RICHMOND, BC, March 3 /CNW/ - Ascalade Communications Inc. ("Ascalade" or
"the Company") (TSX: ACG) today announced that it intends to seek protection
from creditors under the Companies' Creditors Arrangement Act (CCAA) with the
British Columbia Supreme Court.
Ascalade's Board of Directors has determined that seeking creditor
protection is in the interests of the Company, its creditors, shareholders,
employees, customers and other stakeholders. These actions are necessary
because of the Company's inability to fund operations to meet customer demand.
This is as a result of significant operational challenges due to difficulty
hiring and retaining workers, continued labor and material cost increases,
sustained competitive price pressures and foreign exchange variations
impacting the business.
"Following the results of our previously announced operational and
strategic review, our Board of Directors has concluded that seeking CCAA
protection is in the best interest of the Company and its stakeholders. In
addition, we are exploring the sale in whole or in part of Ascalade's assets
as a key step in executing our stakeholder value strategy," said John Kim,
Ascalade's Lead Director. "We anticipate working with our advisors and
interested parties to execute this strategy successfully" he added.
In conjunction with the application for creditor protection the Company
announced the following updates:
- The resignation from the Board of Directors of Mr. Brian Barry and
Mr. Frankie Li. The resignations took effect on February 29, 2008.
- The formation of a Special Committee by the Board of Directors for
the purpose of exploring restructuring alternatives to maximize
creditor and shareholder value, including transactions involving the
sale of all or part of the assets of the Company.
- The retention of Deloitte & Touche Inc. as asset recovery and
restructuring advisors and to support management in ensuring creditor
and shareholder value is maximized.
- The formation of an executive project team to manage the
restructuring process. Under the leadership of Greg Allen, the
following executives have been retained to work on the restructuring
project - Greg Allen, Troy Bullock, Eric Ho and Fred Li.
- Ascalade Communications Limited, our Hong Kong subsidiary, will be
preparing to put forward a Scheme of Arrangement under the Hong Kong
laws for the consideration by its creditors. See note 1 below for
additional information on a Scheme of Arrangement.
- We plan to reduce the number of employees in our Canada, UK and Hong
Kong offices over the next three month period.
Greg Allen, Ascalade's President said: "Today's filing is a result of the
completion of our operational and strategic review and difficulties in funding
operations due to continued significant operational and business challenges.
Allen added "The Company believes it has valuable assets located throughout
the world and we believe that seeking CCAA protection will allow the Company
time to restructure its assets and operations and find alternatives that are
in the best interest of the Company's stakeholders."
The intent of the CCAA filing is to enable Ascalade to continue its day
to day operations for as long as possible or until its CCAA status changes.
The implications for Ascalade's shareholders will not be able to be determined
until the end of the restructuring process and will depend on the terms of the
restructuring plan approved by the affected stakeholders. The Company does not
intend to file, on a timely basis, its annual financial statements and related
Note 1: Scheme of Arrangement
A scheme of arrangement is an arrangement entered into between a company
and its creditors or any class of its creditors under Section 166 of the
Companies Ordinance of Hong Kong. It becomes legally binding on all creditors,
including those voting against the scheme and those not voting, if the
requisite majority (representing more than 50% in number and also not less
than 75% in value of the claims of creditors who - either in person or by
proxy - attend a meeting of creditors convened with the leave of the Court)
vote in favor of the scheme and the Court then approves it. A scheme becomes
effective and legally binding when the order of the Court sanctioning it is
filed with the Registrar of Companies for registration.
Ascalade Communications Inc. is an innovative product company that
designs, develops and manufactures digital wireless and communication
products. We deliver world-class products by offering our partners and
customers complete vertical integration, from leading-edge product design and
development to final production. Our products include digital cordless phones,
Voice over Internet Protocol ("VoIP") phones, digital wireless baby monitors
and digital wireless conference phones. Ascalade products have been
distributed under our customers' well-known brand names in over 35 countries
and under 80 regional brands. Ascalade has design, manufacturing and
distribution facilities in Richmond, British Columbia (head office), Qingyuan
(China), Hong Kong and a sales office in Hertfordshire, (United Kingdom).
Forward Looking Information:
The discussion and analysis in this news release, including information
on the application to file for creditor protection and the Company's future
plans, contains forward-looking statements under securities laws that involve
risks and uncertainties. When used in this news release the words such as
"believes", "intends", "will", "may", "could", "suspect", "outlook",
"anticipate", "estimate", "preparing", "plan", target" and similar words and
expressions generally identify forward-looking statements.
These statements are not historical facts, but reflect our current
expectations. The results or events predicted in such forward-looking
information may differ materially from actual results or events. When relying
on the Company's forward-looking information to make decisions, investors and
others should carefully consider the foregoing factors and other uncertainties
and potential events.
In making the forward-looking information contained in this news release,
the Company does not assume any significant acquisitions, dispositions or
one-time items or the renewal of certain customer and supplier contracts. The
Company has also assumed a certain progression, which may not be realized.
Additionally, the Company made a number of assumptions about the market,
operations, finances and transactions. Certain factors that could cause
results or events to differ materially from our current expectations include,
among others, our ability to implement our strategies and plans, the intensity
of competitive activity and the ability to deliver our products on time while
significantly reducing costs, the proper execution of our supply chain
contract arrangements, timely development and completion of our product
offerings, the attainment of cost reduction targets, a sustained demand for
our product lines, the impact of competition on pricing and market share, and
the ability to fund the required investment in working capital to sustain
It has also assumed that the material factors referred to in the previous
paragraph will not result in such forward-looking information to differ
materially from actual results or events. However, the list of these factors
is not exhaustive and is subject to change and there can be no assurance that
such assumptions will reflect the actual outcome of such items or factors.
These forward-looking statements are subject to a number of risks,
uncertainties and assumptions that could cause actual results or events to
differ materially from current expectation; including matters discussed more
fully under "Risk Factors" in the MD&A portion of our 2006 Annual Report and
our 3rd Quarter 2007 results, which is available at www.sedar.com.
These risks and uncertainties also include, among other things, risks
related to: uncertainty involved in Court proceedings and the implementation
of a plan under the CCAA restructuring and a Hong Kong 'Scheme of
Arrangement", inability to find a buyer for business assets, loss of
customers, economic downturn in key geographic markets, availability and cost
of labor, cost of material, labor relations, power constraints, environmental
laws, insufficient production capacity to satisfy customer demand, impact of
restructuring on operations stability, failure to develop new products or
enhance existing products, customer supplier litigation, ability to maintain a
workforce and factory operations, government and regulatory challenges in
China, reduction of production costs and management of production levels.
There can be no assurance that our expectations will prove to be correct.
Consequently, all forward-looking statements made are qualified by these
cautionary statements and other cautionary statements and factors contained
Except as required by law, Ascalade disclaims any intention or obligation
to update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
For further information:
For further information: visit us online at: www.ascalade.com