Railpower Technologies Corp.
TSX : P

Railpower Technologies Corp.

April 09, 2009 15:35 ET

Railpower Files Second Default Status Report and Announces Additional Reduction in Workforce

BROSSARD, QUEBEC--(Marketwire - April 9, 2009) - Railpower Technologies Corp. (TSX:P) provides its second bi-weekly Default Status Report under National Policy 12-203 - Cease Trade Orders for Continuous Disclosure Defaults, pursuant to which Railpower announced that the filing of its audited financial statements, management's discussion and analysis and related CEO and CFO certifications for the year ended December 31, 2008 will be delayed beyond the statutory deadline of March 31, 2009. Railpower reports that since announcing the original Notice of Default on March 13, 2009 and filing its first Default Status Report on March 27, 2009, except as otherwise publicly disclosed there have not been any additional material changes to the information contained therein; nor any failure by Railpower to fulfill its intentions as stated therein with respect to satisfying the provisions of the alternative information guidelines, and there are no additional defaults or anticipated defaults subsequent to such announcement.

Railpower also announced today that it is reducing its workforce by a further 50%, from 78 to 39 employees. As previously disclosed, despite making all efforts to secure the continued viability of its operations, Railpower remains under the protection of the Companies' Creditors Arrangement Act (Canada) and its ability to continue as a going concern is uncertain. Railpower may have no other alternatives than to initiate liquidation procedures.

In these circumstances, the Corporation has decided to cease its active operations. The remaining employees are those whose presence is required to maintain Railpower's minimum day-to-day operations and to support the development of available alternatives. In addition, the Quebec Superior Court has authorized Railpower to pay an amount of $13 million from its cash on hand to the Court-appointed monitor, Ernst & Young Inc. to be held in trust on behalf of Railpower's main creditor, to be released to Railpower's main creditor as to $12 million (plus interest earned) upon receipt by the monitor of a legal opinion confirming the validity and opposability of the security in favour of Railpower's main creditor and as to $1 million (plus interest earned) upon the granting of written releases by the creditors of Railpower having a claim ranking prior to Railpower's main creditor's claim with respect to the cash on hand.

Except as otherwise publicly disclosed and as disclosed in this press release, there have been no additional material changes respecting Railpower and its affairs. Railpower intends to file its next Default Status Report by April 24, 2009.

About Railpower

Railpower (TSX:P), (www.railpower.com) is engaged in the development, construction, marketing and sales of high performance, clean locomotives and power plants for the transportation and related industries. Railpower has designed and is marketing a range of locomotives for the North American low and medium horsepower locomotive market. It has also designed and is marketing hybrid power plants for rubber tyred gantry cranes (Eco-Cranes®). Its technologies have broader potential and applications in other markets and industries.

Caution regarding forward-looking statements

Certain statements contained in this release contain forward-looking statements. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions may be used to identify forward-looking statements. Those statements reflect our current views with respect to future events or conditions, including prospective results of operations, financial position, and predictions of future actions, plans or strategies. Certain material factors and assumptions were applied in drawing our conclusions and making those forward looking statements. By their nature, those statements reflect management's current views, beliefs and assumptions and are subject to certain risks and uncertainties, known and unknown, including, without limitation, the ability to secure new orders or new financing, our ability to secure the sale of our securities or assets, our ability to comply with the covenants and conditions contained in our outstanding convertible debentures with Ontario Teachers Pension Plan Board, the ability to retain our employees, product development or manufacturing delays, the ability of our current manufacturing suppliers to meet our production demands in terms of quantity, quality and costs, our ability to reach a satisfactory agreement with another supplier if necessary or, the ability to restart the construction of our manufacturing facility and if restarted, to construct our manufacturing facility on time and within the forecasted budget, changing environmental regulations, the ability to attract and retain business partners, the acceptance of our existing and new products, future levels of government funding, the need to obtain and maintain proprietary rights over our technology, competition from other technologies or new competitors, the ability to access the capital required for research, product development, operations and marketing, the need to generate positive cash flow in the foreseeable future, potential legal liability related to the recall of our Green Goat® locomotives, changes in energy prices and currency levels.
Further, actual results or events could differ materially from those contemplated in forward-looking statements as a result of the risks and uncertainties relating to the CCAA and Chapter 15 proceedings (collectively, the "Insolvency Proceedings") including: any negative impacts on the Corporation's business, results of operations, financial position, cash management arrangements and limitations on the Corporation's ability to freely deploy its cash resources throughout the company; relationships with employees, customers, creditors, suppliers and other stakeholders resulting from the Insolvency Proceedings; the failure of the Corporation or its U.S. subsidiary (collectively, the "Applicants") to obtain subsequent court orders extending the applicable stays of actions and proceedings against the Applicants to permit them to propose a restructuring plan to affected creditors; the adequacy of the Corporation's available cash on hand to fund its ongoing operations or ability to arrange for sufficient alternative debtor-in-possession financing during the Insolvency Proceedings; the failure of the Corporation to obtain the requisite approvals of affected creditors or the courts for any restructuring plan, or to successfully implement such a plan or obtain sufficient exit financing, if required, within the time granted by any court, which could result in substantially all of its debt obligations becoming immediately due and payable or subject to immediate acceleration, leading to the likely liquidation of the Applicants' assets; that the Corporation's existing securities could have no material value in, and following the approval of, a restructuring plan and could be cancelled. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying our projections or forward-looking statements prove incorrect, our actual results may vary materially from those described in this report as intended, planned, anticipated, believed, estimated, or expected. Unless otherwise required by law, we do not intend or do not assume any obligation to update these forward-looking statements whether as a result of new information, plans, events or otherwise.

Contact Information

  • Railpower Technologies Corp.
    Kamila Wirpszo
    Vice-President, General Counsel and Corporate Secretary
    450-678-5277 ext.518
    Toll Free: 1-866-678-5277
    kwirpszo@railpower.com