TORONTO, June 4, 2019 /CNW/ - GrowthWorks Commercialization Fund Ltd. (the "Fund") today provided an update on the on-going efforts of the board of directors of the Fund (the "Board") to wind-up the Fund. The winding up and dissolution of the Fund are subject to the Fund obtaining all applicable court, regulatory, tax and third party approvals, rulings and clearances.
On January 22, 2018, the Fund obtained an order (the "Dissolution Order") of the Ontario Superior Court of Justice authorizing the orderly dissolution of the Fund pursuant to the Canada Business Corporations Act under the supervision of the Board. The Fund obtained the Dissolution Order following its annual and special meeting of shareholders in September 2017. At that meeting, holders of the Fund's Class A shares ("Class A Shares") and Class B shares ("Class B Shares") unanimously approved the dissolution of the Fund but the former manager of the Fund and sole holder of the Fund's Class C shares ("Class C Shares"), GrowthWorks WV Management Ltd. (the "Former Manager"), voted against the dissolution after having recommended to the Board that it pursue a winding up of the Fund. The Former Manager subsequently chose to appeal the Dissolution Order to the Court of Appeal for Ontario (the "Former Manager Litigation"). The outcome of the Former Manager Litigation could not be predicted with certainty and has served as an impediment to the Board's efforts to wind up the Fund on a timely basis. In May 2019, the Court of Appeal has dismissed the Former Manager's appeal of the Dissolution Order. The courts awarded a total of $35,000 in costs to the Fund in connection with the Former Manager Litigation. The Fund is in the process of collecting that amount from the Former Manager.
The Fund has settled its appeal of the remaining 2014 audit findings of the Ontario Ministry of Finance, resulting in a payment to the Fund of $350,000.
Winding-Up and Dissolution of the Fund
Since obtaining the Dissolution Order, the Board has continued to dispose of its remaining venture assets with a view to winding up the Fund after satisfying any creditor claims, including expenses associated with the winding-up process, and distributing its remaining property to its shareholders in accordance with their respective entitlements under the articles of the Fund. Pursuant to that process, the Fund has now substantially disposed of all of its venture assets having more than a nominal value. The Fund's remaining assets consist of cash and venture assets having a nominal value.
The terms of the Fund's articles provide that, upon the liquidation, dissolution or winding-up of the Fund (a "Dissolution Event"), the holder of the Class C Shares is entitled to receive a fixed amount equal to the sum of (a) all declared but unpaid dividends on the Class C Shares, and (b) an amount equal to the cumulative dividends to which the holder of the Class C Shares would have been entitled pursuant to the terms of the Class C Shares assuming that all of the Fund's venture investments had been disposed of as of the date of the Dissolution Event at their estimated fair values on that date calculated in accordance with the Fund's valuation policies. The Fund's articles further provide that the holder of the Class C Shares is entitled to receive that fixed amount in preference and priority to any amount payable to holders of Class A Shares or Class B Shares upon a Dissolution Event. Currently, the amount that would be payable upon a Dissolution Event to the Former Manager (as the sole holder of the Class C Shares) is $1,461,220 (the "Class C Dissolution Entitlement").
The Fund estimates that the value of its remaining venture assets and its cash and cash equivalents total approximately $1.167 million.
In its audited financial statements for the year ended August 31, 2018, the Fund recorded a deficit in net assets attributable to holders of Class A Shares. A copy of those financial statements is available on SEDAR (www.sedar.com).
After considering a variety of factors, including the Fund's current cash position, the nominal value ascribed to the Fund's remaining venture assets, the fact that the Fund's remaining assets are now limited to such cash and venture assets, the Fund's current and estimated obligations and liabilities, and the respective terms of the Fund's outstanding Class A, B and C Shares (including the priority of payment upon a Dissolution Event enjoyed by the holder of the Class C Shares relative to holders of Class A Shares and Class B Shares, respectively), the Board has determined that the Fund will not have any funds or other assets available for distribution to holders of Class A Shares or Class B Shares upon the winding up and dissolution of the Fund and that the amount distributable to the holder of the Class C Shares is expected to be less than Class C Distribution Entitlement.
The Fund anticipates that it will complete the winding up and dissolution process in 2019, subject to the Fund obtaining all applicable court, regulatory, tax and third party approvals, rulings and clearances.
This press release contains forward looking statements. These forward-looking statements reflect the Fund's current views and are based on certain assumptions the Fund believes are appropriate. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in these statements, including, but not limited to, uncertainty as to the amount of cash and assets distributable to the Fund's shareholders, if any, upon a Dissolution Event and the risk that the winding up and dissolution of the Fund may be delayed or curtailed by the Fund's inability to obtain all applicable court, regulatory, tax and third party approvals, rulings and clearances; and those risks and uncertainties disclosed in the Fund's most recently filed prospectus and other regulatory filings posted on SEDAR at www.sedar.com. These risks and uncertainties may cause actual results, events or developments to be materially different from those expressed or implied by such forward-looking statements. Unless required by law, the Fund does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or results or other factors.
SOURCE GrowthWorks Commercialization Fund Ltd.
For further information: Questions regarding this press release may be directed to C. Ian Ross, Chair of the Board of Directors of the Fund, at: 416-619-9118