VANCOUVER, Aug. 17, 2015 /CNW/ - Working Opportunity Fund (EVCC) Ltd. (the "Fund") provides a portfolio update for Venture Series and Commercialization Series.
We are pleased to report that several portfolio companies continued to make good progress advancing their technologies and relationships with partners in the first half of 2015. We believe the Venture Series portfolio is well positioned to generate a number of exit transactions and the Commercialization Series portfolio is well positioned to generate the income required to maintain its dividend policy.
As previously reported, the Fund adopted a cash dividend distribution policy for the Venture Series to distribute available cash through an orderly realization of value from dispositions in the Venture Series' portfolio while maintaining funds for strategic follow-on investments, liabilities and anticipated operating expenses of the Venture Series. The adoption of the cash dividend distribution policy followed a full review of strategic options directed towards realizing on the potential value of the Venture Series portfolio and providing liquidity to Venture Series shareholders. For more information about the cash dividend distribution policy for Venture Series, we encourage you to review the Fund's most recent Management Report of Fund Performance and a set of frequently asked questions available on the Fund's website at www.growthworks.ca.
Redemption requests for Venture Series received by the Fund will continue to be placed in a queue for processing in the order they are received; however, the board of directors of the Fund currently intends that available cash from the sale of the Venture Series portfolio companies will be distributed to shareholders through the cash dividend distribution policy and does not expect to open redemptions of the Venture Series. The Fund expects to process Venture Series shares redemptions only in the very limited circumstance of hardship disposition provided there are available funds to do so.
In the first half of 2015, the Commercialization Series Shares paid dividends for the 9th consecutive year in accordance with the dividend policies on previously offered series. The dividend policy has been met since the Fund began offering the Commercialization Series shares in 2005. The Commercialization Series remains open for redemption; however, it is closed for sales.
Venture Series' Portfolio Update
The Fund and its manager continue to work towards maximizing the return for all shareholders by working with the companies in the Venture Series portfolio and positioning several of them for exit. We are encouraged by the maturity of many of the companies in the Venture Series portfolio in terms of revenue, revenue growth, and in some cases having achieved profitability, and believe there are several companies well positioned for near to medium term exit.
During the first half of 2015, the Venture Series completed full exits from Avcorp Industries (TSX:AVP), Celator Pharmaceuticals (Nasdaq:CPXX) and Metafor Software. The Venture Series also received a final escrow payment on the 24 month anniversary of the June 2013 sale of Layer 7 Technologies to Computer Associates. In Aggregate these exits totalled $14.6 million. During the second quarter of 2015 the Venture Series shares in Dermira (Nasdaq:DERM) and Xenon (Nasdaq:Xene) became free trading and the Fund is determining the appropriate divestment timing in consideration of the anticipated release of trial data by each company and trading volumes.
At June 30, 2015 the Venture Series holds active venture investments in 19 investee companies. Of those investments, more than half of the value of the Venture Series' venture portfolio is represented by companies that are not expected to require additional financing by virtue of having achieved profitability, or can access the capital markets opportunistically as required to fund growth. Several of these companies are well-positioned for medium-term exit. Venture capital funds like the Fund rely on favourable M&A and IPO market conditions for full value, cash generating exit opportunities. If favourable market conditions continue, the Fund's manager is optimistic that exit markets for the remainder of 2015 will remain favourable for portfolio companies, although the Fund can provide no assurance as to if or when any exits may be completed.
As at June 30, 2015, the Ventures Series Net Asset Value (NAV) was $138.5 million composed of $124.3 million of venture assets and includes $13.7 million in cash and other liquid assets and $0.5 million in other assets. Strategic follow-on investments may be required for the Venture Series portfolio companies that have not yet achieved profitability. While no assurance can be made with respect to the amount of future strategic follow-ons in the Venture Series' portfolio, follow-on levels are expected to be minimal with $1.2 million of follow-ons in the six month period ending June 30, 2015 and average of $0.8 million made per year in the previous two years. The top holding of the Venture Series is Teradici, valued at $31.1 million and comprising 23% of NAV. The top five holdings of the Venture Series are investments in Teradici, D-Wave, BuildDirect, ResponseTek and General Fusion which totalled $90.2 million, or 65% of NAV at June 30, 2015.
The value of the most widely held shares, Balanced Shares (series 2), increased 10.98% during the six month period ended June 30, 2015.
Commercialization Series Portfolio Update
During the first half of 2015, the Commercialization Series completed partial exits from Inetco Systems, LightHaus Logic, and Lite Access Technologies. The Commercialization Series also received a final escrow payment on the 24 month anniversary of the June 2013 sale of Layer 7 to Computer Associates. In Aggregate these exits totalled $1.2 million.
At June 30, 2015 the Commercialization Series holds active venture investments in 10 investee companies. Management believes that the value of the underlying investments in the venture investment portfolio will remain strong, and the current income component of the Commercialization Series' investments will support the adopted dividend policies. As the portfolio matures, some of the additional features in our investment holdings focused on capital appreciation, such as conversion rights and warrants to purchase shares in the companies to whom loans were made, may result in increases in value for the venture investment portfolio. The cash dividend distribution policy adopted for the Venture Series does not apply to the Commercialization Series which remains open for redemption.
As at June 30, 2015 the Commercialization Series Net Asset Value (NAV) was $31.9 million composed of $21.0 million of venture assets, $10.7 million in cash and other liquid assets and $0.2 million of other assets. Debt investments represent 72% of the Commercialization Series venture investment portfolio. The top five venture holdings in the Commercialization Series total $16.3 million, or 51% of NAV. The Fund and its manager believe that the Commercialization Series venture investment portfolio will generate sufficient income to satisfy future dividend payments in accordance with all adopted dividend policies on previously offered series. Dividends are not guaranteed and there can be no assurance that the portfolio will generate the cash flow needed to pay dividends in accordance with all adopted dividend policies.
The value of the most widely held shares, Commercialization '05 Series, increased 3.33% during the six month period ended June 30, 2015.
Forward Looking Statements : This press release contains forward looking statements which primarily relate to assessments of the liquidity position of the Venture Series, implementation of the cash dividend distribution policy, the targeted timing of exits (also referred to as divestments) from the Venture Series venture investment portfolio, future economic and market conditions, including M&A and IPO market conditions, the Venture Series ability to make follow-on investments, redemptions of Commercialization Series shares and statements regarding the Fund's dividends policies. All forward looking statements are based on management's current beliefs and assumptions which are subject to numerous known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others assessments of the targeted timing of exits (also referred to as divestments) from the Fund's venture investment portfolio, general economic and business conditions, including changing market conditions, changing governmental regulations, unforeseen developments, and other factors referenced in the Fund's filings with the Canadian securities regulators. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Neither the Fund nor its manager assumes any obligation to update any forward-looking statements made in this letter. Returns: The returns for Balanced Series 2 to June 30, 2015 are: year to date: 10.98%; one year: 20.62%; three years: 11.68%; five years: 4.29%; and ten years: 0.66%. The returns for Commercialization 05 Series to June 30, 2015 are: year to date: 3.33%; one year: 2.98%; three years: 2.70%; five years: 3.78%; and ten years: 4.47%. Past performance does not necessarily indicate how a series will perform in the future.
SOURCE Working Opportunity Fund (EVCC) Ltd.
For further information: Reference: David Levi, President & CEO, Tel: (604) 895-7253, Suite 2600, Royal Centre, 1055 West Georgia Street, Vancouver, BC V6E 3R5