/NOT FOR DISSEMINATION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
CALGARY, April 26 /CNW/ - Winalta Inc. (TSX-V-"WTA.A") announces today that it and certain of its subsidiaries, Winalta Homes Inc., Winalta Oilfield Rentals Inc., 916830 Alberta Ltd., Winalta Holdings Inc., Winalta Construction Inc., Baywood Property Management Inc., Winalta Carlton Homes Inc., and Winalta Carriers Inc. (collectively "Winalta") have obtained creditor protection under the Companies' Creditors Arrangement Act (Canada) (the "CCAA") pursuant to an Order granted on April 26, 2010 by the Court of Queen's Bench of Alberta, Judicial Centre of Edmonton (the "Court").
The CCAA filing follows a review of Winalta's strategic alternatives by Winalta Inc.'s Board of Directors following the receipt on March 31, 2010 by Winalta and its subsidiaries of demands for payment and Notices of Intention to Enforce Security from Winalta's principal lender, HSBC Bank of Canada ("HSBC"). Details of the CCAA filing and related matters will soon be available on the website www.deloitte.com/ca/winalta under the insolvency and restructuring link. It was determined by the Board of Directors that as a result of Winalta's current financial situation, seeking CCAA protection would be in the best interests of Winalta and all of its stakeholders. While under CCAA protection, Winalta will continue with its efforts to pursue strategic alternatives, including restructuring its existing lines of business and pursuing the sale of assets, the proceeds of which will be used to repay creditors.
Winalta has sought protection under the CCAA as its current cash in hand would not allow it to meet its current obligations. CCAA protection stays creditors and others from enforcing rights against Winalta and affords it the opportunity to restructure its financial affairs. The Court has granted CCAA protection for an initial period expiring May 21, 2010, to be extended thereafter as the Court deems appropriate, during which time Winalta will formulate a Plan of Arrangement (the "Plan") pursuant to the CCAA. Winalta will issue a further news release on or before May 21, 2010 which will provide an update.
While under CCAA protection, Winalta Inc.'s Board of Directors maintains its usual role and its management remains responsible for the day-to-day operations of Winalta under the supervision of Deloitte & Touche Inc., who is the Court-appointed Monitor, and who will be responsible for reviewing Winalta's ongoing operations, assisting with the development and filing of the Plan, liaising with creditors and other stakeholders and reporting to the Court. The Board of Directors and management of Winalta will also be primarily responsible for formulating the Plan for restructuring Winalta's affairs.
Enquiries for the Monitor may be directed to:
Deloitte & Touche Inc.
2000 Manulife Place
10180 - 101st Street
Edmonton, Alberta T5J 4E4
Attention: Jeff Keeble
Phone: (780) 401-3912
Although CCAA protection enables Winalta to continue with its day-to-day operations until its CCAA status changes, the implications for Winalta Inc.'s shareholders are less clear. Winalta continues to explore a number of alternatives, including a sale of various assets and the repayment of all creditors in full. However, the Plan must be approved by the requisite number and value of the affected creditors, as required by law, as well as by the Court. At the end of the restructuring process, the value of what is left for shareholders will depend upon the terms of the Plan approved by the affected stakeholders. If the Plan is not so approved it is possible that Winalta would be placed into receivership or bankruptcy. Every effort will be made to ensure that all stakeholders of Winalta are kept informed of developments as they occur.
Following from the receipt of the demand for payment and Notices of Intention to Enforce Security from HBSC, a secured creditor of Winalta, HSBC and Winalta entered into a forbearance agreement (the "Forbearance Agreement") in respect of the indebtedness owed HSBC by Winalta agreeing, among other things, that HSBC 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 until May 31, 2010, or such later date as may be agreed to by HSBC, and to other matters relating to the conduct of Winalta during the period of CCAA protection. During the forbearance period, subject to established margining requirements and authorized limits, Winalta will be permitted to access its existing operating loan. Under the terms of the Forbearance Agreement, Winalta will be required to make permanent reductions in its outstanding indebtedness owed to HSBC of $1.2 million on or before July 31, 2010, $800,000 on before August 31, 2010, $1.1 million on or before September 30, 2010 and $200,000 on or before October 31, 2010. Any proceeds from the sale of assets received by Winalta shall be applied as a permanent reduction of indebtedness owed to HSBC.
In the event that Winalta is in default of, or otherwise breaches, the terms of the Forbearance Agreement, Winalta has provided HSBC with an irrevocable consent receivership order which permits HSBC to appoint a receiver under the Bankruptcy and Insolvency Act (Canada).
As part of Winalta's restructuring efforts, Winalta has entered into a non-binding letter of intent with Allis Energy Services Inc. ("Allis") to acquire Winalta's oilfield rentals business and its carrier division. The completion of this transaction is subject to the final approval of the Board of Directors of Winalta, the negotiation of a definitive purchase and sale agreement as well as the approval of the Monitor and the Court and such other regulatory and stock exchange approvals as may be necessary. Winalta will review the terms of the potential Allis transaction as part of the development of the Plan. At this time there can be no assurance that the Allis transaction or any other transaction will be completed.
Lastly, Winalta announces the resignation of Ron Berg as President and Chief Executive Officer and as a director of Winalta. With Mr. Berg's resignation, the Board of Directors of Winalta has appointed Artie Kos, a current director and the former President and Chief Executive Officer of Winalta as President and Chief Executive Officer of Winalta. Mr. Kos, in conjunction with Winalta's senior management team, the Monitor, and with assistance from Winalta's Board of Directors, will lead Winalta's restructuring plan while under CCAA protection.
Winalta Inc. is an integrated company with three main operating divisions, Homes, Industrial, and Manufacturing. The Homes Division sells CSA approved homes via retail centers, communities and supply arrangements. The Industrial Division leases portable industrial accommodations. The Manufacturing Division builds CSA approved homes and portable industrial accommodations from facilities near Spruce Grove, Alberta.
The TSX Venture Exchange has neither approved nor disapproved the contents of this news release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
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. Such forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Winalta 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 the uncertainty involved in the Court proceedings and the implementation of a Plan under the CCAA and the approval of and timing of the proposed sale to Allis.
The forward-looking information contained in this news release represents the expectations of Winalta as at April 26, 2010 and, accordingly, is subject to change after such date. However, Winalta 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.
SOURCE Winalta Inc.
For further information: For further information: Artie Kos, President and Chief Executive Officer, Phone: (780) 960-6900, Fax: (780) 962-9523; Austin Fraser, VP Winalta Homes, Phone: (780) 960-6900, Fax: (780) 962-9523