MONTREAL, QUEBEC -- (Marketwire) -- 03/19/13 -- ProSep Inc. (TSX: PRP) ("ProSep" or the "Company"), dedicated to providing process solutions to the oil and gas industry, today announced it has entered into a binding memorandum of understanding for the sale its 51% investment in ProSep Kolon Company Ltd, a South Korean joint venture with Kolon Group, for total consideration of $5 million. After reimbursement of a related $1 million debenture, this transaction will provide net proceeds of approximately $4 million to be used as working capital.
"Since 2011, ProSep has been investing in accelerating the commercialization of its innovative technologies, expanding business development and process engineering teams and engaging in various partnerships. Although revenues grew in 2012, the Company recently implemented a cost optimization program and reduced headcount in order to provide annual operating savings of almost 15% of operating expenses and divested its investment in its South Korean joint venture. These initiatives provide additional liquidities to support projected growth with the objective of reaching profitability," said Jacques L. Drouin, President & CEO.
The Company entered into a binding memorandum of understanding whereby it agreed to sell its 51% investment in ProSep Kolon Company Ltd. to a subsidiary of Kolon Group, a large South Korean integrated construction, chemical and advanced materials company. After reimbursing a related five-year convertible unsecured debenture (see press release dated December 8, 2010) this transaction will provide ProSep with net proceeds of approximately $4 million to be used as working capital. Licensing agreements remain in place and both companies will continue operating as commercial partners.
In addition to these initiatives, the Board of Directors has formed a Special Committee to review the financing opportunities and other alternatives that may be available to the Company, and to recommend appropriate actions to the Board of Directors. The members of the Special Committee are Mr. Anthony Rustin, (chair of the Special Committee), Mr. Claude Fontaine and Mr. Richard Lint. The Company and the Board of Directors also engaged KPMG LLP as financial advisor to assist in reviewing the Company's business, financial performance and investigate strategic alternatives available to ProSep which may result in the acquisition of shares of the Company, the divestiture of non-core assets, the entering into a joint venture, merger, combination, take-over, going private or other collaboration agreement, a recapitalization, a reorganization, an arrangement, a financing or any similar strategic transaction. There can be no assurance that this process will result in any specific transactions and no timetable has been set for its completion. The Company does not plan to make future comments about the status of this review unless there are material developments.
On December 31, 2012 one of the Company's wholly-owned subsidiaries was in breach of covenants under borrowing facilities with DnB Bank. The Company is currently in negotiations with the bank in order to obtain a waiver on the breach of covenants.
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