WINNIPEG, Aug. 10 /CNW/ - Empire Industries Ltd. (TSX-V: EIL) ("Empire"
or the "Company"), announced today that it has successfully concluded
negotiations for a forbearance agreement (the "Forbearance Agreement") between
the Company, the Company's subsidiaries, George Third & Sons Ltd. and Dynamic
Structures Ltd. (the "BC Group"), and HSBC Bank of Canada ("HSBC") under the
senior secured credit agreement ("HSBC Credit Agreement") between HSBC and the
As previously disclosed, certain events of default are continuing under
the HSBC Credit Agreement. The aggregate amount outstanding and owed by the BC
Group under the HSBC Credit Agreement is approximately $13.9 million,
comprised of $11.4 million drawn on a $15 million revolving credit facility
and $2.5 million drawn on a $6 million leasing facility. Under the terms of
the Forbearance Agreement, HSBC is reviewing the BC Group's operations and
outlook and has agreed not to enforce its rights under the HSBC Credit
Agreement and to continue to provide advances thereunder for a period up to
October 31, 2009, provided that there is no event of default under the
As previously disclosed, certain events of default are also continuing
between the Company's subsidiary, Empire Iron Works Ltd. ("Empire Iron"), and
the Royal Bank of Canada ("RBC") under the senior secured credit agreement
(the "RBC Credit Agreement") between RBC and Empire Iron. The aggregate
principal outstanding under the RBC Credit Agreement is approximately $7.2
million, comprised of $4.5 million drawn on a $6 million revolving credit
facility and a $2.7 million term loan.
The Company, on behalf of Empire Iron, has provided a letter (the
"EIL/RBC Letter") to RBC agreeing to make every reasonable effort to repay in
full the amounts due under the RBC Credit Agreement by September 30, 2009. In
return for the receipt of the EIL/RBC Letter, RBC has agreed not to enforce
its rights under the RBC Credit Agreement for a period up to September 30,
2009, provided that, during this period, the Company and Empire Iron comply
with the conditions in the EIL/RBC Letter and there is no further material
adverse change to RBC's risk as it relates to the RBC Credit Agreement.
In addition to pursuing options for refinancing Empire Iron and the
Company's other assets, the Company continues its efforts to reduce funded
debt through revenue enhancement, cost containment, working capital management
and the disposition of redundant or non-core assets. On July 31, 2009, the
Company reported that net proceeds of $9.5 million from the sale and leaseback
of its Kingsway facility were used to both repay the Company's secured
long-term debt in B.C. and reduce the BC Group's indebtedness under the HSBC
The Company expects to report the results of its second quarter ended
June 30, 2009 on or about August 29, 2009.
About Empire Industries Ltd.
Empire Industries Ltd. adds value to steel through its leading, Western
Canadian engineered products manufacturing and steel fabrication groups and
its Fort McMurray-based strategic partnership in the maintenance services
sector. The Company's business operations are focused on the infrastructure,
commercial and industrial construction marketplace of Western Canada and
select niche markets internationally. Empire's common shares are listed on the
TSX Venture Exchange under the symbol EIL.
This press release contains forward-looking statements, within the
meaning of applicable securities legislation, concerning Empire's business and
affairs. In certain cases, forward-looking statements can be identified by the
use of words such as "plans", "expects" or "does not expect", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or variations
of such words and phrases or state that certain actions, events or results
"may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
These forward looking statements are based on current expectations, and are
naturally subject to uncertainty and changes in circumstances that may cause
actual results to differ materially. Readers are cautioned not to place undue
reliance on such forward-looking statements. Forward-looking information is
provided as of the date of this press release, and Empire assumes no
obligation to update or revise them to reflect new events or circumstances,
except as may be required under applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
For further information:
For further information: please visit our web-site at: www.empind.com or
contact: Guy Nelson, Chairman & CEO, Empire Industries Ltd., Phone: (416)
366-7977, Email: email@example.com; Trevor Heisler, Investor Relations, The
Equicom Group Inc., Phone: (416) 815-0700 x 270, Email: firstname.lastname@example.org