Counsel Corporation
TSX : CXS

Counsel Corporation

April 01, 2011 08:30 ET

Counsel Corporation Announces 2010 Fiscal Year Results

TORONTO, ONTARIO--(Marketwire - April 1, 2011) - Counsel Corporation ("Counsel" or the "Company") (TSX:CXS) today reported its financial results for the year ended December 31, 2010. All amounts are stated in Canadian dollars, unless noted.

The Company had net income attributable to controlling interest of $8.8 million or $0.14 per share, basic and diluted, for the year ended December 31, 2010 compared with a net loss of $3.6 million, or $0.07 per share, basic and diluted, for the year ended December 31, 2009. The Company had a loss from continuing operations attributable to controlling interest of $6.4 million, or $0.10 per share, basic and diluted, for the year ended December 31, 2010, compared with a loss of $3.2 million, or $0.06 per share, basic and diluted, for the year ended December 31, 2009.

Highlights of 2010 and 2011 to date:

  • In February 2010, Counsel's Case Goods subsidiary Fleetwood Fine Furniture ("Fleetwood") arranged new equity financing of $2.5 million from a third party investor for 25% of the outstanding units of Fleetwood. As a result, Counsel's ownership of Fleetwood has been reduced from approximately 95% to approximately 71%. The proceeds from the capital raise have been used to fund the transition of Fleetwood's manufacturing capacity to Asia, as well as for working capital and general corporate purposes.
  • In April 2010, the Company sold its 20% ownership interest in six income producing properties in Brockville, Ontario for proceeds of approximately $1.4 million.
  • In April 2010, Counsel RB Capital LLC ("Counsel RB"), Counsel's asset liquidation subsidiary, as part of a consortium, completed the sale of the former Aleris Aluminum manufacturing facility in Trois-Rivieres, Quebec for approximately US$25 million. Counsel RB and its partners purchased the Aleris Aluminum assets in November 2009. Counsel RB's interest in the transaction yielded a gain of approximately US$2.1 million after expenses. 
  • In June 2010, Knight's Bridge Capital Partners Inc. ("Knight's Bridge") along with its partners Authentic Brands Group LLC ("ABG") and Leonard Green & Partners, LP announced a US$250 million equity raise. The equity capital will be used to fund the growth of ABG's global brand licensing and management business as ABG looks to acquire and manage iconic consumer brands in the apparel, sporting goods, action sports, home, celebrity, entertainment and consumer electronics segment. Knight's Bridge Capital Partners Fund I has committed to fund US$5 million of the equity raise.
  • In September 2010, ABG acquired TapouT and Silver Star Casting Company, two of the biggest apparel names in the mixed martial arts industry.
  • In September 2010, Knight's Bridge along with its partners, completed the acquisition of The Works Burger Bistro Inc. (the "Works"). The Works is a chain of full service gourmet hamburger restaurants, with six stores across the Ottawa region and plans to expand into new regions.
  • In December 2010, C2 Global Technologies Inc. ("C2") acquired the 25% minority interest in Counsel RB, owned by Counsel RB's two CEOs, in exchange for a total 3,242,000 common shares of C2. As a result, Counsel RB became a wholly-owned subsidiary of C2. The acquisition price represented approximately 12.5%, post issuance, of C2's outstanding common shares. As a result of the issuance of C2 shares, Counsel's ownership in C2 was reduced from 91% to 79.5%. In January 2011, C2 changed its name to Counsel RB Capital Inc.
  • On December 30, 2010, Counsel completed the sale of a real estate portfolio that it owned and/or managed. The real estate portfolio consisted of seven income producing properties, of which six were owned by Counsel. The aggregate purchase price for the portfolio was $140 million, subject to the usual closing adjustments. The purchaser assumed the $60.3 million of mortgage debt that was on the properties. Counsel has been hired by the purchaser to continue managing the properties.
  • On January 25, 2011, all of the Company's Series B preferred shares were converted into common shares at $0.75 per share, resulting in the issuance of 15,384,617 common shares.
  • On March 9, 2011, the Company announced that it has signed a non-binding letter of intent to acquire Street Capital Financial Corporation, a Canadian residential mortgage lender. The acquisition is subject to successful negotiation of definitive documentation as well as usual closing conditions and approvals and is expected to close in April 2011.
  • March 15, 2011, Counsel RB Capital Inc. completed a private placement of 1,000,000 common shares at an issue price of US$1.83 per share. The shares were purchased by an institutional investor. The share issuance reduced Counsel's ownership in Counsel RB Capital Inc. from 79.5% to 76.6%.

"We are very pleased with our results in 2010" said Allan Silber, Chairman and CEO of Counsel Corporation. "In particular, Counsel RB Capital, our asset liquidation business, has greatly exceeded expectations and Knight's Bridge, our private equity operation, has been able to source some promising investments - Authentic Brands Group and The Works. In addition, we were successful in selling our real estate portfolio for a substantial gain."

The Company's Management's Discussion and Analysis and Financial Statements for the year ended December 31, 2010 have been filed and are available on SEDAR (www.sedar.com).

About Counsel Corporation

Counsel Corporation (TSX:CXS) is a private equity investor and alternative asset manager that actively partners with businesses to achieve shared success and to unlock value through leveraging its relationships, access to capital and strategic market experience. For further information, please visit Counsel's website at www.counselcorp.com.

Forward-Looking Statements

The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, other than statements of historical facts, which address Counsel Corporation's expectations, should be considered as forward-looking statements. Such statements are based on knowledge of the environment in which Counsel Corporation currently operates, but because of the factors listed herein, as well as other factors beyond Counsel Corporation's control, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that may cause actual results to differ from anticipated results include, but are not limited to, obtaining necessary approvals and other risks detailed from time to time in the Company's securities and other regulatory filings.

Counsel Corporation  
Consolidated Statements of Operations  
For the years ended December 31  
(in thousands of Cdn Dollars, except per share amounts)  
(Audited)  
           
           
    2010   2009  
    $   $  
           
Revenues   36,835   29,036  
           
           
Expenses (exclusive of depreciation, amortization and interest expense shown below) and other (income) losses          
  Operating costs   28,238   26,864  
  Selling, general and administrative expense   13,149   14,100  
  Foreign exchange (gain) loss   (206 ) (2,216 )
  (Gain) loss on short-term investments   (97 ) (1,469 )
  Restructuring costs   902   1,975  
  Other   146   3,151  
    42,132   42,405  
           
           
           
Income (loss) before depreciation, amortization, interest expense, goodwill impairment, income taxes, and discontinued operations   (5,297 ) (13,369 )
           
  Depreciation and amortization   148   667  
  Interest expense   2,117   2,521  
  Goodwill impairment   5,175   -  
Income (loss) before income taxes and discontinued          
operations   (12,737 ) (16,557 )
           
  Income tax provision (recovery)   (6,133 ) (9,743 )
Income (loss) from continuing operations   (6,604 ) (6,814 )
           
Income (loss) from discontinued operations   34,610   1,181  
           
Net income (loss)   28,006   (5,633 )
           
Net income (loss) attributable to non-controlling interest          
  Continuing operations   (225 ) (3,594 )
  Discontinued operations   19,441   1,527  
    19,216   (2,067 )
           
Net income (loss) attributable to controlling interest   8,790   (3,566 )
           
Basic and diluted net income (loss) per share:          
  Continuing operations   (0.10 ) (0.06 )
  Discontinued operations   0.24   (0.01 )
           
Basic and diluted net income (loss) per share   0.14   (0.07 )
           
Weighted average number of common shares          
outstanding (in thousands) - basic and diluted   61,820   52,149  
           
           
The notes contained in the Company's annual consolidated financial statements are an integral part of these condensed consolidated financial statements.  
         
         
         
Counsel Corporation        
Consolidated Balance Sheets        
As at December 31        
(in thousands of Cdn Dollars)        
(Audited)        
         
         
    2010   2009
    $   $
 
Assets        
 
  Current assets        
    Cash and cash equivalents   61,897   8,048
    Short-term investments   333   1,519
    Accounts receivable (net of allowance for doubtful accounts of $28; 2009 - $129)   4,490   5,303
    Inventories   5,808   6,734
    Prepaid expenses and deposits   1,736   2,428
    Future income tax assets   2,220   766
    Assets of discontinued operations   1,199   1,125
    77,683   25,923
 
  Long-term assets        
    Income producing properties, net   -   100,721
    Properties under development   7,198   6,800
    Property, plant and equipment, net   1,764   2,042
    Portfolio investments   34,057   28,737
    Intangible assets, net   -   3,033
    Goodwill   20,877   26,058
    Tenant related costs and other assets   194   5,951
    Assets of discontinued operations   538   -
 
    142,311   199,265
 
  Liabilities        
 
  Current liabilities        
    Accounts payable and accrued liabilities   10,299   13,480
    Customer deposits   2,495   4,911
    Income taxes payable   218   44
    Future income tax liabilities   -   58
    Current portion of mortgages and loans payable   8,902   16,876
    Convertible preferred shares   11,538   11,538
    Liabilities of discontinued operations   2,663   273
    36,115   47,180
  Long-term liabilities        
    Mortgages and loans payable   6,685   81,809
    Intangible liabilities   -   571
    Future income tax liabilities   -   1,405
    Other liabilities   2,191   -
    44,991   130,965
 
Shareholders' equity   97,320   68,300
 
    142,311   199,265
         
The notes contained in the Company's annual consolidated financial statements are an integral part of these condensed consolidated financial statements.

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