/NOT FOR DISSEMINATION IN THE UNITED STATES OR OVER UNITED STATES WIRE
CALGARY, April 13 /CNW/ - EarthFirst Canada Inc. ("EarthFirst" or the
"Company") (TSX: EF, EF.WT) provides its eleventh bi-weekly Default Status
Report under National Policy 12-203 - Cease Trade Orders for Continuous
Disclosure Defaults, pursuant to which EarthFirst announced that its financial
statements for the third quarter ended September 30, 2008 would not be filed
by November 14, 2008 and that 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 (collectively, the
"Annual Filings") would not be filed by March 31, 2009. 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,
April 27, 2009.
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 April 14, 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.
EarthFirst continues to work with certain bidders who have made offers to
purchase 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 to work with these bidders and other interested parties in an
effort to consummate a transaction with one of them prior to the end of May.
If one of these transactions does not close, or if EarthFirst cannot obtain
some other funding prior to the end of May, 2009, EarthFirst may not have
sufficient funds to continue to operate.
EarthFirst also advises that it has sent a letter to certain EarthFirst
shareholders who invested in flow-through common shares of EarthFirst in
December 2007. In this regard, EarthFirst has advised these flow-through
shareholders of two issues relating to their investment in flow-through common
shares. The first issue relates to the uncertainty of EarthFirst as to whether
the specific requirements under the Income Tax Act and the Income Tax
Regulations to qualify certain expenses as Canadian Renewable and Conservation
Expenses ("CRCE), were, or will continue to be, fulfilled and the second and
related issue is how any potential claim that may arise as a result of the
first issue will rank against EarthFirst's creditors given EarthFirst's
November 2008 filing for protection from creditors under the Companies
Creditors Arrangement Act ("CCAA").
Under the agreements relating to the flow-through investment, EarthFirst
was required to make "qualifying expenditures" (essentially CRCE) equal to the
subscription proceeds received from flow-through shareholders by December 31,
2008. During 2007 and 2008, EarthFirst made a number of qualifying
expenditures including costs related to roads, foundations, engineering
studies and "test wind turbines". However, in order for the cost associated
with a "test wind turbine" to qualify as CRCE prior to December 31, 2008 the
test wind turbine must have, among other things, been used for the purpose of
generating electricity prior to December 31, 2008.
During 2008, EarthFirst successfully erected five test turbines and
received the related mechanical completion checklists showing that the test
turbines were completed and ready for use. As these test turbines were being
installed, the British Columbia Transmission Corporation announced that it
would have to delay the construction of the interconnection of EarthFirst's
substation to the British Columbia electrical grid until March 19, 2009 due to
The first of these test turbines was tested in December, 2008. Without
the interconnection to the grid, EarthFirst was forced to test the turbine
using a capacitor bank. The test had to be stopped for safety reasons.
However, the turbine was briefly restarted in early 2009.
In addition, for a turbine to qualify as a "test wind turbine", the
Income Tax Regulations also require that the test wind turbine be tested for
at least 120 calendar days and that another "wind energy conversion system"
not be installed within 1,500 metres of the test wind turbine during that
period. At this point in time, the test wind turbines are not connected to the
grid and the 120 day test cannot be conducted. Connection to the grid will not
occur unless and until EarthFirst completes a transaction involving the sale
of the Dokie I project assets and the purchaser connects the turbines.
EarthFirst is negotiating to ensure any purchaser of the Dokie I project
covenants to complete these testing requirements. However, there can be no
assurance EarthFirst will be successful in any such negotiation or that any
successful bidder will fully comply with these covenants even if they agree to
As a result of these potential issues, and notwithstanding EarthFirst's
best efforts, EarthFirst is not able to assure flow-through shareholders that
the conditions necessary for the costs of the test wind turbines to qualify as
CRCE have been or will be met. As such, there is a possibility that the amount
of qualifying expenditures previously renounced may be reduced. If so, a
portion of the amount of CRCE that a flow-through shareholder claimed for tax
purposes in 2007 could be reduced and such shareholders may have a claim for
indemnity from EarthFirst for taxes payable.
In order for EarthFirst to be in a position to bring forward a plan of
arrangement under the CCAA, EarthFirst is required to determine the owners,
nature and amount of its various creditor claims and contingent claims, and as
well determine the ranking of any claims against it, including the ranking of
any potential claims which may arise under EarthFirst's indemnification of
flow-through shareholders. The Alberta Court of Queen's Bench will determine
the status of any such claims. How such claim ranks in relation to other
claims against EarthFirst under the CCAA depends on how the Court
characterizes the nature of the claim.
Lastly, EarthFirst advises that Rob Toole resigned as a Director of
EarthFirst effective April 9, 2009. The Company does not anticipate appointing
a replacement for Mr. Toole at this time. The Board of Directors of EarthFirst
wishes to thank Mr. Toole for his contributions to the Company.
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 interim financial statements, related
management's discussion and analysis and related CEO and CFO certifications
for the third quarter ended September 30, 2008 and its Annual Filings and
matters relating to issues pertaining to certain flow through shares of
EarthFirst. 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
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 April 13, 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: email@example.com; Derren Newell, VP, Finance and Chief
Financial Officer, EarthFirst Canada Inc., Tel: (403) 513-0766, Toll Free:
1-877-513-0777, E-mail: firstname.lastname@example.org