 32 tower
sections were received on site as planned. At present, four turbines have been
completely erected and four towers have been partially erected. Overall, the
construction work is on schedule.
    The expected capital costs for the Dokie I Project remain at $360
million. The $35 million increase announced in the second quarter was due to
higher labour and commodity costs related to competitive pressures from
increased natural gas exploration and other economic activities in the area
($22 million), combined with an increase in the contingency allocation for the
project by the lenders' independent engineer ($13 million). In the second
quarter Garrad Hassan, the Corporation's independent wind consultant, changed
the wind energy estimation methodology it is applying to North American wind
projects. With this change, Garrad Hassan decreased its P50 annual energy
estimate by 2.3% to 341.5 GWh / annum which, in turn, lowered the anticipated
cash flows from the project and therefore the amount of leverage that can be
used to finance the project.
    To date, EarthFirst has not earned revenues from windpower production and
is considered to be in the development stage. It is currently anticipated by
management that there will be no revenue from windpower production until early
in 2009. EarthFirst incurred general and administrative, restructuring and
strategic review expenses for the third quarter and the first nine months of
2008 of $1.06 million and $3.54 million, respectively. The largest component
of these 2008 expenses is general and administrative costs of $0.9 million and
$3.35 million for the three and nine months ended September 30, 2008,
respectively. Stock based compensation costs of $0.09 million and $0.34
million are included in the compensation costs for the three and nine month
ended September 30, 2008. Restructuring costs for the first nine months of
2008 were $0.02 million, although none were incurred in the third quarter of
2008. During the third quarter, the company did incur $0.16 million in costs
relating to the strategic review process now underway.
    The recovery of development costs associated with windpower projects is
dependent upon the successful completion of those windpower projects.
EarthFirst reviews the recoverability of these costs when changes in
circumstances indicate they may be impaired. On September 22, 2008, when
EarthFirst's Board of Directors decided to proceed with the sale of the
Corporation and actively solicit interest from third party purchasers, the
assets and liabilities of the Corporation were re-classified as held for sale
and were grouped with windpower prospect development costs for valuation
purposes. There are different methods for calculating the fair value of the
Corporation's net assets including share price, indicative bid values and
analyses of the net present value of the future cash flows expected from
operations. The Corporation has reviewed its net asset value under each of
these methods and acknowledges that a write down of some significance is
required. However, given the large variance in fair market value produced
under each of the methods, EarthFirst believes that the true net asset value
is not reasonably determinable at this time. Once the strategic review process
has been completed and this value can be determined with more reliability,
EarthFirst will recognize the impairment and take the related charge to
operations.
    During the first three quarters of 2008, the focus of the work at the
Nuttby Mountain ("Nuttby") project in Nova Scotia, which was acquired earlier
in the year, was to obtain the required environmental assessment and related
permits. In July, the Nuttby project received its provincial environmental
assessment. Work continues on obtaining its federal environmental assessment
and other related permits. Negotiations to secure turbines for this project
continued during the quarter but were curtailed when EarthFirst entered CCAA.
Detailed engineering and design work on the project commenced during the
quarter.
    EarthFirst continues to work on advancing the permitting requirements for
its 30 MW's of projects near Grand Valley, Ontario. In Q1 2008, the local
municipality passed a by-law allowing for construction and operation of wind
turbines. EarthFirst determined that some of the provisions of this by-law
would place undue restrictions on the placement and operation of wind turbines
at this project, and thus filed a procedural appeal to the Ontario Municipal
Board. In the meantime, EarthFirst continues to work with the local
municipality to structure mutually acceptable by-laws which allow for wind
turbine construction and operation. The projects have submitted their final
Environmental Screening Report ("ESR") for the first six turbines of the 30 MW
group of projects to the Ontario Ministry of Environment. The second ESR for
the balance of turbines required for this group of projects was filed in
October 2008.

    Liquidity

    In its second quarter report, the company reported that as a result of
the second quarter capital cost increase, lower debt levels supported by the
project, and additional financing related costs the company had a financing
shortfall of approximately $50 million and that the Company was actively
working on financing this shortfall through a combination of subordinated debt
and equity. In the third quarter, the Company initiated the syndication of its
previously planned senior project finance debt facility of approximately $200
million to fund the remaining cost to complete the Dokie I project. Due the
unprecedented deterioration in global credit markets experienced by the
Company over this period, the Company has not been successful in completing
any of these financing initiatives to date. As a result, the Company's
financing requirements now exceed its available cash by $250 million.
    The Corporation is actively trying to complete its strategic review
process. However, there can be no assurance that this will occur. The
Corporation also continues to try to raise the senior project finance debt in
an effort to support the strategic review process. The ability of the
Corporation to continue as a going concern is dependent on obtaining
additional financing to finance its Dokie I Project.
    A $135 million turbine financing facility was entered into in May 2008.
This turbine financing facility is being provided by WestLB, and is providing
interim financing that allowed EarthFirst to meet its May 15, 2008 requirement
from Vestas to post a letter of credit for the unpaid portion of the turbines.
This facility was intended to provide interim financing until a senior secured
project finance credit facility could be completed. At September 30, 2008
EarthFirst has drawn $13.2 million under the turbine financing facility and
the rest of the facility is supporting the letter of credit with Vestas. Under
the terms of this facility, EarthFirst was originally required to make a $22.5
million payment in October of 2008. However, under the terms of a Forbearance
Agreement dated November 4, 2008 and described above, WestLB and EarthFirst
have mutually agreed to delay this payment until January 4, 2009. Furthermore,
the $22.5 million payment has been reduced by $4.2 million to reflect
September payments made to Vestas under the Turbine Supply Agreement, thereby
reducing the related letter of credit held by WestLB. The balance of payments
on the first eight turbines is anticipated to occur in late 2008.
    At September 30, 2008, the Corporation had cash and cash held in escrow
of $41.06 million compared to $65.13 million at June 30, 2008 and $73.82
million at December 31, 2007. The decrease in cash compared to both June 30,
2008 and December 31, 2007 relates to the funds expended on construction and
development activities during 2008. Cash was also used to fund the ongoing
administrative costs of the Corporation. Cash received during the first nine
months of 2008 included the net proceeds of $3.76 million received from the
IPO underwriters exercising their over-allotment option, interest on cash
balances, and incidental logging sales. Under the terms of the Turbine Supply
Agreement the Corporation is anticipated to have additional interim payments
of $4.2 million prior to the end of December 2008.
    On November 4, 2008, immediately prior to the CCAA filing, EarthFirst had
an available cash balance of $32.9 million and current liabilities totaling
approximately $21 million which have now been stayed under the CCAA process.

    Contractual Obligations as at September 30, 2008
    -------------------------------------------------------------------------
                                        Due        Due        Due        Due
                                  less than     2 to 3     4 to 5    after 5
    ('000's)               Total     1 year      years      years      years
    -------------------------------------------------------------------------
    Turbines            $117,685   $110,122   $  7,563    $     -   $      -
    -------------------------------------------------------------------------
    Turbine Warranties    27,517      1,860     12,907      12,750         -
    -------------------------------------------------------------------------
    Turbine Supply Loan   13,210     13,210          -           -         -
    -------------------------------------------------------------------------
    Other Construction
     Contracts            47,159     46,328        831           -         -
    -------------------------------------------------------------------------
    Leases (Land and
     Office)               1,128        267        549         312         -
    -------------------------------------------------------------------------
                        $206,699   $171,787   $ 21,850    $ 13,062  $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    In support of the EPA with BC Hydro, the Corporation was required to and
did post a $10.80 million letter of credit with BC Hydro in August 2006. As
collateral, the Corporation placed the equivalent amount of cash on deposit
with a chartered bank.
    The Corporation has entered into lease agreements with respect to the
site for the Dokie I Project. The term and the rent payable under the lease
agreements are based on the size of the location, capacity, and duration. The
lease agreements are for five years at $0.10 million per annum. Under the
terms of these lease agreements, the Corporation was required to put in place
letters of credit of $0.90 million during August, 2007, which are recorded
under performance deposits in the balance sheet.
    In December 2007, the Corporation leased the office space for the Calgary
office expiring January 2013. The total outstanding obligation on the lease at
September 30, 2008 was $0.74 million.
    The Corporation entered into a Turbine Supply Agreement ("TSA"), Service
Agreement and Warranty Agreement, and other fixed balance of plant contractual
commitments for the Dokie I Project. The Service Agreement commitment is
subject to increase annually by the percentage change in Consumer Price Index
("CPI"). As part of the TSA requirements, a payment performance letter of
credit was posted for $121.8 million. This letter of credit is supported by
the turbine supply loan facility. Under the terms of the TSA, the Corporation
made interim payments of approximately $4.2 million prior to the end of
September 2008 which commensurately reduces the letter of credit, with an
additional interim payment of $4.2 million expected prior to the end of
December 2008. The balance of payments under this contract is anticipated to
occur in 2009.

    CRCE Renouncements

    As at September 30, 2008, the Corporation has spent $99.6 million in CRCE
eligible expenditures based on the initial test phase plan. These expenditures
are largely attributed to various CRCE eligible pre-development,
pre-construction and site preparation costs ($36.6 million). The Company has
also incurred construction costs on the CRCE turbines and related
infrastructure of $63 million. For Pre - IPO flow through share investors,
qualified CRCE expenditures have been made in excess of the amounts renounced
to those investors. For IPO flow through share investors, while CRCE eligible
expenditures in excess of the renounced amount have been made, the Corporation
needs to begin testing the level of electrical energy produced by at least one
wind turbine prior to the end of the year. The Corporation is currently
endeavoring to meet this requirement. Please refer to the Indemnity Obligation
described in the "Risk Factors Relating to the Corporation" found on Page 47
of the Corporation's 2007 Annual Report for more detail on implications for
investors when there is a reduction in amounts renounced.

    Management and Board of Directors Changes

    During the third quarter, Paul Bradley resigned as a Director of
EarthFirst due to changed employment. The Corporation does not anticipate
appointing a replacement for Mr. Bradley at this time. The Board of Directors
of EarthFirst wishes to thank Mr. Bradley for his contributions to the
Corporation.
    In June, EarthFirst announced the appointment of Linda Chambers to the
position of President and Chief Executive Officer, effective July 2, 2008.
Mrs. Chambers was appointed to the Board of Directors at its August 12th, 2008
meeting. Ms. Chambers joined EarthFirst with the mandate to lead the Company's
growth plans as a leading independent developer of renewable energy projects
in Canada. With the unexpected difficulties experienced by the Company in
raising the necessary financing to complete the Dokie I Project, principally
due to the unprecedented deterioration in capital market conditions, the
Company's ability to pursue these growth plans is now limited. On November
10th, 2008, Ms. Chambers resigned her positions with EarthFirst. The Board of
Directors of EarthFirst wishes to thank Ms. Chambers for her contributions to
the Corporation.
    In Ms. Chambers' place, the Board of Directors has appointed Mr. Brian
Trypka as Chief Restructuring Officer.
    Readers are directed to the Corporation's 2007 Annual Report, pages 41 to
48, for a detailed discussion of certain risk factors which investors should
carefully consider before deciding to acquire securities of the Corporation.
The Annual Report is available on SEDAR at www.sedar.com and on the
Corporation's website at www.earthfirstcanada.com.

    Certain statements included in this news release constitute
"forward-looking information" within the meaning of applicable securities
legislation including the timing and continuance of CCAA protection. Such
forward-looking information involves known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of EarthFirst to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
information.
    Specifically, some of the material risks include not being able to
acquire required permits, delays in construction, not being able to obtain
financing and the uncertainty involved in the Court proceedings and the
implementation of a Plan under the CCAA.
    The forward-looking information contained in this news release represents
the expectations of EarthFirst as at November 13, 2008, and, accordingly, is
subject to change after such date. However, EarthFirst expressly disclaims any
intention or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise, except as
required by applicable law.

For further information: Derren Newell, VP, Finance and Chief Financial
Officer, EarthFirst Canada Inc., Tel: (403) 513-0766, Toll Free: 1 (877)
513-0777, E-Mail: dnewell@earthfirstcanada.com