GrowthWorks Atlantic Venture Fund to Wind-up
HALIFAX, Nova Scotia, June 10, 2020 (GLOBE NEWSWIRE) — GrowthWorks Atlantic Venture Fund Ltd. (the “Fund”) announced today that its board of directors (the “Board”) had determined to pursue wind-up and dissolution of the Fund (the “Wind-Up”). The Wind-Up is expected to be effected during the 3rd quarter of 2020 in accordance with the provisions of the Canada Business Corporations Act and applicable rules relating to the wind-up of registered labour-sponsored venture capital corporations under the Income Tax Act (Canada) and relevant provincial legislation in New Brunswick, Nova Scotia and Newfoundland and Labrador. The completion of the Wind-Up is subject to the satisfaction of certain conditions, including any necessary shareholder, regulatory and tax approvals. In connection with this decision, a decline in the carrying value of the Fund’s venture assets was recorded to reflect the anticipated divestment proceeds that may be received prior to completion of the Wind-Up.
The Board’s decision to pursue the Wind-Up was taken as part of its continuing evaluation of the Fund’s status and strategic options reasonably available to the Fund after consulting with GrowthWorks Atlantic Ltd. (the “Manager”) and independent legal counsel. The Board considered a number of factors based on information provided by the Manager including: (i) current economic and market conditions caused by the COVID-19 pandemic; (ii) current and projected liquidity, operating expenses and liabilities of the Fund; (iii) the current size, composition and value of the Fund’s investment portfolio following a material write-down in the value of the venture portfolio earlier in the year; (iv) an evaluation of the risks and uncertainties associated with possible alternatives to the Wind-Up such as a possible court ordered liquidation process and/or statutory creditor protection process; and (v) the Manager’s views as to the projected timing of, and realizable proceeds from, divestments of the Fund’s remaining venture assets generally given the impact of current market conditions on exit markets for its venture assets. Despite reducing operating costs by 50% in recent years, as a regulated labour sponsored investment fund and reporting issuer investment fund under securities laws, the Fund is required to operate in such a manner that requires the Fund to continue to incur significant costs over and above the basic costs of managing a venture portfolio. The Fund has been successful in the past in exiting venture investments to provide some returns to shareholders under its Pro Rata Redemption Plan and fund its operating costs. In this regard, one portfolio company had initiated in early 2020 a formal process to seek a M&A transaction and the Manager believed that there was a reasonable prospect that a transaction would be completed by August therefore providing working capital for the short to medium term and some returns to shareholders. With the depressed investment and M&A market brought about largely by COVID-19, the Manager’s view as to the anticipated lengthy time horizon to recovery of exit markets and the limited working capital remaining, the Board determined to pursue the Wind-Up at this time rather than continue operations and face the expected uncertainty and higher costs associated with other options for winding down operations. Prior to the completion of the Wind-Up, the Fund intends to pursue the disposition of all of its remaining venture assets and while the Manager will seek to maximize values on divestments, it is expected that dispositions will not yield proceeds sufficient to fund any cash distribution to the Fund’s shareholders in connection with the Wind-Up after all expected liabilities and obligations of the Fund have been satisfied or adequately provided for.The Fund intends to call a special meeting of its shareholders to be held in Nova Scotia during July or August (the “Meeting”), at which the Fund’s shareholders will be asked to vote on a special resolution to approve the Wind-Up. The Meeting will observe physical distancing guidelines then in effect by the Government of Nova Scotia which may limit the number of shareholders available to attend. As such, shareholders are encouraged to vote in advance via proxy as only shareholders attending in person or the named proxy holders will be able to vote during the Meeting. Shareholder proxies, notice of meeting and an information circular regarding the Wind-Up and any other business to be considered at the Meeting are expected to be sent to shareholders in July 2020 and those meeting materials and information incorporated by reference therein, as permitted under applicable securities laws, will be made available on SEDAR and the Fund’s website at www.growthworks.ca. Shareholders are encouraged to regularly check these websites for information. Notice is hereby given, and will be provided electronically on SEDAR and the Fund’s website, that assuming all conditions have been satisfied to complete the Wind-Up, the Fund will terminate as an investment fund under applicable securities laws upon completion of the Wind-Up no earlier than 60 days from the date of this press release.Forward Looking Statements: This press release contains forward looking statements based on beliefs and assumptions of management of the Fund at the time the statements are made, including beliefs and assumptions about the Fund’s current and projected operating expenses and liabilities, the current and anticipated impact of COVID-19 on portfolio companies and Fund operations including shareholder meetings, ability to complete divestments from the venture portfolio and the absence of potential future distributions to shareholders and other risks and uncertainties including, including, but not limited to, the risk that there may not be a market for the Fund’s venture assets and the Fund may not be able to dispose of these assets on favourable terms, in a timely manner or at all; the risk that the proceeds that the Fund receives upon a disposition of its venture assets may vary materially and adversely from the historical values assigned to those assets using the International Private Equity and Venture Capital Valuation Guidelines and/or the liquidation values as calculated by the Manager; the risk that dispositions of the Funds’ venture assets will not yield proceeds sufficient to fund any cash distribution to the Fund’s shareholders in connection with the Wind-Up and/or to satisfy all liabilities and obligations of the Fund; the risk that the Fund does not obtain the shareholder, regulatory, tax or third party approvals required to complete the Wind-Up and/or the risk the Fund becomes subject to additional uncertainties, risks and costs under an alternative winding down option such as a possible court ordered liquidation process and/or statutory creditor protection process. 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. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless required by law, neither the Fund nor the Manager assumes any obligation to update any forward-looking statements or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results or other factors. No assurance can be given as to completion of the Wind-Up.Reference:Peter Clark
President & CEO
GrowthWorks Atlantic Venture Fund Ltd.
Suite 1301 – 1959 Upper Water Street
Halifax, Nova Scotia B3J 3N2
Tel: (506) 440-2711