Coventree Comments on Commencement of OSC Proceedings

NEX Symbol: COF.H

TORONTO, Dec. 7 /CNW/ - Coventree Inc. (NEX: COF.H) commented today on the commencement of proceedings against the Company and two of its current and former officers by staff of the Ontario Securities Commission (OSC). The commencement of proceedings by OSC staff follows the previously disclosed investigation by OSC staff into the Canadian asset backed commercial paper (ABCP) market and Coventree's participation in that market.

To oversee Coventree's response to the OSC staff investigation, the Coventree Board of Directors established a Special Committee comprised of two independent directors, Peter Dey and Wes Voorheis. Messrs. Dey and Voorheis have extensive experience in dealings at or with the OSC and a deep understanding of governance and securities law issues. Both directors joined the Coventree board in April 2008, subsequent to the events that were investigated by OSC staff.

"We are extremely disappointed with OSC staff's decision to commence these proceedings. Led by the Special Committee, Coventree cooperated fully and completely with OSC staff and took significant steps - at a substantial cost to the Company - to cooperate with their investigation," said Peter Dey and Wes Voorheis of Coventree's Special Committee in a joint statement. "Most significantly, the Special Committee engaged independent legal counsel and other experts and undertook its own investigation into the issues identified by OSC staff. Based on our investigation, we believe the Company and the individuals complied with their obligations under Ontario securities laws and that these allegations are unwarranted and unfair in the circumstances."

In the notice of hearing and statement of allegations which are available on the OSC's website, OSC staff allege that Coventree breached Ontario securities laws and acted in a manner that is contrary to the public interest by failing to make full, true and plain disclosure in the Company's November 2006 prospectus by failing to disclose the fact that Dominion Bond Rating Service Limited (DBRS) had adopted more restrictive credit rating criteria for ABCP in November 2006; failing to meet its continuous disclosure obligations by failing to disclose that DBRS's decision in January 2007 to change its credit rating methodology resulted in a material change to Coventree's business or operations; making misleading statements in April 2007 by failing to provide investors with a breakdown of the total U.S. subprime exposure in Coventree sponsored conduits by conduit and ABCP note series; and failing to meet its continuous disclosure obligations by failing to disclose liquidity and liquidity-related events and the risk of a market disruption in the days leading up to the market disruption on August 13, 2007. OSC staff have asked the OSC to consider whether it would be in the public interest to make a number of orders, including requiring Coventree and the two individuals to each pay an administrative penalty of not more than $1 million for each failure to comply with Ontario securities laws, each disgorge to the OSC any amounts obtained as a result of non-compliance with Ontario securities laws, and jointly pay the costs of the investigation and the costs of or related to the hearing that are incurred by or on behalf of the OSC.

Coventree will review OSC staff's allegations and, once it has completed its review, will provide further information on the implications on its previously announced plans to wind up the Company and distribute its remaining assets to shareholders.

Forward-Looking Statements

This press release includes certain forward-looking statements, including with respect to the Company's expectations to implement a formal winding up of the Company and distribution of its assets to shareholders. These statements can be identified by the expressions "expects", "believe" and "will". These forward-looking statements are not historical facts but reflect Coventree's current expectations regarding future events based on information currently available to Coventree. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions which may be substantial. Many factors could cause actual results or events to differ materially from current expectations that may be expressed or implied by such forward-looking statements, including, without limitation, the various matters discussed under "Risks and Uncertainties" contained on pages 18 and 19 of the Company's Management Discussion and Analysis for the fiscal year ended September 30, 2009 which is available under the Company's profile on SEDAR at Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, the Company may not be able to wind down its operations or implement a formal winding up of the Company in the near future or at all, and the amount of funds available to be distributed to shareholders pursuant to such a winding up could be significantly reduced and/or the timing of the distribution of such funds could be significantly delayed. These factors should be considered carefully and prospective investors should not place undue reliance on the forward-looking statements. These forward-looking statements are made as of the date of this press release and Coventree does not intend, and does not assume any obligation, to update or revise these forward-looking statements, except as required by law.

SOURCE Coventree Inc.

For further information: For further information: Craig Armitage, The Equicom Group Inc., Tel: (416) 815-0700 x278, Email:

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