Benev Capital (BEV-T) sells waste treatment plant for $10-million
May 31, 2013 - News Release
Benev Capital Inc. has completed the previously announced proposed sale of its Saint Ambroise, Que., waste treatment plant and related assets and liabilities to 8439117 Canada Inc., a company indirectly controlled by the plant's current manager, Jean-Francois Landry. Under the asset purchase agreement dated March 7, 2013, the purchase price for the assets consists of $10-million, $8-million in cash at closing plus an earn-out which could be as high as $2-million or more, contingent on a specific potential new contract being entered into within three years from the date of signing of the purchase agreement (which is by no means certain). In addition, the purchase price will be adjusted postclosing for working capital at closing, and for soil contracts received between signing and closing. A copy of the purchase agreement has been filed on SEDAR. The transaction was approved by the shareholders of the corporation at the annual and special meeting of the shareholders held on May 3, 2013.
As at May 31, 2013, and after the receipt of cash on closing of the transaction, the corporation's cash position was approximately $72-million including restricted cash of approximately $500,000. The majority of the restricted cash is used to secure a foreign exchange facility which is no longer required now that the sale of the plant has been completed.
Due to its significant tax loss carryforwards and other tax assets, the corporation is not expected to incur income tax as a result of the consideration received at closing. The tax effects of any additional consideration which may be received in future periods will vary depending upon the amount of tax assets available at that time, if any, to offset such consideration.
Lawrence Haber, the corporation's chair and chief executive officer, stated: "Benev is pleased to announce the completion of this transaction, which we view as mutually beneficial. We wish Jean-Francois Landry and his financial partners great success with the business, and we are confident that he and his team at the plant will continue to provide the same high-quality service to customers of the business that they have become accustomed to over the years."
Mr. Haber also stated: "The sale of the plant is consistent with the strategy that we have articulated since the installation of a new board in June, 2011, namely to source, structure and complete one or more transactions, designed to transform the corporation and create meaningful value for shareholders. We have said that such transactions may or may not be in the environmental space, and may involve one or more of a sale of all or substantially all of the corporation's assets, an acquisition, a merger, or a strategic investment. The sale of the plant is the first step in this direction, and we believe it will increase our range of options and provide us with enhanced flexibility on a go forward basis. We will continue to seek to source, structure and complete a transformative transaction; one that enhances value for all shareholders. We also may consider a return of capital, special dividend and/or the dissolution of the corporation. In the meantime, we will manage our cash conservatively, reduce our expenses where appropriate and remain prudent and patient."
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