GrowthWorks Canadian Fund Ltd.

GrowthWorks Canadian Fund Ltd.

May 23, 2012 18:55 ET

GrowthWorks Canadian Fund Provides Update on Financing Arrangements

TORONTO, ONTARIO--(Marketwire - May 23, 2012) - GrowthWorks Canadian Fund Ltd. ("Canadian Fund") today announced an update with respect to financing arrangements aimed at providing liquidity over the near and medium term.

Canadian Fund has arranged short and medium-term financing to support Canadian Fund's liquidity pending the completion of divestments from the Canadian Fund's venture portfolio, including a loan pursuant to a financing facility established and announced in March 2011 (the "Facility"). Under the Facility, funds can be raised, on an as needed basis, through the issuance of secured notes of various maturities ("Notes") to accredited investors. Base interest rates on the Notes vary and Canadian Fund may pay capped bonus interest on Notes. The Facility is secured by a charge over all of Canadian Fund's chargeable assets and the proceeds derived from non-chargeable assets.

As at May 15, 2012, approximately $3.5 million of management fees had accrued but were unpaid under the management agreement (the "Management Agreement") between Canadian Fund and its manager. On May 18, 2012, GrowthWorks WV Management Ltd. (the "Manager"), the manager of the Canadian Fund, on behalf of the Canadian Fund obtained a $4 million term loan provided by a third party lender in order to pay Canadian Fund operating expenses. The Board of Directors of Canadian Fund has designated the term loan as an "approved borrowing" by the Manager for purposes of the Management Agreement and, in accordance with the Management Agreement, all costs incurred by the Manager in connection with the term loan will be reimbursed by Canadian Fund. Structurally, the reimbursement will be effected through interest payments on a Note in the principal amount of $4 million issued under the Facility to Matrix Asset Management Inc. ("Matrix"), the parent company of the Manager. The terms of the Note match the terms of the third party loan and were formulated so as to ensure that Matrix does not earn interest on the Note in excess of the costs incurred by the Manager in respect of the term loan. It was on this basis that Canadian Fund's Board of Directors and Independent Review Committee approved the issuance of the Note to Matrix.

The issue of the Note to Matrix brings the total principal amount of Notes funded under the Facility to $13.5 million, of which $9.5 million matures on December 20, 2012 and $4.0 million matures on July 31, 2014. The total annual cost of fees and interest on the Notes issued to date is approximately 22% per annum. The proceeds advanced under Notes are applied to fund liabilities and operating commitments of Canadian Fund, including payments due under the May 28, 2010 Participation Agreement between Canadian Fund and Roseway Capital. Funding under the Participation Agreement provided capital to Canadian Fund for follow-on investments in several portfolio companies, a number of which have generated exits for Canadian Fund.

Commissions, trailing commissions, management fees and expenses all may be associated with investment fund purchases. Read a fund's prospectus before investing. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. Canadian Fund purchased the assets of Canadian Science and Technology Growth Fund and Capital Alliance Ventures in 2005, of ENSIS Growth Fund in 2008 and of Canadian Medical Discoveries Fund in 2009, in each case in exchange for Class A shares. ENSIS is a registered trademark of ENSIS Capital Corporation.

Contact Information

  • GrowthWorks Canadian Fund Ltd.
    Debbie Gray
    Senior Vice President, National Sales and Marketing
    (416) 934-7726
    www.growthworks.ca