VICTORIA, BC, CANADA – Carmanah Technologies Corporation (TSX: CMH) (the “Company” or “Carmanah”) announced that it has received a non-binding proposal (the “Proposal”) from entities controlled by James Meekison and Terry Holland to purchase all shares of Carmanah not already owned or controlled by Mr. Meekison or Mr. Holland at a price of $7.35 per share, payable in cash.
Mr. Meekison and Mr. Holland are both current directors of Carmanah and, together, own or control a total of 5,709,904 common shares, representing in aggregate approximately 30.3% of the currently issued and outstanding shares of Carmanah.
In response to the Proposal, Carmanah has established a special committee of its board of directors consisting of Ms. Sara Elford who is a fully independent director. The special committee’s mandate is to consider the Proposal and any potential alternative transactions and ultimately make a recommendation regarding the course of action which it considers to be in the best interests of Carmanah. At this point, the special committee has not come to any conclusions regarding the Proposal or any potential alternative courses of action.
To assist the special committee in its work, the special committee has retained Capital West Partners as its financial advisor.
As a preliminary matter, the parties are assessing how any cash consideration received by shareholders will be treated under the Income Tax Act (Canada). There is some uncertainty as to whether these amounts will be treated entirely as “proceeds of disposition” for the purposes of a capital gain (or loss) calculation, or whether they will in part give rise to a deemed dividend. In the case of a deemed dividend, the amount of the dividend would be equal to the portion of the proceeds that are in excess of the Company’s paid up capital. The paid up capital is currently approximately $4.32 per share. If the proceeds were treated as a deemed dividend, the Company would generally be required to withhold and remit to the Canada Revenue Agency (the “CRA”) a portion of any such deemed dividends payable to non-residents of Canada. Carmanah intends to seek an advance ruling from the CRA to confirm the tax treatment of such payments.
It should be noted that there is currently no binding agreement in place with respect to the transactions proposed under the Proposal. Until such time as the special committee completes its work and analysis, there can be no certainty that a definitive transaction will be agreed or, if any such transaction is agreed, what terms that transaction will contain. The process of seeking an advance ruling from the CRA could take a number of months and, unless required to do so by law, the Company does not intend to provide interim updates on the status of the application or any negotiations involving the Proposal or any alternative transaction.
About Carmanah Technologies Corporation
Carmanah designs, develops and distributes a portfolio of products focused on energy optimized LED solutions for infrastructure. Since 1996, we have earned a global reputation for delivering durable, dependable, efficient and cost-effective solutions for industrial applications that perform in some of the world’s harshest environments. We manage our business within three reportable segments: Signals, Illumination and Offshore. The Signals segment serves the Traffic and Telematics markets. The Illumination segment provides solar powered LED outdoor street lights for municipal and commercial customers, while the Offshore segment specializes in the provision of comprehensive safety and marking systems for offshore wind farms.
Carmanah Technologies Corporation:
Evan Brown, (250) 380-0052
Chief Financial Officer/Corporate Secretary
This release may contain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities legislation. All information contained herein that is not historical in nature may constitute forward-looking information. Often, but not always, forward-looking statements can be identified by the use of words such as “expects”, “estimates”, “could”, “will”, or variations of such words and phrases. Forward-looking statements herein include, but are not limited to, statements about the Proposal and its terms, the consideration of the Proposal and any alternative courses of action by the special committee, and the application for an advance tax ruling to the CRA, and are based on management’s current expectations and assumptions. Those expectations and assumptions are currently considered reasonable by management but are inherently subject to business, market and economic risks, uncertainties, and contingencies which may cause the actual results, performance, or achievements of Carmanah to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
Readers are cautioned not to place undue reliance on such forward-looking statements or information. Carmanah disclaims any obligation to update, or to publicly announce, any such statements, events or developments except as required by law. Risk factors include, among others: the uncertainties associated with the Proposal as a result of its non-binding nature and the unknown results of the application for the advance tax ruling to the CRA.
For additional information on these risks and uncertainties, see Carmanah’s most recently filed Annual Information Form (“AIF”) and Annual MD&A (“MD&A”), which are available on SEDAR at www.sedar.com and on the Company’s website at www.carmanah.com. The risk factors identified in the AIF and MD&A are not intended to represent a complete list of factors that could affect Carmanah.