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Noveko International Inc. Announces Results for the First Quarter Ended September 30, 2012 and New Financing of $10,000,000 to $12,000,000

Wednesday, November 14, 2012 8:30 AM


BOUCHERVILLE, QC, Nov. 14, 2012 /CNW Telbec/ - For the first quarter ended September 30, 2012 ("first quarter of 2013"), Noveko International Inc. (TSX: EKO) (the "Corporation") announces that its consolidated revenue totalled $1.0 million considering that the operations of SARL Noveko Algérie ("Noveko Algérie") and of S.A.S. E.C.M. ("ECM") are now being treated as discontinued operations in accordance with IFRS because of the Corporation's decision to divest these subsidiaries. This is a decrease of $0.2 million compared with the revenues of the first quarter ended September 30, 2011 ("first quarter of 2012") computed on the same basis. The net loss from continuing operations amounted to $1.6 million ($0.02 basic and diluted per share) for first quarter of 2013, compared with $1.4 million ($0.02 basic and diluted per share) for the first quarter of 2012. The net loss (including the net loss from discontinued operations) amounted to $1.8 million ($0.02 basic and diluted per share), compared with $1.6 million ($0.02 basic and diluted) for the first quarter of 2012.

Please refer to the end of this press release where you will find a table containing Selected Consolidated Information.

Strategic Plan: During the last months, the Corporation has initiated a strategic evaluation process of its business segments with the clear objective of capitalizing on its most promising technologies, i.e. its air filtration solutions, in order to ultimately optimize its value. This evaluation process has led to the adoption of the following measures: (i) enhancement of the Corporation's cost-reduction measures; (ii) decision to sell the Corporation's shareholding in Noveko Algérie in order to recover the advances granted thereto; (iii) decision to sell ECM if the Corporation could obtain a fair price considering its financial obligations, but also the financial situation of ECM, which will require more capital investment; (iv) despite the Corporation's willingness to sell its shares of ECM, continuation, if possible, of ECM's ultrasound scanner distribution activities in Canada; (v) firm intention to sell the Corporation's significant inventories of masks, respirators and sanitizers and to grant distribution rights to third parties in that regard in order to withdraw from the distribution of such products; (vi) thorough search for financing at suitable conditions; and (vii) realignment of the Corporation's human and financial resources in order to facilitate the commercialization of its air filtration solutions. These measures are hereinafter designated as the Corporation's "Strategic Plan".

Although, on a short-term basis, the Corporation's revenues have substantially decreased because of our decision to transfer our shareholdings in Noveko Algérie and in ECM (now already stated as discontinued operations), management strongly believes that the realignment of our resources in the air filtration segment should have a positive impact on the Corporation's financial situation, results and future prospects over the mid- to long-term.

Highlights of the first quarter of 2013 and subsequent events
In this context, the Corporation has decided to divest its 70% interest in Noveko Algérie, in consideration of the repayment of all the advances granted thereto by the Corporation, in the amount of $1.4 million. The Corporation already received an amount of $0.4 million in August 2012. This transaction is expected to close at the latest on December 31, 2012.

As indicated previously, the Corporation and a French firm (the "Firm") had agreed, on September 27, 2012 on the final terms for the sale of all shares of ECM held by the Corporation to this Firm, subject to the approval of the Firm's Board of Directors. However, these final terms were not approved by the Firm's Board of Directors even though it was still willing to purchase ECM but at a considerably lower price. The Corporation determined that the latest offer was unacceptable and refused to proceed with that transaction.

Considering ECM's financial situation, especially with respect to its cash flows in which the Corporation was unable, on a short-term basis, to inject additional funds, and the fact that the previously announced transaction for the sale of all ECM's shares to the Firm will not occur (which would have provided for cash inflows to ECM's benefit), ECM's main officer filed with the Tribunal de commerce (Commercial Court) of Angouleme, France, a request for the opening of a safeguarding procedure that was granted by the Tribunal on October 11, 2012. The purpose of a safeguarding procedure is to allow a company which suffers from financial difficulties, but is not yet in cessation of payments (insolvency), to protect itself by postponing its debt payments and allowing its restructuring with the objective of continuing its economic activities, maintaining employment and discharging its debts (by decreasing and/or spreading them out).

New Financing - In connection with its search for financing, after the Corporation received two letters of intent (one was received during the first quarter of 2013 and the other subsequently) concerning proposed investments into the Corporation, the Corporation's Board of Directors adopted yesterday resolutions approving the borrowing by the Corporation of a minimum of $10 million and of a maximum of $12 million, taking the form of (i) the issuance of secured convertible debentures for a minimum amount of $5 million to a maximum amount of $7 million, bearing interest at the annual rate of 8%, payable quarterly, reimbursable 36 months after their issuance and convertible into Corporation's Class A Shares on the basis of one Class A Share for each $0.31 in capital debenture, and (ii) a 36-month term loan of a principal amount of $5 million, bearing interest at the annual rate of 10%, payable quarterly. Both of these secured convertible debentures and term loan will be secured by a hypothec on all the Corporation's assets. After negotiations between the Corporation and Third Eye Capital Corporation as agent for the lenders and debenture holders (collectively "TEC") of the September 28, 2011 financing, the Corporation agreed that the proceeds of this borrowing will be used, among other things, to fully reimburse, on or before December 14, 2012, TEC's Credit Facility and Secured Convertible Debentures. The remaining portion will be used for the Corporation's business activities. Closing of this new financing is expected to occur on or before December 12, 2012. As of the date hereof, the Corporation is in default under TEC's Credit Facility and Secured Convertible Debentures. The $5 million to $7 million portion of this new financing that would take the form of secured convertible debentures is subject to the TSX's approval.

"We are very happy to announce this new financing. It will greatly help us strengthen the Corporation's financial situation and will allow us to concentrate our efforts on the implementation of the other measures of our Strategic Plan, particularly the realignment of our human and financial resources to the commercialization of our air filtration solutions," declared Mr. André Leroux, Chairman of the Board and Chief Executive Officer of the Corporation.

SELECTED CONSOLIDATED INFORMATION

Quarters Ended September 30,        
(in thousands of Canadian $, except per-share amounts)   2012   2011
Revenue   1,004   1,234
Gross profit   356   570
Provision (reversal of provision) for slow-moving inventories   (115)   1
Operating loss before amortization, net financial expenses, income taxes and discontinued operations (1)   (883)   (1,141)
Net loss from continuing operations   (1,563)   (1,384)
Net loss from discontinuing operations (2)   (216)   (202)
Net loss   (1,779)   (1,586)
         
Earnings per Class A Share basic and diluted)        
  From continuing operations   $ (0.02)   $ (0.02)
  From discontinued operations (2)   $ (0.00)   $ (0.00)
  Total   $ (0.02)   $ (0.02)
         
Weighted average number of outstanding Class A Shares, basic and diluted (in thousands)   91,946   91,946
         
Statement of financial Position data as at   September 30   June 30
(in thousands of Canadian $)   2012   2012
Total assets   21,376   22,274
Equity   9,295   11,153
Total interest-bearing debt   5,408   5,221
Liabilities held for sale(3)   1,873   261
Cash   256   385

(1) Operating loss before amortization, net financial expenses, income taxes and discontinued operations is not a measure established in accordance with IFRS. In this regard, the reader is referred to the Compliance with IFRS section of the Corporation's annual MD&A for the year ended June 30, 2012.
(2) Related to Noveko Algérie's and ECM's operations for the first quarter of 2013 and to Noveko Algérie's, ECM's and Bolduc Leroux Inc.'s operations for the first quarter of 2012.
(3) Related to Noveko Algérie and ECM as at September 30, 2012 and to Noveko Algérie as at June 30, 2012.


Profile of the Corporation

The Corporation specializes in the air filtration segment by providing its clientele with innovative and eco-energetic filtration solutions. As such, through its subsidiaries, the Corporation designs, develops, manufactures and markets air filters incorporating its patented air filtration technologies, which filters are cleanable and recyclable, and have a much longer life span than conventional air filters. These filters are used in farm buildings, in institutional, commercial, industrial and residential buildings, and in the ground and aeronautics transport industry.

Through distributors, the Corporation furthermore continues to commercialize antimicrobial masks and respirators, hands sanitizers and ultrasound scanners for use in human and veterinary medicine.

Certain statements set forth in this press release constitute forward-looking statements. In some cases, these statements are identified by the use of terms such as "may", "could", "might", "intend", "should", "expect", "project", "plan", "believe", "estimate" or other comparable variants. These statements are based on the information available at the time they are written, on assumptions made by management and on the expectations of management, acting in good faith, regarding future events, including those relating to economic conditions, fluctuations in exchange rates and operating expenses, and the absence of unusual events entailing supplementary expenditures. Although management considers these assumptions and expectations reasonable based on the information available at the time they are written, they could prove inaccurate. Forward-looking statements are also subject, by their very nature, to known and unknown risks and uncertainties such as those related to the industry, acquisitions, labor relations, credit, key officers, supply and product liability. The actual results of Noveko International Inc. could differ materially from those indicated or underlying these forward-looking statements. The reader is therefore recommended not to unduly rely on these forward-looking statements. Forward-looking statements do not reflect the potential impact of special items, any business combination or any other transaction that may be announced or occur subsequent to the date hereof. Unless otherwise required under securities laws, the Corporation does not intend and undertakes no obligation to update or revise the forward-looking statements.

The reader is furthermore recommended, before making any decision to purchase or to sell any of the Corporation's securities, to carefully consider the complete statement of the risk factors and uncertainties described in the Management's Report for fiscal 2012 as well as in the Annual Information Form for fiscal 2012, notably with respect to the Corporation's financial position and its sources and requirements of funds.

The Management's Report, and Unaudited Condensed Consolidated Interim Financial Statements and accompanying notes for the first quarter ended September 30, 2012 will be filed on SEDAR (www.sedar.com) and available in the Investor Relations section of the Corporation's website (www.noveko.com).

 

 

SOURCE: NOVEKO INTERNATIONAL INC.

André Leroux
Chairman of the Board and Chief Executive Officer
Tel: (514) 875-0606
http://www.noveko.com

(Source: CNW )
(Source: Quotemedia)

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