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BENEV Capital Inc. Announces Sale of its Saint Ambroise, Quebec Waste Treatment Plant

OAKVILLE, ONTARIO--(Marketwire - Mar 7, 2013) - BENEV Capital Inc. (BEV.TO) (the "Company" or "BCI") announced today that it has entered into a binding purchase and sale agreement on an arm''s length basis to sell its Saint Ambroise, Quebec waste treatment plant and related assets and liabilities to 8439117 Canada Inc., a company controlled by the plant''s current manager, Mr. Jean-Francois Landry, for $10 million, $8 million in cash at closing plus an earn out which could be as high as $2 million or more, contingent on a specific potential new contract being entered into within three years from the date of signing of the purchase agreement (which is by no means certain). In addition, the purchase price will be adjusted for working capital at closing, and for certain new soil contracts received between signing and closing. A copy of the purchase agreement will be filed on SEDAR shortly, and a shareholders'' meeting of BCI to approve the transaction is expected to be called for some time in April or May, 2013. Canaccord Genuity has provided an opinion to the effect that the consideration to be received by BCI under the purchase agreement is fair from a financial point of view to the Company.

Closing is expected to occur in the second quarter of 2013.

The purchaser has arranged debt financing commitments for the purchase price from a number of Quebec-based lending institutions, but they are conditional and remain subject to finalization. The transaction is conditional (absent applicable waivers) on, among other things, the receipt of financing by the purchaser, approval by BCI''s shareholders without dissents being over a specified level, the entry into a new collective agreement with the plant''s union, and the receipt of applicable regulatory approvals. Second City Capital Partners I, Limited Partnership and funds for which I.A. Michael Investment Counsel Ltd. acts as advisor, BCI''s two principal shareholders, who in the aggregate hold approximately 41% of the issued and outstanding shares, have indicated their intention to vote in favour of the transaction, absent a superior proposal. 

As at February 28, 2013, the Company''s cash position was approximately $64 million including restricted cash of approximately $0.5 million. The majority of the restricted cash is used to secure a foreign exchange facility which will not be required after the sale of the plant has been completed.

BCI shall be entitled to terminate the agreement to accept a superior proposal, on the terms set out in the definitive agreement, and in such circumstances would be liable to pay the purchaser''s reasonable expenses, up to a maximum of $500,000. 

Due to its significant tax loss carry forwards and other tax assets, BCI is not expected to incur income tax as a result of the consideration anticipated at closing. The tax effects of any additional consideration which may be received in future periods will vary depending upon the amount of tax assets available at that time, if any, to offset such consideration. 

Lawrence Haber, the Company''s Chair and CEO, stated, "BENEV is pleased to announce this transaction, which we view as mutually beneficial. We wish Jean-Francois Landry and his financial partners great success with the business, and we are confident that he and his team at the plant will continue to provide the same high quality service to customers of the business that they have become accustomed to over the years.

The sale of the plant is consistent with the strategy that we have articulated since the installation of a new Board in June, 2011, namely to source, structure and complete one or more transactions, designed to transform the Company and create meaningful value for shareholders. We have said that such transactions may or may not be in the environmental space, and may involve one or more of a sale of all or substantially all of the Company''s assets, an acquisition, a merger, or a strategic investment. The sale of the plant is the first step in this direction, and we believe it will increase our range of options and provide us with enhanced flexibility on a go forward basis. We will continue to seek to source, structure and complete a transformative transaction; one that enhances value for all shareholders. We also may consider a return of capital, special dividend and/or the dissolution of the Company. In the meantime, we will manage our cash conservatively, reduce our expenses where appropriate and remain prudent and patient."

Forward Looking Statements

Certain statements contained in this press release and in certain documents incorporated herein by reference may constitute forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe", "confident", "plan" and "intends" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events, performance, or achievements of BENEV Capital Inc. to differ materially from those anticipated or implied in such forward-looking statements. BENEV Capital Inc. believes that the expectations reflected in these forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct. Given these uncertainties, readers are cautioned that forward-looking statements included in this press release are not guarantees of future performance, and such forward-looking statements should not be unduly relied upon. These statements speak only as of the date of this press release. BENEV Capital Inc. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.

In formulating the forward-looking statements contained herein, management has assumed that business and economic conditions affecting BENEV Capital Inc. will continue substantially in the ordinary course, including without limitation with respect to transaction opportunities, that the sale of the plant will be completed, and that the Company''s shares will continue to trade on the Toronto Stock Exchange. These assumptions, although considered reasonable by management at the time of preparation, may prove to be incorrect.

All of the forward-looking statements made in this Press Release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, BENEV Capital Inc.

Additional Information

The foregoing description of the proposed transaction does not purport to be complete and is qualified in its entirety by reference to the copy of the definitive purchase agreement entered into by the Company, which will be available at www.sedar.com.