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).
Mr. McKim has never served on the board of directors of Matrix or as an officer of Matrix. Apart from Mr. McKim, no other insider or related party of Matrix is participating in the Seamark Sale or will receive consideration from Matrix or any affiliate of Matrix as a result of the Seamark Sale. Because of Mr. McKim's insider status as a result of his position as officer and director of Seamark, a subsidiary of Matrix, as well as his participation in the Seamark Sale, including indirect receipt of consideration representing a value in excess of 10% of the market capitalization of Matrix as of June 4, 2013, and pursuant to Section 501(c) of the TSX Company Manual, Matrix has obtained approval from holders of more than 50% of the outstanding voting securities of Matrix, excluding Mr. McKim, that such shareholders are in favour of the Seamark Sale. Matrix is relying on an exemption available under Section 604(d) of the TSX Company Manual that permits issuers to obtain this consent in writing.
It is anticipated that management of the Matrix group of investment funds (the "Matrix Funds") will move from Growth Works Capital Ltd.'s Matrix Funds Management division to Seamark on or about July 16, 2013. Seamark is an affiliate of Growth Works Capital Ltd. and currently provides sub-advisor services to a number of the Matrix Funds. It is anticipated that there will be no change to the individuals performing fund and portfolio management activities for the Matrix Funds in connection with the transfer of management to Seamark. For those Matrix Funds which engage Seamark as sub-advisor, the same individuals currently performing those sub-advisory services through Seamark will provide those services through New Seamark following closing of the Seamark Sale. The transfer of management of the Matrix Funds to Seamark remains subject to a number of conditions, including the completion of the Seamark Sale, obtaining necessary consents and regulatory approvals and Independent Review Committee approval. It is unknown at this time if these conditions will be satisfied or waived. The transition of management of the Matrix Funds to Seamark is not expected to impact the previously announced change of manager of the Matrix Funds to Marquest. Upon closing of the Marquest transaction, management of the Matrix Funds would move from Seamark to Marquest. Information about the Marquest transaction, including expected timing and conditions on the transfer of management of the Matrix Funds to Marquest, will be contained in meeting materials to be sent to unit holders of the Matrix Funds' for the August 15, 2013 meeting at which unit holders will be asked to vote on the change. There can be no assurance that the Marquest transaction will close on the terms proposed or at all.
Forward-looking statements: Certain statements in this press release are forward-looking statements including the statements about the terms and timing of the Seamark Sale, repayment of indebtedness under the Notes, transfer of management of the Matrix Funds to Seamark and related matters. Forward-looking statements are based on beliefs and assumptions at the time the statements are made, including beliefs and assumptions about the satisfaction or waiver of conditions to the closing of the Seamark Sale, including regulatory, stock exchange and third party filings and approvals, and the completion of the transfer of management of the Matrix Funds to Seamark, including necessary consents and regulatory and Independent Review Committee approvals. While management considers these beliefs and assumptions to be reasonable based on information currently available to it, they are subject to numerous risks and uncertainties and no assurance can be given that such beliefs and assumptions will prove to be correct. Accordingly, actual results may differ significantly from those expressed or implied by forward-looking statements due to many factors including, but not limited to, risks associated with securing necessary regulatory, stock exchange and third party approvals for the Seamark Sale and transfer of management of the Matrix Funds to Seamark, satisfying other conditions to the Seamark Sale and transfer of management of the Matrix Funds to Seamark, risks associated with completing the Seamark Sale and risks associated with Matrix's ability to continue to operate as a going concern, to maintain compliance with minimum working capital and other regulatory requirements and to repay indebtedness under the Notes if the Seamark Sale does not complete. Many of these risks are beyond the control of Matrix. Other than as specifically required by law, Matrix undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect new information, future unanticipated events or results or other factors.
Matrix Asset Management Inc.
(604) 895-7274 or (416) 934-7700
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