TORONTO, ONTARIO -- (Marketwired) -- 07/08/13 -- Matrix Asset Management Inc. ("Matrix") (TSX: MTA) announced today an update with respect to the previously announced proposed sale of the operating assets (excluding working capital) of SEAMARK Asset Management Ltd. ("Seamark"), a subsidiary of Matrix (the "Seamark Sale").
As previously announced, Matrix has agreed to sell the Seamark assets to a newly formed company ("New Seamark") owned by Robert McKim, the Chief Investment Officer and a director of Seamark, and Marquest Asset Management Inc. ("Marquest"), a party at arm's length to Matrix. Mr. McKim will indirectly own 67% of the outstanding shares of New Seamark and Marquest will own the remaining 33%. The parties are now targeting July 12, 2013 as the closing date for the Seamark Sale. While Matrix, Marquest and Mr. McKim have entered into binding term sheets in respect of the Seamark Sale, closing of the transaction remains subject to customary closing conditions, including obtaining TSX and regulatory approvals. There can be no assurance that the transaction will be completed on the terms proposed or at all.
As previously announced, the Seamark Sale has a transaction value of approximately $1.62 million, which is to be comprised of: (i) $900,000 advanced by Mr. McKim to Matrix effective May 31, 2013, (ii) $200,000 advanced by Marquest to Matrix effective June 4, 2013, (iii) $200,000 advanced by Mr. McKim to Seamark effective June 4, 2013, (iv) $100,000 advanced by Mr. McKim to Matrix effective June 4, 2013 (such advances being referred to herein as the "Advances"), and (v) the forgiveness of $218,739 of indebtedness owed by Seamark to a company related to Mr. McKim. As part of the Seamark Sale, New Seamark will acquire the right to use the name "SEAMARK Asset Management Ltd." and will apply to change its name to "SEAMARK Asset Management (2013) Ltd." Seamark proposes to change its name to "GrowthWorks Enterprises Ltd.", to become effective as of closing.
The Advances made by Mr. McKim and Marquest in respect of the Seamark Sale are evidenced by promissory notes executed by Seamark and Matrix (the "Notes"). Indebtedness owing under the Notes is repayable on the earliest of (i) on demand after the closing of the Seamark Sale, at which time Matrix and Seamark will be released from their obligations under the Notes and the principal amount of the Notes will be applied on account of the purchase price for the Seamark assets, (ii) the date of completion of an alternative transaction, including an issuance of Common shares of Matrix from treasury (other than under Matrix's restricted share plan), a sale of all or substantially all of the assets of Matrix, or a change of control of Matrix, and (iii) the date which is 366 days after demand for repayment therefor is made by holder of the Notes. Indebtedness under the Notes accrues interest at a rate of 10.0% per annum before maturity and 15.0% after maturity or default and is secured by general security agreements over all of the assets of Matrix. All accrued and unpaid interest under the Notes will be payable on the closing of the Seamark Sale. If closing of the Seamark Sale occurs on July 12, 2013, interest in the amount of no more than $13,480 will be paid in respect of the Notes issued to Mr. McKim and interest in the amount of no more than $2,083 will be paid in respect of the Notes issued to Marquest. If the Seamark Sale does not close, the Notes may remain outstanding for an indefinite period of time until an alternative transaction is completed, a default occurs or 366 days after a demand is made. Until the Notes are repaid, interest on the full principal amount of the Notes would accrue at a rate of $140,000 per annum ($120,000 in the case of Notes issued to Mr. McKim), or $210,000 per annum after a default occurs ($180,000 in the case of Notes issued to Mr. McKim).
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