EarthFirst Canada Inc. - 14th Default Status Report and Update



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

    CALGARY, May 25 /CNW/ - EarthFirst Canada Inc. ("EarthFirst" or the
"Company") (TSX: EF, EF.WT) provides its 14th bi-weekly Default Status Report
under National Policy 12-203 - Cease Trade Orders for Continuous Disclosure
Defaults, pursuant to which EarthFirst announced that its: (a) financial
statements for the third quarter ended September 30, 2008 would not be filed
by November 14, 2008; (b) its annual audited financial statements,
management's discussion and analysis, annual information form and related CEO
and CFO certifications for the year ended December 31, 2008 would not be filed
by March 31, 2009; and (c) its financial statements for the first quarter
ended March 31, 2009 would not be filed by May 15, 2009 (collectively the
"Required Filings"). EarthFirst reports that since announcing the original
Notice of Default on November 10, 2008 there have not been any material
changes to the information contained therein; nor any failure by EarthFirst to
fulfill its intentions as stated therein. Further, there have been no
additional material changes respecting EarthFirst and its affairs which have
not been previously disclosed or are not disclosed below. EarthFirst intends
to file its next Default Status Report on Monday, June 8, 2009.
    On May 22, 2009, the Court of Queen's Bench of Alberta, Judicial Centre
of Calgary (the "Court") granted an extension until June 26, 2009 of the
initial Order granted on November 4, 2008 pursuant to which EarthFirst was
granted creditor protection under the CCAA. The extension was supported by
Ernst & Young Inc., the Court-appointed Monitor of EarthFirst's CCAA process
and was not objected to by counsel to EarthFirst's secured creditor, WestLB
AG.
    On November 4, 2008, EarthFirst and WestLB AG entered into a forbearance
agreement in respect of the indebtedness owed WestLB AG by EarthFirst
agreeing, among other things, that WestLB AG would be exempted from the stay
in the CCAA initial order but would forbear from enforcing its claim under the
negotiated terms of the agreement and to other matters relating to the conduct
of EarthFirst during the period of CCAA protection. This forbearance agreement
has been extended to May 22, 2009. EarthFirst and WestLB AG are continuing to
negotiate an extension to this agreement and EarthFirst will provide further
disclosure of the result of these negotiations as information is known to the
Company.
    Also on May 22, 2009, the Court approved the previously announced share
purchase and sale agreement dated May 11, 2009 with 2204926 Ontario Limited, a
joint venture of Schneider Power Inc. and Land's End Corporation, to sell all
of the shares of EarthFirst's wholly-owned subsidiary, Grand Valley Wind Farms
Inc. and approved the previously announced asset purchase agreement dated May
15, 2009 with Canadian Hydro Developers, Inc. to sell EarthFirst's Windrise
power project As a result of these transactions, EarthFirst will receive funds
of $800,000, less working capital and other adjustments from the Grand Valley
Sale and $250,000 from the Windrise sale. The completion of the Grand Valley
transaction is expected to occur on or about May 29, 2009 while the closing of
the Windrise transaction occurred on May 25, 2009.
    EarthFirst continues to pursue a transaction for the sale of some or all
of the Company and/or EarthFirst's Dokie I project and/or certain of the wind
turbines associated with the Dokie I project. EarthFirst will continue its
efforts to consummate a transaction prior to the end of June. If a transaction
does not close, or if EarthFirst cannot obtain some other funding prior to the
end of June, 2009, EarthFirst may not have sufficient funds to continue to
operate.

    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 and the
timing of filing of EarthFirst's Required Filings and the expected timing of
the completion of certain sale transactions. 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 timing or turbine delivery,
not being able to complete a purchase and sale transaction or 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 May 25, 2009, 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:

For further information: Brian Trypka, Chief Restructuring Officer,
EarthFirst Canada Inc., Tel: (403) 513-0780, Toll Free: 1-877-513-0777,
E-mail: btrypka@earthfirstcanada.com; 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

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EARTHFIRST CANADA INC.

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