EarthFirst Canada Inc. to sell Dokie Project



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

    CALGARY, May 29 /CNW/ - EarthFirst Canada Inc. ("EarthFirst" or the
"Company") announced today that it has received the approval of the Court of
Queen's Bench of Alberta, Judicial Centre of Calgary (the "Court") of a
conditional Asset Purchase Agreement (the "APA") entered into between
EarthFirst and GE Energy Financial Services Company which entitles GE Energy
Financial Services Company or its assignee (the "Purchaser") to complete its
due diligence and determine in its sole discretion whether it wishes to
complete the transactions contemplated by the APA. Pursuant to the APA,
provided that the conditions precedent (as specifically set forth below) are
satisfied or waived in the Purchaser's sole discretion on or before July 6,
2009 (with notice of any waiver or non-satisfaction of conditions having been
provided by July 8, 2009) (the "45 Day Conditions") and provided a number of
other conditions precedent are satisfied or waived by either the Purchaser or
EarthFirst, as applicable, on or before closing of the transactions
contemplated by the APA (the "Closing Conditions"), the Purchaser would
acquire all of the assets associated with EarthFirst's Dokie I Windpower
Project (the "Dokie I Project") and the Dokie Expansion Project (collectively
the "Dokie Assets"). The Dokie I Project is to be located at Dokie Ridge in
Northeast British Columbia and, if completed, is expected to have a nameplate
capacity of 144 MW. EarthFirst's Dokie Expansion Project is a development
stage windpower project situated adjacent to the Dokie I Project and is
intended to have up to 156 MW of potential windpower capacity.
    Subject to satisfaction or waiver of the 45 Day Conditions and the
Closing Conditions (collectively the "Conditions") in accordance with the APA,
in consideration for the acquisition of the Dokie Assets, the Purchaser would:
(i) assume and agree to pay, perform and discharge when due, all liabilities
accruing from the construction of the Dokie Assets from and after the time of
closing, (ii) repay to WestLB AG ("WestLB"), EarthFirst's largest secured
creditor, the outstanding principal amount owing by EarthFirst to WestLB,
currently in the amount of approximately $26.3 million plus an amount not to
exceed $1.0 million on account of any interest, fees, penalties and other
charges or amounts owing from EarthFirst to WestLB as of the date of closing
of the APA, and (iii) provide a replacement letter of credit in respect of
EarthFirst's obligations to its wind turbine provider, Vestas-Canadian Wind
Technology, Inc. ("Vestas"), currently issued by WestLB in favour of Vestas
and provide other replacement letters of credit in the aggregate amount of
approximately $11.3 million, resulting in the release of funds to EarthFirst
which are currently being used to secure outstanding letters of credit
provided by EarthFirst (collectively, the "Transaction").
    The Purchaser's obligations to complete the transactions contemplated by
the APA are subject to the 45 Day Conditions which must be satisfied or waived
by the Purchaser, in its sole discretion, on or before July 6, 2009 (with
notice of any waiver or non-satisfaction of conditions having been provided by
July 8, 2009) and which consist of the following conditions:

    
    -   satisfactory completion by the Purchaser of its due diligence review
        of the Dokie Assets;

    -   receipt of all internal approvals as required by the Purchaser for
        the performance and closing of the Transaction;

    -   satisfactory completion by the Purchaser of arrangements or agreement
        with BC Hydro and Vestas;

    -   receipt of final binding bids for engineering, procurement and
        construction contracts with respect to the Dokie Project on terms and
        conditions satisfactory to the Purchaser; and

    -   receipt of such consents and approvals of certain First Nations as
        may be necessary or desirable for the acquisition, ownership,
        construction, development and operation of the Dokie Project on terms
        and conditions satisfactory to the Purchaser.
    

    Provided the 45 Day Conditions are satisfied or waived by the Purchaser,
it is anticipated that closing of the transactions contemplated under the APA
will occur within a further 45 day period (on or before August 20, 2009)
subject to satisfaction or waiver of the Closing Conditions. The Closing
Conditions consist of a number of conditions precedent, which include, among
other things, the filing of a Plan of Arrangement under the CCAA proceedings
by EarthFirst no later than July 8, 2009, the receipt of all necessary
regulatory approvals, including under the Competition Act (Canada) and from
the British Columbia Utilities Commission, and the consents required to be
received from certain First Nations and various other third parties involved
with the Dokie Project, including consents to the assignment and transfer to
the Purchaser of key contracts, material permits and specific fixed assets and
equipment.
    The approval of the APA by the Court represents an important step in the
on-going broad sales process first initiated by the EarthFirst Board of
Directors in August, 2008 pursuant to a shareholder value maximization process
conducted by EarthFirst and its financial advisors, Blair Franklin Capital
Partners Inc. and GMP Securities L.P. to assess EarthFirst's restructuring
options, including pursuing the possible sale of all or substantially all of
EarthFirst's assets. Subsequent to obtaining protection under the Companies'
Creditors Arrangement Act (Canada) on November 4, 2008, EarthFirst continued
with its efforts to market, and solicit bids for, certain of its assets. This
process continued throughout 2008 and into 2009, resulting in the entering
into of the APA with the Purchaser. The proposed sale of the Dokie Assets to
the Purchaser has been unanimously approved by the Board of Directors of
EarthFirst. In addition, the entering into of the APA was supported by
EarthFirst's Court appointed Monitor, Ernst & Young Inc. as set forth in the
Non-Confidential Eighth Report of the Monitor dated May 27, 2009 and was
consented to, and supported by, WestLB. WestLB has provided a formal consent
to the APA pursuant to the forbearance agreement entered into between WestLB
and EarthFirst which provides that WestLB will, subject to the satisfaction or
waiver of the 45 Day Conditions by the Purchaser on or before July 8, 2009,
forbear from enforcing its claim under the negotiated terms of the forbearance
agreement until the earlier of the time that the Transaction is closed or the
APA is terminated in accordance with its terms.
    Pursuant to the APA, the Purchaser has, subject to the proviso below,
covenanted to EarthFirst that it will take certain steps, including using
reasonable commercial efforts to conduct a 120 day test of certain test
turbines located on the Dokie I Project, which may satisfy certain conditions
required to allow for tax deductions claimed by persons who purchased
flow-through shares of EarthFirst ("CRCE Shareholders") relating to certain
expenses incurred by EarthFirst in connection with the Dokie I Project to
properly qualify as Canadian Renewable and Conservation Expense under the
Income Tax Act (Canada). This covenant is subject to the proviso that such
undertaking does not have any material negative commercial impact on the
development or construction of the Dokie I Project by the Purchaser, as
determined by the Purchaser in its sole discretion and notwithstanding the
foregoing, the Purchaser shall not assume any liability to the CRCE
Shareholders for any of such actions failing to qualify the Dokie I Project
for Canadian Renewable and Conservation Expense treatment under the Income Tax
Act (Canada).
    Under the APA, EarthFirst has agreed that prior to the satisfaction or
waiver of the 45 Day Conditions, EarthFirst will be permitted to continue to
solicit expressions of interest for superior acquisition proposals relating to
the Dokie Assets and to continue with its turbine remarketing process, both of
which have been approved by prior orders of the Court. Immediately following
the satisfaction or waiver of the 45 Day Conditions, EarthFirst has agreed
that it will not solicit or initiate any discussions concerning the pursuit of
any other acquisition proposals, except in circumstances provided for in the
APA in respect of unsolicited superior proposals. Any alternate proposals
received by EarthFirst must meet certain over-bidding requirements as are set
forth in the APA in order to be considered a superior proposal, including,
among others, that the acquisition proposed to EarthFirst must be more
favourable in financial terms than the Transaction by at least $3.0 million in
the event such proposal is received prior to the satisfaction of the 45 Day
Conditions, and which minimum threshold thereafter increases to $6.0 million.
EarthFirst has also agreed to pay to the Purchaser a termination fee in
certain circumstances prior to the satisfaction of the 45 Day Conditions in
the amount of $3.0 million which thereafter increases to $6.0 million. Should
the termination fee become payable by EarthFirst, the termination fee will
represent a charge on the Dokie Assets in favour of the Purchaser and shall be
allocated as to 80% to the Dokie Assets and 20% as against funds held in trust
for the benefit of EarthFirst, which allocation may be adjusted to 70% and
30%, respectively, in certain circumstances. In addition, the Purchaser has
the right to match any superior proposal for the Dokie Assets in the event
such a proposal is made.
    It is not expected that the proposed sale of the Dokie Assets will result
in any recovery for EarthFirst's shareholders.

    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 the completion of the 45 Day Conditions and the expected timing of
the closing of the APA. 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
satisfy the 45 Day Conditions or the other conditions required to close the
transactions contemplated by the APA 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 29, 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: (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:
(877) 513-0777, E-mail: dnewell@earthfirstcanada.com

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EARTHFIRST CANADA INC.

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