MONTREAL, QUEBEC--(Marketwire - Mar 19, 2013) - ProSep Inc. (PRP.TO) ("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.
ProSep is a technology-focused process solutions provider to the upstream oil and gas industry. ProSep designs, develops, manufactures and commercializes technologies to separate oil, water and gas generated by oil and gas production. For more information, please visit www.prosep.com.
Caution concerning forward-looking statements
This press release may contain forward-looking statements within the meaning of Canadian securities laws. Forward-looking statements can generally be identified by the use of the conditional tense, the words "may", "should", "would", "believe", "plan", "expect", "intend", "anticipate", "estimate", "foresee", "objective" or "continue" or the negative of these terms or variations of them or words and expressions of similar nature. In particular, forward-looking statements regarding ProSep''s plans for its business development strategy, anticipated customer orders, sales and revenues, financial and operational projections and anticipated results, anticipated results of field testing with potential customers and expected benefits of ProSep''s proprietary technologies; and anticipated impact on ProSep of the factors discussed under the heading "Error! Reference source not found." in the latest management discussion and analysis document ("MD&A"). These forward-looking statements are based on, among other things, management''s assumptions, expectations, estimates, objectives, plans and intentions as of the date hereof pertaining to, but not limited to demand for ProSep''s solutions, projected revenues and expenses, the economic and industry environments in which the Company operates or which could affect its activities, the Company''s ability to attract new customers, projected operating costs and cost of raw materials and energy supply, expected timing and amount of capital expenditures program of ProSep''s potential customers, target market acceptance of ProSep''s solutions, current and future solutions performance, evolving market conditions for oil & gas producers; and success of commercialization approach and strategic partnership initiatives. Although ProSep believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because ProSep can give no assurance that they will prove to be correct. Because forward-looking statements address future events and conditions, by their very nature they involve numerous inherent risks and uncertainties that contribute to the possibility that the forward-looking statements may prove to be incorrect. ProSep cannot assure investors that any of these forward-looking statements will prove to be accurate.
Further, if any of these statements are inaccurate, the inaccuracy may be material. Actual performance and results could differ materially from those currently anticipated in the forward-looking statements due to a number of factors and risks. Some of the factors that could cause such differences include, but are not limited to uncertainty as to market acceptance of new solutions and possible technological change, competition, economic environment and especially conditions in the oil & gas industry, legislative or regulatory developments, ProSep''s ability to penetrate core markets, expand into new markets and manage future growth, the need for additional financing and uncertainties as to access to sufficient capital financing on acceptable terms, uncertainty as to achievement of profitability and ability to meet cash requirements, availability and retention of management and key personnel, the long sales and implementation cycles for ProSep''s solutions, reliance on major customers, manufacturing, project execution, product defect and product liability risks, dependence on third party suppliers, exchange rate and currency fluctuations, protection of ProSep''s intellectual property rights; and risks related to ProSep''s foreign operations and compliance with anti-corruption and anti-bribery laws. Assumptions, expectations and estimates made in the preparation of forward-looking statements and risks that could cause actual results to differ materially from current expectations are further discussed under "Error! Reference source not found." in the latest MD&A. In light of the significant risks and uncertainties in these forward-looking statements, investors should not place undue reliance on or regard these statements as a representation or warranty by the Company or any other person that the Company will achieve its objectives, strategies and plans in any specified time frame, if at all. The forward-looking statements contained or incorporated by reference in this management discussion and analysis relate only to events as of the date on which the statements are made. Except as required under applicable securities legislation, the Company does not undertake to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.