Railpower Technologies Corp.
TSX : P

Railpower Technologies Corp.

May 01, 2009 17:03 ET

R.J. Corman to Purchase Assets of Railpower

BROSSARD, QUEBEC--(Marketwire - May 1, 2009) - Railpower Technologies Corp. (TSX:P) ("Railpower") and R.J. Corman Railroad Group, LLC ("R.J. Corman") announced today that they 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 20, 2009, being the expiry of Railpower's Court protection under the Companies' Creditors Arrangement Act (Canada) ("CCAA"), unless further extended by the Court.

On closing of the transaction, R.J. Corman has agreed to sell to certain current members of management of Railpower, acting on behalf of a wholly-owned corporation to be incorporated ("Management Newco"), certain assets to be purchased from Railpower by R.J. Corman, including the RTG cranes technology, and concurrently grant to Management Newco a non-exclusive, perpetual, fully-paid royalty free license to use intellectual property rights in any hybrid applications.

R.J. Corman and Management Newco have confirmed to Railpower that it is their intention to hire approximately 75% of Railpower's current workforce, and enter into employment agreements with such individuals no later than the closing date.

Based on the advice of the Court-appointed Monitor, Ernst & Young Inc., and legal and financial advisors, having considered the interests of all stakeholders, and after review of all available alternatives, members of the board of directors of Railpower have unanimously concluded that the offer from R.J. Corman is in the best interests of Railpower and its U.S. subsidiary and their respective stakeholders.

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.

According to a company spokesperson, the R.J. Corman Railroad Group is honored to be able to continue the advancement of the Railpower leading edge Gen-Set technology. "We look forward to working diligently with all of our railroad customers to close this transaction in a timely manner and to continue to provide the highest quality service in the Railroad Industry" added the company spokesperson.

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.

About R.J. Corman

Based in Nicholasville, Kentucky, the R.J. Corman Railroad Group, LLC is the owner of several business entities serving the rail industry. Started as a railroad construction company in 1973, the R.J. Corman Railroad Group, LLC has grown to include not only railroad construction, but the operation of 9 shortline railroads, 19 derailment and emergency services locations and 10 locations providing track materials. The company website is www.RJCorman.com.

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 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
    kwirpszo@railpower.com
    or
    R.J. Corman Railroad Group, LLC
    Bruce E. Greinke
    EVP-Finance
    859-881-2498
    Bruce.Greinke@RJCorman.com