GrowthWorks Ltd.

GrowthWorks Ltd.

November 19, 2010 16:36 ET

GrowthWorks Announces Key Improvements on Covington Proposal

TORONTO, ONTARIO--(Marketwire - Nov. 19, 2010) - GrowthWorks Ltd. ("GrowthWorks") is continuing with its efforts to formulate a better proposal for VenGrowth Fund class shareholders and is pleased to announce its forthcoming proposal will have the following more favourable terms than the Covington proposal*:

50% Higher Penalty Free Redemptions - Suspended VenGrowth Funds class A shareholders will have the opportunity to redeem 50% more shares without a NAV discount or penalty redemption fee. Under the Covington proposal, shareholders of these funds are limited in their penalty free redemptions to 10% a year over four years, in one case starting at the first anniversary of closing. GrowthWorks' forthcoming proposal would allow 15% a year. This will be of considerable value to the majority of shareholders who want a way to exit without a major penalty.

25% Lower IPA to the Manager - VenGrowth Funds assets which end up in a GrowthWorks+ managed fund will have 15% incentive participation amount ("IPA"), which would be 25% lower than the 20% IPA proposed by Covington. (The IPA is also sometimes commonly called a carried interest or performance incentive.) This leaves more dollars in shareholders' pockets, yet still incents management to pursue high value venture holdings exits.

The two items above are in addition to the previously announced items below:

$5 Million to defray Manager Termination Expenses - GrowthWorks will propose to pay $5 million toward any termination costs due to relieve a significant part of the burden on the VenGrowth class A shareholders.

Lower Redemption Penalties - For those suspended VenGrowth Fund shareholders who are looking to exit their share investment for cash in the shorter term, GrowthWorks will propose a significantly lower 30% discount at closing and a yet further reduced 20% discount in a second window 18 months after closing, instead of the Covington proposal's 40% NAV discount for suspended VenGrowth Fund shareholders who redeem on closing.

GrowthWorks has filed a dissident proxy circular and is urging VenGrowth class A shareholders to vote against the Covington proposal at the November 25th meeting to allow GrowthWorks to present an alternative proposal with significant improvements, including those listed above. GrowthWorks encourages all VenGrowth Fund shareholders to go to the website, read the GrowthWorks circular posted there, and consult with their investment advisors before casting their votes with respect to the Covington Proposal. THIS IS A TIME SENSITIVE MATTER. Please GO NOW to to learn more and get directions on HOW TO VOTE BEFORE THE DEADLINE.

The substantial improvements over Covington proposal terms noted above reflect GrowthWorks' desire to formulate a significantly better deal for VenGrowth class A shareholders. The fact that Covington is now seeking to improve one of its terms proves there is real value in having more than one proposal on the table for VenGrowth class A shareholders.

GrowthWorks also wishes to address two important matters which were commented on by VenGrowth Asset Management Inc. ("VG Management") in a letter to VenGrowth shareholders.

VG Management indicated that VenGrowth shareholders may not be left with any deal if they vote against the Covington proposal. This is not true. This wholly ignores the commitment GrowthWorks has made to not only preserve the economic opportunity presented by Covington by providing a backstop to the Covington deal in the event it is withdrawn, but also propose a significantly better deal for VenGrowth class A shareholders.

VenGrowth Management also suggested Covington is a better manager for the VenGrowth Funds assets. GrowthWorks strongly disagrees.

Six investee companies representing about 40% of the value of VenGrowth's venture holdings are common to other GrowthWorks+ managed funds. The GrowthWorks group venture managers know them well, often sit on their boards, and we believe are best positioned to generate good exits. We do not believe there is any overlap with the Covington portfolio. GrowthWorks' national investment team of seventeen investment professionals has deep experience, with over 200 years of venture investing.

* "Covington proposal" means the proposal as described in the VenGrowth Funds' information circular dated October 28, 2010 as it relates to class A shareholders of the VenGrowth Funds. The GrowthWorks "backstop" of that proposal will automatically arise if Covington cancels or does not extend its proposal and is subject to substantially the same/equivalent conditions as are set out in the Asset Purchase Agreement posted on SEDAR on October 12, 2010 for the Covington proposal. GrowthWorks has issued an amended and restated proxy circular that refers to the backstop commitment and further details about GrowthWorks' position on the Covington proposal. There can be no assurance that the conditions to a GrowthWorks proposal will be satisfied, nor can there be any assurance that the conditions to the Covington Proposal will be satisfied.

+ "GrowthWorks managed funds" means retail venture capital funds managed by one the GrowthWorks group of companies.

About GrowthWorks* ( GrowthWorks™ managed funds provide investment capital for Canadian companies and tax-advantaged investment opportunities for Canadian investors. GrowthWorks manages approximately $560 million in assets through the GrowthWorks Canadian Fund Ltd., GrowthWorks Commercialization Fund Ltd., GrowthWorks Atlantic Venture Fund Ltd., and Working Opportunity Fund (EVCC) Ltd. GrowthWorks identifies, analyzes and structures investments in companies with high growth potential. Building on more than 18 years of investment expertise, GrowthWorks is a leader in Canadian venture capital management.

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