/THIS PRESS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY/
NEX Symbol: COF.H
TORONTO, Nov. 25 /CNW/ - Coventree Inc. (NEX: COF.H) ("Coventree" or the "Company") today announced its financial results for the fiscal year ended September 30, 2009. All amounts are reported in Canadian dollars.
Coventree's net income for the fiscal year ended September 30, 2009 was $0.7 million compared to $11.0 million for the previous year.
Total revenue for the year decreased by $24 million as the Company has discontinued operations. The decrease in revenue is primarily due to the fact that virtually no revenue was received from credit arbitrage transactions in the 2009 fiscal year, which decrease was offset partially by fees totalling $8.2 million earned under the Transition Services Agreement for the period from January 21, 2009 to May 21, 2009. Revenue from traditional asset securitization transactions ceased as of the closing of the Restructuring Plan on January 21, 2009.
Operating expenses for the 2009 fiscal year decreased by $4.8 million compared to the previous year. Most of the reduction is due to lower compensation and benefits expense as there are fewer employees. Expenses for the three and twelve months ended September 30, 2009 included $0.9 million and $3.9 million, respectively, in costs associated with the Special Committee formed to oversee the Company's response to the investigation by Ontario Securities Commission ("OSC") staff.
For the twelve months ended September 30, 2009, there was a $1.8 million unrealized pre-tax gain on Xceed Mortgage Corporation shares compared to an unrealized pre-tax loss of $4.3 million for the twelve months ended September 30, 2008.
The current tax provision for the year ended September 30, 2009 is a recovery of $1.1 million reflecting the reversal of a $1.8 million reserve originally set up in fiscal year 2008. The future income tax provision includes the reversal of a $1.8 million future tax benefit also originally set up in fiscal year 2008.
The Company's Management Discussion & Analysis and audited consolidated financial statements for the fiscal year ended September 30, 2009 will be available under the "Coventree Owners" section of the Company's website at www.coventree.ca and on SEDAR at www.sedar.com.
The Company expects that it will continue to proceed with its previously announced plans to wind down the Company and its operations. However, the timing of any formal winding up of the Company and the amount and timing of any distribution of funds to shareholders under such a winding up cannot be determined. A number of factors, some of which are beyond the Company's control, could affect the timing of, or the amount of funds available for distribution upon, a formal winding up of the Company. The Company and four of its current and former officers have received enforcement notices from OSC staff that indicate that staff is of the view that Coventree breached the Securities Act (Ontario) and acted in a manner that is contrary to the public interest, including with respect to the disclosure in the prospectus relating to Coventree's initial public offering that was completed in November 2006, the Company's disclosure of its U.S. subprime exposure to customers and dealers during 2007, and the Company's compliance with its continuous disclosure obligations prior to August 13, 2007. The notices also indicate that OSC staff is contemplating commencing proceedings against the Company and those four individuals in relation to those issues. No formal proceedings have yet been commenced against Coventree or any of its current or former directors or officers; however, if such formal proceedings are commenced, the Company will incur additional legal and other expenses, and may be required to pay fines, monetary penalties and/or costs which could be substantial. Further, the Company may be obligated to indemnify the four current and former officers that have received enforcement notices from OSC staff against legal and other expenses incurred by such individuals in connection with the OSC's investigation, and against fines, monetary penalties and/or costs which such individuals may be required to pay in connection with any OSC proceedings. Accordingly, the commencement of formal proceedings by the OSC could result in a significant reduction in the amount of funds available to be distributed to shareholders and/or a significant delay in the timing of any such distribution. Further, Coventree has agreed with OSC staff that it will not make or pay any dividend or other distribution to Coventree's shareholders generally without first providing at least 45 days' prior written notice to staff.
This press release includes certain forward-looking statements relating to the Company's expectations to wind down its operations and to implement a formal winding up of the Company. These statements can be identified by the expressions "expects" 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 www.sedar.com. 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.
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