Reasons for the Dissolution
In reaching its decision that the liquidation and dissolution is in the best interests of the Company and its shareholders, the Board of Directors considered a number of factors. The Circular describes these factors, including the Company's previous unsuccessful efforts to take the Company private, the Company's declining revenues, the difficult economic environment in the oil and gas service sector, the increasing expense of continuous disclosure obligations and maintaining a stock exchange listing, and the inability to identify a strategic merger or alliance partner. The Board and the Company's management determined that it would not be advisable to continue the operations of the Company, which are currently reducing the Company's liquidity on a monthly basis. Additionally, the Company's common shares have recently traded on the TSX Venture Exchange ("TSXV") at approximately the anticipated cash liquidation value of the common shares.
Based on this information, the Board's business judgment of the risks associated with continuing the business, the remote possibility of the Company acquiring additional financing on acceptable terms, if at all, or identifying a buyer or strategic partner, the Board of Directors has concluded that distributing the Company's net cash assets to its Shareholders would return the greatest value to the Shareholders.
Dissolution Process and Distributions
Upon receipt of all required regulatory and shareholder approvals, the Company will continue operations in order to complete all work-in progress, but will cease taking on new service work. After completion of all existing work, the Company will cease normal business operations, except as may be required to administer payables and accounts receivables, settle all liabilities, distribute the remaining cash to shareholders and wind-up the business and affairs of the Company.
The Company will be liquidated and dissolved in accordance with the Business Corporations Act (Alberta). The Company's shareholders will receive the net cash proceeds of the liquidation and dissolution in one or more distribution installments. Instructions will be provided to shareholders describing the procedures to be followed to effect the cash distributions. The amount of the distributions will be determined by the Board after repayment of the Company's debt, reviewing tax and other potential liabilities of the Company, including severance and termination payments and costs relating to the winding-up process, which liabilities are currently estimated to be approximately $792,835 and $931,631. Although management of the Company believes that the estimates of the liabilities set forth above are reasonable based on information currently available to the Company, the actual amounts of such liabilities after completion of the winding-up may differ materially from the estimates presented above, thereby affecting the amount of cash available to be distributed to shareholders. The Board is not currently aware of any material items that could give rise to unforeseen tax liabilities or other liabilities or costs which would materially reduce the amount of cash available for distribution to shareholders, but there is no assurance that this will remain the case.
Prior to the actual dissolution and distribution of cash by the Seaway however, clearance certificates and a dissolution consent must be obtained from the Canada Revenue Agency ("CRA"). As this process is expected to take some time beyond the Meeting, Seaway expects to submit its request for these approvals from CRA in advance of the Meeting.
Further details regarding the timing of, and amount of funds available for distribution to shareholders upon completion of the winding-up process, and payment of the liabilities of the Company will be provided in a subsequent press release(s).
The Common Shares currently trade on the TSXV. If the requisite shareholder and regulatory approval is received, the Company will take the appropriate steps, following the determination of a record date for those shareholders of the Company eligible to receive the distribution(s) on dissolution, to voluntarily delist from the TSXV.
This news release contains forward-looking statements and information ("forward-looking statements") within the meaning of applicable securities laws including statements regarding the preparation and mailing of the Circular, the approval of matters to be presented to shareholders at the Meeting, the liabilities of the Company, the dissolution of the Company and the distribution of funds to shareholders. Although The Company believes that the expectations reflected in its forward-looking statements are reasonable, such statements have been based upon currently available information to the Company. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in forward-looking statements. Risks include, but are not limited to: receipt of all required regulatory and shareholder approvals, changes in tax laws, the ability to collect outstanding receivables in a timely manner, the ability of the Company to effect an orderly wind-up of its operations, the possible delay in implementation of the liquidation and dissolution, the timing and amount of payments to shareholders, unknown liabilities which may be asserted in connection with the liquidation, and the risks associated with the oil and gas service industry. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in more detail in the Company's management's discussion and analysis and other documents available at www.sedar.com. Readers are cautioned to not place undue reliance on forward-looking statements. The statements in this press release are made as of the date of this release, and, except as required by applicable law, The Company does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Seaway Energy Services Inc.
Jerry J. Budziak
President and CEO
Seaway Energy Services Inc.
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