EnGlobe Corp. Announces Third Quarter Results, New Developments in Europe, an Equity Financing and Credit Agreement Amendment

    BURLINGTON, ON, Nov. 14 /CNW/ - EnGlobe Corp. ("EnGlobe" or the
"Corporation") (TSX: EG), a leading international integrated environmental
services company, today announced its financial results for the third quarter
ended September 30, 2008, new developments in Europe as well as an equity
financing and credit agreement amendment.

    KEY DEVELOPMENTS

    -   Third quarter results exceed those of the previous year and provide
        positive net earnings.

    -   Renewal of a 30-year agreement with Biffa Waste Management for joint
        investments and growth of Soil Treatment Facilities in the United
        Kingdom.

    -   New permit obtained to develop a Soil Treatment Facility in Lyon,
        Rhône-Alpes region of France. Operations are to be initiated in the
        second quarter of 2009.

    -   The Corporation has announced an $18 million equity financing led by
        ONCAP to strengthen EnGlobe's balance sheet along with an amendment
        to its Senior Credit Agreement to address the financial difficulties
        of the Company, as more fully described below.

    "We are pleased with EnGlobe's third quarter results, especially from our
Organic Waste Management ("OWM") division which is posting benefits from a
restructuring plan initiated in the second quarter," said André Héroux,
President and Chief Executive Officer of EnGlobe. "Third quarter results
included benefits from our four main priorities to restructure our business as
announced in October 2008. In addition to implementing a cost reduction
strategy, we are pleased to announce two major initiatives to pursue
aggressively our Site Assessment and Remediation ("SAR") division's growth
plan in Europe. First, we have renewed a 30-year partnership agreement with
Biffa Waste Management for joint investments and growth of Soil Treatment
Facilities ("STF") throughout the UK. We currently have two STFs in operation
in the UK while a third one is soon to be implemented in 2009 in Redhill.
Also, we have recently obtained a permit to build and operate an STF near
Lyon, in the Rhône-Alpes region which hosts the largest number of contaminated
sites and second largest real estate market in France. Construction of this
new STF will be initiated by the end of 2008 and will be fully operational in
the second quarter of 2009."
    "In addition, as a result of the Corporation's financial difficulties
year to date, the Corporation's largest shareholder, ONCAP, has agreed to
invest up to $18 million to recapitalize the Corporation which in conjunction
with an amendment to the Corporation's senior credit agreement will provide
the Corporation with the proper foundation to execute its growth strategy
going forward."

    THIRD QUARTER RESULTS
    Selected financial information (unaudited)
    Quarter ended September 30 (In thousands of dollars, except per share
    amounts)

                                               Third Quarter   Third Quarter
    Condensed Statements of Operations         2008            2007

    Revenue                                         45,760            39,957
    EBITDA(1)                                        6,388             5,357
    Net Earnings                                       105                92

    (1) EBITDA as referred to in this press release is a non-GAAP measure.
    See the Management's Discussion and Analysis, available on www.sedar.com,
    for the definition and the reconciliation to the consolidated statements
    of earnings.

    Results of Operations

    Revenue was $45.8 million for the quarter ended September 30, 2008
compared with revenue of $40.0 million for the quarter ended September 30,
2007 an increase of $5.8 million or 14.5%. The growth in revenue is driven by
greater revenue in the SAR division which is primarily attributable to the
Celtic acquisition and an increase in revenue from a new major contract in
Northern Canada.
    Gross profit for the quarter ended September 30, 2008 was $13.6 million
compared with $12.2 million for the quarter ended September 30, 2007, an
increase of $1.4 million or 11.5%. Gross margin for the quarter ended
September 30, 2008 was 29.7% compared to 30.6% for the quarter ended September
30, 2007. The increase in gross profit is primarily attributable to the
acquisition of Celtic and gross profit generated by a new major contract in
Northern Canada.
    EBITDA for the quarter ended September 30, 2008 was $6.4 million compared
with $5.4 million for the quarter ended September 30, 2007, an increase of
$1.0 million. This increase in EBITDA is mainly attributable to Celtic's
contribution of $1.2 million. It is important to note that the Corporation's
OWM division experienced improved performance in the third quarter following
the difficult challenges experienced earlier in 2008.
    The adjusted earnings for the quarter ended September 30, 2008 was $5.2
million compared to $3.8 million for the quarter ended September 30, 2007, an
increase of $1.4 million mostly attributable to Celtic activities which
represents an additional $1.0 million.
    For the three month period ended September 30, 2008, cash used in
operations was $0.8 million compared with cash used in operations of $2.1
million for the three month period ended September 30, 2007. Cash used in
operating activities reflects the change in non-cash working capital items of
$3.2 million partially offset by $2.4 million generated by our cash from
operating activities before fluctuations in non-cash working capital.

    YEAR-TO-DATE RESULTS

    For the first nine months of 2008, EnGlobe generated revenue of $108.3
million, compared with revenue of $109.2 million during the first nine months
ended September 30, 2007, a decrease of $0.9 million or 0.8% year to date. The
Celtic acquisition on March 25, 2008 contributed $11.5 million in SAR division
revenue. This increase has been offset by lower revenue from existing
operations mainly due to a reduction in revenue from the SAR United Kingdom
markets and OWM Ontario and Quebec.
    Gross profit for the nine months ended September 30, 2008 was $23.0
million, compared to gross profit of $31.6 million for the nine months ended
September 30, 2007, a decrease of $8.6 million or 27.2%. Gross margin for the
nine months ended September 30, 2008 was 21.2% compared to 28.9% for the nine
months ended September 30, 2007. The reduction in gross profit and gross
margin is primarily attributable to the OWM division, where treatment and
disposal costs increased significantly.
    EBITDA for the nine months ended September 30, 2008 was $1.2 million
compared with $10.9 million for the nine months ended September 30, 2007, a
decrease of $9.7 million. Year over year, the acquisition of Celtic generated
EBITDA of $2.0 million. The reduction in EBITDA is primarily related to the
challenges experienced by the Corporation's OWM division as outlined more
specifically in the report for the second quarter of 2008. These challenges
have led to the substantial reduction in EBITDA in the year to date results.
    The adjusted loss for the nine months ended September 30, 2008 was $3.1
million compared with an earnings income before the undernoted items of $6.2
million for the nine months ended September 30, 2007, a decrease of $9.3
million.
    For the nine month period ended September 30, 2008, cash used in
operations was $5.2 million compared with cash used in operations of $5.9
million for the nine month period ended September 30, 2007. Cash used in
operating activities reflected the change in non-cash working capital items
that generated $2.6 million in cash, offset by $7.9 million derived from cash
from operating activities before fluctuations in non-cash working capital. In
comparison, for the nine month period ended September 30 2007, the cash
provided by continuing operations before working capital charges was $3.3
million, offset by non-cash working capital items which used $9.5 million.
    EnGlobe Corp.'s full unaudited interim consolidated financial statements,
notes, and Management's Discussion and Analysis for the three-month period
ended September 30, 2008 are available at http://www.sedar.com.

    ENGLOBE ANNOUNCES EQUITY FINANCING AND CREDIT AGREEMENT AMENDMENT

    Background

    As previously announced, the Corporation's financial difficulties
resulted in the breach of the Corporation's financial covenants in its credit
agreements. The Corporation entered into a Waiver and Amendment agreement with
its senior lenders, which are arm's length to the Corporation, that was then
extended until November 14, 2008. During this period the Corporation has been
renegotiating its credit agreements with its lenders, which has resulted in an
amendment agreement (the "Amendment") that should provide longer term
stability to the Corporation's capital structure. As part of the Amendment,
the senior lenders have requested that the Corporation refinance its senior
debt with at least $15,000,000 of additional capital. With this additional
capital the senior lenders have agreed to modify the Corporation's financial
covenants for the remainder of 2008 and all of 2009. With these changes, the
Corporation anticipates it will meet its new financial covenants on an ongoing
basis and will have sufficient liquidity.
    To meet the senior lenders' request for additional capital to be invested
into the Corporation, EnGlobe plans to issue to the purchasers set out below
an aggregate maximum of $18,000,000 of Series 3 convertible preferred shares
("Preferred Shares"). To the extent Preferred Shares are issued to such
purchasers other than ONCAP, ONCAP will backstop the proposed offering with a
minimum total investment of $17,000,000. Preferred Shares will not be issued
to non-insiders of the Corporation. The definitive terms of the proposed
offering remain subject to negotiation and approval of the final form of
financing documentation.

    The Offering

    As a result, the Corporation announced today that it is proceeding with a
nonbrokered, non-arms' length private placement financing (the "Offering")
consisting of the issuance of Preferred Shares to ONCAP II, L.P. and/or its
affiliates (collectively "ONCAP") on a private placement basis. Although the
final details of the Offering have not yet been confirmed, it is conceivable
that Preferred Shares may also be issued to André Héroux, the President and
Chief Executive Officer of the Corporation and Mario Saucier, the Chief
Financial Officer of the Corporation (collectively, the "Management
Purchasers", and together with ONCAP, collectively, the "Purchasers"). The
proceeds of the Offering will be used to repay existing indebtedness to
recapitalize the Corporation and to pay the costs associated with the
Offering.
    As part of the refinancing for the next twelve months ONCAP has agreed to
accept non-cash compensation instead of cash interest and dividends on its
existing various investment securities in EnGlobe (consisting of (i) Units
(Convertible Debentures and Series 1 Preferred Shares), (ii) Debentures and
(iii) Series 2 Preferred Shares) as well as waive its previously contractually
agreed right to increase the interest and dividend rates on its various
existing securities in the Corporation. In addition, ONCAP has also agreed
that the conversion price of its existing Unit investment from March 2006 will
be fixed at the initial conversion price of $0.323 per share (subject to
customary anti-dilution adjustments) and that it will waive its previously
contractually agreed right to reduce its conversion price as a result of an
Indemnity Event as defined in the March 2006 Unit investment agreement.
    The Preferred Shares will be non-voting securities and convertible at any
time by the holders thereof on the basis of one Preferred Share for each
common share of the Corporation ("Common Shares"). Holders of the Preferred
Shares are entitled to receive, subject to certain exceptions, a cumulative
dividend of 6% per annum calculated on a daily basis and payable quarterly at
the Corporation's option in cash or additional equivalent value Preferred
Shares. All Preferred Shares will be convertible at the holder's option at any
time into freely tradable Common Shares at a conversion price of $0.10 per
Common Share (subject to customary anti-dilution adjustments). The Preferred
Shares are not redeemable at the option of the Corporation before November 15,
2018, and thereafter the Corporation may redeem all but not less than all of
the Preferred Shares at the issue price plus all accrued and unpaid dividends
up to but excluding the redemption date. Additionally, upon the closing of the
Offering, ONCAP will be entitled to fees from the Corporation equal to 6% of
the initial face value of the Preferred Shares, which fees will be paid in
equivalent-value Preferred Shares.
    ONCAP currently holds 24,636,937 Common Shares representing 28.4% of
EnGlobe's currently issued and outstanding Common Shares. In addition, ONCAP
currently holds series 1 convertible preferred shares, series 2 convertible
preferred shares, Class A debentures and Class B debentures which, if
converted, would entitle ONCAP to an additional 71,212,618 Common Shares
(representing 56.9% on a fully diluted basis).
    As a result of the Offering, ONCAP will hold or be entitled to
276,649,555 Common Shares representing approximately 77.0% of the issued and
outstanding Common Shares. Additionally, if the Corporation elects to do so
from time to time thereafter in order to pay the annual dividend on the
Preferred Shares (as described above), ONCAP would be entitled to additional
Preferred Shares that could be converted into additional Common Shares.
    André Héroux, the President and Chief Executive Officer of the
Corporation, and Mario Saucier, the Chief Financial Officer of the
Corporation, each currently hold no Common Shares.

    Financial Hardship

    The Offering is being made on a non-arms' length basis and will
constitute a related party transaction under securities laws. ONCAP II, L.P.,
Mr. André Héroux, and Mr. Mario Saucier are currently insiders of the
Corporation. The Corporation does not intend to obtain a valuation or majority
of the minority shareholder approval but will instead rely on exemptions from
such requirements available under Multilateral Instrument 61-101 and from the
security holder approval requirements of the TSX in Subsection 604(e) of the
TSX Company Manual available in situations of financial hardship.
    In this regard, the Corporation's board of directors (the "Board") has
established an independent committee consisting of Michael Harris and Allen
Clarke (the "Independent Committee"). The Independent Committee retained
independent counsel to advise it on the issues related to financial hardship.
Members of the Independent Committee (i) separately met with and / or
discussed the financial hardship issue with representatives of the banking
syndicate, ONCAP and the management team of the Corporation, and (ii) reviewed
all relevant documentation.
    Each of the Board and the Independent Committee has determined, acting in
good faith, that (i) the Corporation is in serious financial difficulty; (ii)
the proposed transaction has been designed to improve the Corporation's
financial situation; (iii) the terms of the Offering are reasonable in the
circumstances.
    Factors considered by the Board and the Independent Committee in making
such a determination include the requirements of the Company's senior lenders
and bonding partner, the existing going concern note in its financial
statements for the period ended June 30, 2008, prevailing conditions in the
financial markets and the limited availability of alternative financing
arrangements.
    The TSX has accepted notice of this private placement subject to
receiving customary documentation. The transaction is expected to close prior
to December 31, 2008 but no sooner than ten days from dissemination of this
press release. The securities issuable pursuant to the Offering will be
subject to applicable regulatory hold periods.

    ABOUT ENGLOBE CORP.

    EnGlobe Corp. is a leading international integrated environmental
services company specializing in the management of organic-based waste streams
and contaminated soils, with an emphasis on beneficial reuse. EnGlobe offers
cost-effective solutions to municipal, commercial and industrial clients in
Canada, the northern United States, England and France through its
subsidiaries: Biogénie S.R.D.C. Inc. for site assessment and remediation, GSI
Environment Inc. for organic waste management, and Tanknology Canada Inc. for
tank testing and calibration. EnGlobe shares are listed on the Toronto Stock
Exchange under the ticker symbol EG. Additional information is available at
www.englobecorp.com.

    FORWARD-LOOKING STATEMENTS

    This press release contains certain forward-looking statements. Such
statements relate to, among other things, sales growth, expansion and growth
of the Corporation's business, future capital expenditures and the
Corporation's business strategy. Forward-looking statements are subject to
inherent uncertainties and risks including, but not limited to: general
industry and economic conditions, changes in the Corporation's relationships
with its suppliers, pricing pressures and other competitive factors, the
availability and costs of fuels and utilities, the results of the
Corporation's ongoing efforts to improve cost effectiveness, changes in
regulatory requirements affecting the Corporation's business and the
availability and terms of financing. Other Risk Factors are set out and
described in the Corporation's Annual Information Form which is available at
www.sedar.com. Consequently, actual results and events may vary significantly
from those included in, contemplated by or implied by such forward-looking
statements. In evaluating forward-looking statements, readers should
specifically consider the various factors that could cause actual events or
results to differ materially from such forward-looking statements.

For further information: Investors: Mario Saucier, Chief Financial
Officer, EnGlobe Corp., T (450) 929-4949; Media: Marie-Chantal Turcotte,
Director, Legal Affairs, EnGlobe Corp., mcturcotte@englobecorp.com, T (418)
781-0191 ext. 5235