Tuckamore Capital Management Inc.
TSX : TX
TSX : TX.DB.B

Tuckamore Capital Management Inc.

January 27, 2016 07:00 ET

Tuckamore Capital Management Inc. Files Restated Q3 2015 Financial Statements and Related Management's Discussion and Analysis

TORONTO, ONTARIO--(Marketwired - Jan. 27, 2016) - Tuckamore Capital Management Inc. (TSX:TX)(TSX:TX.DB.B) ("Tuckamore" or the "Company") announced that it has re-filed and restated its unaudited interim consolidated financial statements for the three and nine month periods ended September 30, 2015, together with the notes thereto and the applicable management's discussion and analysis of the financial condition and results of operations of the Company (collectively, the "Restated 2015 Q3 Financial Statements and Related MD&A"). The Restated 2015 Q3 Financial Statements and Related MD&A have been filed on the Company's SEDAR profile at www.sedar.com.

The adjustments to the Company's previously filed unaudited interim consolidated financial statements for the three and nine month periods ended September 30, 2015 (the "2015 Q3 Financial Statements") are as follows:

  1. Going Concern Note: The 2015 Q3 Financial Statements had been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue its operation for the foreseeable future and will be able to realize its assets and discharges its liabilities in the normal course of operations. The Company has two significant tranches of debt coming due on January 31, 2016 and March 23, 2016. The Company's operating facility with the Bank of Montreal in the amount of approximately $58.7 million (as at September 30, 2015) is due on January 31, 2016. The Company's existing 8.00% secured debentures in the amount of approximately $176.2 million (as at September 30, 2015) is due on March 23, 2016. The Company's future success is ultimately dependant on its ability to refinance these two tranches of debt, fulfill any conditions of refinancing and obtain any required approval of any potential refinancing plans. These events or conditions result in material uncertainties that may cast doubt on the Company's ability to continue as a going concern.

    On December 22, 2015 the Company announced a proposed debt refinancing (the "Refinancing Transactions") with a significant shareholder, Canso Investment Counsel Ltd. ("Canso"). On January 26, 2016, the Company announced that it had entered into a definitive purchase agreement and backstop commitment letter with Canso in respect of the Refinancing Transactions. As a condition to the completion of the Refinancing Transactions, the Company is required to sell certain assets with net proceeds of approximately $17 million. The Company has been actively pursuing the sale of sufficient assets in order to satisfy this condition. Based on expressions of interest received to date by the Company, management believes the value of certain asset sales will be sufficient to achieve the condition of the refinancing, but significantly less than the carrying value of these assets, and the proceeds of any such sales will result in additional downward adjustment to the carrying values of the net assets to reflect the value at which these assets are ultimately sold, if at all. Such non-cash adjustments will be material to the Company's financial statements.

    The Restated 2015 Q3 Financial Statements and Related MD&A do not reflect adjustments to the carrying value of assets and liabilities and the reported amounts of expenses and interim consolidated balance sheet classifications that might be necessary if the Company is unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material. In the event that the Company is unsuccessful or is unable to complete the Refinancing Transactions, there may be significant doubt as to the Company's ability to continue as a going concern.

  2. Non-Cash Impairment: Indicators of impairment were identified at the Quantum Murray LP and Titan cash generating units. Although revenues at Quantum Murray LP have increased over the same period in the prior year, the business has experienced losses and a decline in margins as management is in the final stages of rationalizing its cost structure and implementing business process improvements.

    Based on expressions of interest received for the purchase of Titan and Quantum Murray LP in January 2016, Quantum Murray LP and Titan's recoverable amount is approximately $20 million, indicating a shortfall to carrying value of approximately $38.8 million. IAS 36 - Impairment of Assets limits the write down to the Fair Value Less Cost to Sell ("FVLCS") of individual long lived assets where the assets are not classified as held for sale. As such, the Company has recorded an impairment charge of approximately $3.5 million related to fixed assets of Quantum Murray LP and approximately $1.7 million related to intangible assets of Quantum Murray LP, which are reflected in the Restated 2015 Q3 Financial Statements and Related MD&A as a separate line item in the income statements. The impairment charge was allocated to the industrial services operating segment. The result of the impairment identified above has resulted in the restatement of amounts and balances previously published in the 2015 Q3 Financial Statements. Below is a table detailing the impact of the restatement on the consolidated interim balance sheets and the consolidated interim statement of loss and comprehensive loss.

Original Balance
('000)
Restatement
('000)
Restated Balance
('000)
Consolidated Interim Balance Sheet
(September 30, 2015)
Property, plant and equipment $48,535 ($3,544 ) $44,991
Intangible assets $33,864 ($1,677 ) $32,187
Shareholder's Equity $48,012 ($5,221 ) $42,791
Consolidated interim statement of loss and comprehensive loss
(Three months ended September 30, 2015)
Impairment of intangible assets and property, plant and equipment - ($5,221 ) ($5,221 )
Loss from Continuing Operations ($1,714 ) ($5,221 ) ($6,935 )
Net loss and comprehensive loss ($1,129 ) ($5,221 ) ($6,350 )
Consolidated interim statement of loss and comprehensive loss
(Nine months ended September 30, 2015)
Impairment of intangible assets and property, plant and equipment - ($5,221 ) ($5,221 )
Loss from Continuing Operations ($14,545 ) ($5,221 ) ($19,766 )
Net loss and comprehensive loss ($11,819 ) ($5,221 ) ($17,040 )

About Tuckamore

Tuckamore (http://tuckamore.ca) has investments in four businesses representing a diverse cross-section of the Canadian economy.

Forward-looking information

This press release contains forward-looking information based on current expectations, including but not limited to Tuckamore's expectations in connection with the Refinancing Transactions (including that the Company will maintain the support of the Company's existing lenders) and conditions precedent to the completion of the Refinancing Transactions. Forward-looking information is often, but not always, identified by the use of the words "contemplate" and "anticipate" and statements that an event or result "may", "will", "should", "could" or "might" occur and any similar expressions or negative variations thereof. In providing forward-looking information in this press release, management of the Company has made numerous assumptions regarding the Refinancing Transactions which it believes to be reasonable, including assumptions relating to the Company's existing and future business prospects and opportunities, including that the Company will secure further extensions to the maturity of its indebtedness under its existing senior secured credit facilities, and the satisfaction or waiver of all other conditions to the completion of the Refinancing Transactions. Forward-looking information entails various risks and uncertainties however that could cause actual results to differ materially from those reflected in the forward-looking information. Specific risks that could cause actual results to differ materially from those anticipated or disclosed herein include, but are not limited to: (i) failure to satisfy the conditions to complete the Refinancing Transactions including failure to receive required regulatory approval, stock exchange, shareholder, third party approvals and/or consents; (ii) the Company's inability for any reason to obtain further extensions to the maturity of its existing indebtedness under its senior secured credit facilities prior to the consummation of the Refinancing Transactions; and (iii) the risk that the anticipated effects of the Refinancing Transactions, if completed, may not result in the outcomes expected by management. In addition, general risks relating to capital markets, economic conditions, regulatory changes, changes in interest rates as well as the management and operations of the Company's business may also cause actual results to differ materially from those anticipated or disclosed herein.
These and other risks and uncertainties relating generally to Tuckamore's business and the Refinancing Transactions in particular are more fully discussed in the Company's disclosure materials, including its annual information form and MD&A, filed with the securities regulatory authorities in Canada and available at www.sedar.com and the Company's management information circular in respect of the Meeting. Forward-looking information are not guarantees of future performance, and management's assumptions upon which such forward-looking information are based may prove to be incorrect. Accordingly, there can be no assurance that actual events or results will be consistent with the forward-looking information disclosed herein. In light of the significant uncertainties inherent in forward-looking information, any such forward-looking information should not be regarded as representations by Tuckamore that its objectives or plans relating to the Refinancing Transactions or otherwise will be achieved. Investors are cautioned not to place undue reliance on any forward-looking information contained herein and that such forward-looking information are provided solely for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. In addition, forward-looking information relates to the date on which they are made. Tuckamore disclaims any intention or obligation to update or revise any forward-looking information contained herein, whether as a result of new information, future events or otherwise, except to the extent required by law.

Contact Information

  • Tuckamore Capital Management Inc.
    Keith Halbert
    Chief Financial Officer
    416-775-3796
    keith@tuckamore.ca