Railpower Technologies Corp.

Railpower Technologies Corp.

May 19, 2009 10:49 ET

Railpower Obtains Additional Extension of Stay Period Under CCAA

BROSSARD, QUEBEC--(Marketwire - May 19, 2009) - Railpower Technologies Corp. (TSX:P) announced today that the Quebec Superior Court issued an order providing Railpower with an additional period of protection under the Companies' Creditors Arrangement Act (Canada) ("CCAA"). The initial order, which was first granted under the CCAA in favour of Railpower on February 4, 2009 and subsequently extended on March 4, 2009, April 7, 2009 and April 20, 2009, has now been further extended until May 26, 2009, during which time creditors and other third parties will continue to be stayed from taking steps against Railpower. The purpose of the stay of proceedings is to provide Railpower with an opportunity to develop a comprehensive plan of arrangement for consideration by its creditors and the courts.

As previously stated, Railpower and R.J. Corman Railroad Group, LLC ("R.J. Corman") have entered into a binding agreement providing for the sale of all of the assets of Railpower and its U.S. subsidiary, except cash on hand and on deposit in financial institutions, the land and property located in St-Jean-sur-Richelieu (Quebec) and two road switching locomotives, to R.J. Corman. It is not anticipated that this offer will provide any value to the shareholders of Railpower. Closing of the transaction, which is conditional upon obtaining Court approval in both Canada and the United States, is expected to occur no later than May 29, 2009.

Railpower has been advised that the Memorandum of Understanding dated April 24, 2009 entered into between R.J. Corman and certain current members of management of Railpower has been terminated by mutual agreement of the parties. R.J. Corman has advised Railpower that it is its intention to fulfill all obligations of Management under such Agreement, including making employment offers to certain Canadian employees.

While under CCAA protection, Railpower's board of directors maintains its usual role and its management remains responsible for the day-to-day operations of Railpower, under the supervision of the Court-appointed monitor, Ernst & Young Inc.

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 call and hold the annual meeting of shareholders within the prescribed delays, 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 court approval allowing the sale of assets and/or 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