BOUCHERVILLE, QC, Oct. 17, 2012 /CNW Telbec/ - Noveko International Inc. (TSX: EKO) (the "Corporation") announces having been informed that the Board of Directors of the French firm that offered to purchase S.A.S. E.C.M. ("ECM") (the French Firm") did not approve the final terms that were agreed upon, on September 27, 2012, between Mr. André Leroux, Chairman of the Board and Chief Executive Officer of the Corporation, and the Chief Executive Officer of the French Firm with respect to this purchase (the "Final Terms"). Even if discussions of a possible transaction with the French Firm are still open, there is no certainty that the Corporation and the French Firm will reach an agreement, since the last offer of the latter included the payment of an amount considerably lower than what was provided for in the Final Terms, which is unacceptable to the Corporation.
In addition, the Corporation announces that, Mr. Patrice Emery, the President General Manager of ECM, advised the Corporation that because of ECM's financial situation especially with respect to its cash flows, the refusal by the French Firm's Board of Directors of the Final Terms that provided for cash inflows to the benefit of ECM and to avoid that ECM become insolvent (within the meaning of the French Code de Commerce (Code of Commerce)) which could lead to ECM's receivership, he has filed, in his capacity of main officer of ECM, with the President of the Tribunal de Commerce (Commercial Court) of Angouleme, a request for the opening, under French law, of a procédure de sauvegarde (safeguarding procedure), which has been granted by the Tribunal. A safeguarding procedure may be compared, without being the same, to the process by which a Canadian company wishes to make an arrangement with its creditors under the provisions of the Companies' Creditors Arrangement Act. Only the main officer of the French company may initiate a safeguarding procedure with the Tribunal. Specifically, in the case of insolvency, there are more grounds that may trigger the personal liability of an officer of a French company than in the case of an officer of a Canadian company.
The purpose of a safeguarding procedure is to allow a company which suffers from financial difficulties but is not yet in cessation of payments (insolvency), to protect itself by postponing its debt payments and allowing its restructuring with the objective of continuing its economic activities, maintaining employment and discharging its debts (by decrease and/or by spreading them out). The safeguarding procedure entails the suspension or prohibition of legal actions from creditors of which the debts came into existence prior to the safeguarding procedure's opening or from those creditors of which the debts are incurred after the opening outside the normal course of business. Such procedure allows the main officer to prepare, during a six-month observation phase (renewable one time), a safeguarding plan that, if approved by the Court, will bind all the creditors of the company. It is possible at any time for the corporation to stop this safeguarding procedure and it should not prevent the sale by the Corporation of ECM.
Since ECM's sale will not occur by October 15, 2012 as required by waivers of September 28, 2012 obtained by the Corporation from Third Eye Capital Corporation ("TEC") as agent of its lenders (collectively "TEC"), the Corporation is currently in discussions with TEC as to the consequences of this failure to comply with such obligations as well as the foregoing, any new conditions that will apply to its credit facilities and secured convertible debentures, and the new timeframe to comply with any such conditions. After discussions with TEC, the Corporation is hopeful to reach an agreement with its lenders shortly in order to help realize its Strategic Plan as described in its last annual MD&A and Annual Information Form. However, the Corporation reiterates to its shareholders and potential investors the risk factors described in these documents, especially the Risks related to our financial condition section, and more precisely, the Consequences that may arise if a default occurred under the Debt Agreements subsection. No guarantee can be provided that the Corporation and its lenders will reach an agreement in connection with any defaults, nor that the Corporation will be able to comply with any new conditions further to such discussions.
"Despite these setbacks, we remain firmly committed to pursue our Strategic Plan, including the sale of ECM, in order to focus our human and financial resources in the air filtration segment and are reviewing all aspects arising from these new elements to achieve our objectives, especially with respect to the intended ECM's sale", declared Mr. André Leroux, Chairman of the Board and Chief Executive Officer of the Corporation.
Profile of the Corporation
The Corporation specializes in the air filtration segment by providing its clientele with innovative and eco-energetic filtration solutions. As such, through its subsidiaries, the Corporation designs, develops, manufactures and markets air filters incorporating its patented air filtration technologies, which filters are cleanable and recyclable, and have a much longer life span than conventional air filters. These filters are used in farm buildings, in institutional, commercial, industrial and residential buildings, and in the ground and aeronautics transport industry.
Through distributors, the Corporation furthermore continues to commercialize antimicrobial masks and respirators, hands sanitizers and ultrasound scanners for use in human and veterinary medicine.
Certain statements set forth in this press release constitute forward-looking statements. In some cases, these statements are identified by the use of terms such as "may", "could", "might", "intend", "should", "expect", "project", "plan", "believe", "estimate" or other comparable variants. These statements are based on the information available at the time they are written, on assumptions made by management and on the expectations of management, acting in good faith, regarding future events, including those relating to economic conditions, fluctuations in exchange rates and operating expenses, and the absence of unusual events entailing supplementary expenditures. Although management considers these assumptions and expectations reasonable based on the information available at the time they are written, they could prove inaccurate. Forward-looking statements are also subject, by their very nature, to known and unknown risks and uncertainties such as those related to the industry, acquisitions, labor relations, credit, key officers, supply and product liability. The actual results of Noveko International Inc. could differ materially from those indicated or underlying these forward-looking statements. The reader is therefore recommended not to unduly rely on these forward-looking statements. Forward-looking statements do not reflect the potential impact of special items, any business combination or any other transaction that may be announced or occur subsequent to the date hereof. Unless otherwise required under securities laws, the Corporation does not intend and undertakes no obligation to update or revise the forward-looking statements.
SOURCE: NOVEKO INTERNATIONAL INC.
For further information:
Chairman of the Board and Chief Executive Officer
Tel: (514) 875-0606