Newlook Industries Corp.
TSX VENTURE : NLI

Newlook Industries Corp.

April 27, 2009 14:37 ET

Newlook Provides Update on Wireless Age Assets

TORONTO, ONTARIO--(Marketwire - April 27, 2009) - Newlook Industries Corp. ("Newlook" or the "Company") (TSX VENTURE:NLI) today announced that on April 21, 2009, its majority-owned subsidiary Wireless Age Communications, Inc. ("Wireless Age") received notice that the Receiver of Wireless Age's subsidiaries, Wireless Age Communications Ltd. ("Wireless Communications") and Wireless Source Distribution Ltd. ("Wireless Source"), and Saskatchewan Telecommunications ("SaskTel") were seeking to have an application to the Court of Queen's Bench For Saskatchewan in Bankruptcy and Insolvency heard on April 28, 2009.

The application will seek approval for the sale of Manitoba assets of Wireless Communications to MTS Allstream Inc. ("MTS") and 4L Communications Inc. ("4L") for the total purchase price of approximately $115,000 plus an amount for inventory; the sale of Saskatchewan assets of Wireless Communications and all of the assets of Wireless Source to IM Wireless Ltd. ("IM") for a total purchase price of approximately $7,000,000; to distribute the net proceeds received from the sale of the assets; and to assign Wireless Communications and Wireless Source into bankruptcy.

According to the report of the Receiver, IM is believed to be owned by Mr. Allen Cowie, President of Wireless Communications and Wireless Source, and 4L is an independent dealer of MTS in the province of Manitoba operating other MTS wireless communications retail outlets.

The notice materials also stated that:

1. Two offers were received for the Manitoba assets one from IM and another from MTS and 4L. The IM offer was rejected because IM did not meet MTS's criteria to be an acceptable dealer and therefore the MTS/4L offer was accepted pending approval of the court.

2. There were five offers for the remaining non-Manitoba assets and that three were rejected because of the price. Two were largely identical in value - one from IM and the other from an undisclosed second party. The IM offer was accepted pending approval of the court.

3. The Receiver anticipated approximately $7,650,000 to be available after closing and that there would be approximately $1,250,000 available for unsecured creditors, before the Receiver's fees and after repayment of approximately $6,400,000 to SaskTel.

4. There would be approximately $2,600,000 in trade creditors and a potential undefined income tax payable amount.

5. There would be significant funds to distribute to unsecured creditors, but insufficient funds to pay all creditors. As such, the Receiver wished to assign Wireless Communications and Wireless Source into bankruptcy and be appointed as Trustee to the Bankruptcy to distribute such funds.

6. In anticipation of the possible assignment into bankruptcy, the Receiver obtained a legal independent opinion as to the validity of SaskTel's security that would be available upon request at the meeting of unsecured creditors. The opinion was comprehensive but was qualified in that the enforceability of security interest was subject to the real possibility of court actions brought under the applicable fraudulent preference, fraudulent conveyance, settlement or oppression legislation based on the sequence of events by which SaskTel acquired its security interest.

On April 24, 2009, Wireless Age was also provided an affidavit of Kelly Kazakoff who is President of Jump.ca Wireless Supply Corp. ("Jump.ca"). Jump.ca is an authorized distributor of SaskTel products with twelve retail locations in Saskatchewan. The affidavit indicated that Jump.ca intended to oppose the Receiver's motion to sell the Saskatchewan assets to IM on the basis that Jump.ca had participated in sale process unsuccessfully. The affidavit stated that they had been directed to obtain technical information about the business directly from Mr. Cowie, that they had discussed potential employment of Mr. Cowie if they were successful and that Mr. Cowie became fully aware of Jump.ca's bid. The affidavit further states that at no time did the Receiver or Mr. Cowie advise Mr. Kazakoff that Mr. Cowie was intending to make a bid and that the information provided to Mr. Cowie would have been of significant commercial value to him in his capacity as a bidder.

The potential sale of the assets to IM and 4L/MTS as described in the notice documents would result in Wireless Age not receiving anything from the disposition of the assets. However, the Jump.ca objection may preclude the approval of the sale and therefore the possible assignment of Wireless Communications and Wireless Source into bankruptcy.

John G. Simmonds, CEO of Newlook stated; "The announcement that our former employee is the proposed purchaser and the Jump.ca allegations are troubling. We're going to closely observe the proceedings in court and consider all options available to us. Although the situation seems to be getting murkier, momentum is developing from our view that the events that have unfolded since last summer have not always been what they have seemed."

Newlook will disseminate the results of the court proceedings when they become available, along with any other developments through subsequent news releases as required by securities legislation and Exchange requirements.

Newlook Industries Corp., headquartered in Toronto, Ontario is a publicly traded company listed on the TSX Venture Exchange. For more information please call (416) 477-5656 or refer to www.sedar.com.

The management of the company, who take full responsibility for its content, prepared this press release. This press release contains forward-looking statements relating to future events and results that are based on Newlook's current expectations. These statements involve risks and uncertainties including, without limitation, Newlook's ability to successfully develop and market its products, consumer acceptance of such products, competitive pressures relating to price reductions, new product introductions by third parties, technological innovations, and overall market conditions. Consequently, actual events and results in future periods may differ materially from those currently expected.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Newlook Industries Corp.
    John G. Simmonds
    Chief Executive Officer
    (416) 477-5656 x301