BURNABY, BC, – Azure Dynamics Corporation, a developer and producer of hybrid electric, and electric components and powertrain systems for commercial vehicles, today announced that the Board of Directors of the Company has authorized the filing of a Petition in the Supreme Court of British Columbia for an Initial Order under the Companies’ Creditors Arrangement Act (the “CCAA”). The Company expects that the Initial Order will provide for a stay of proceedings while the Company and its subsidiaries pursue restructuring alternatives under CCAA protection. The Board of Directors of the Company has also authorized the filing of a voluntary petition under Chapter 15 of title 11 of the United States Bankruptcy Code to seek recognition and enforcement in the United States of the Initial Order requested in the CCAA proceedings.
In connection with commencing CCAA proceedings, the Company also announced that it will be abandoning its previously announced offering of units (the “Offering”).
“The decision to abandon the Offering and commence CCAA proceedings comes after several weeks of formal and informal communications with Staff of the Ontario Securities Commission”, said Scott Harrison, CEO of Azure. “Despite including detailed risk factor and other disclosure in the preliminary prospectus regarding the Company’s liquidity and financial hardship, and after several weeks of attempting to satisfy the demands of Staff for additional information and disclosure, the Company was informed on March 23, 2012 that Staff’s recommendation, based on the current draft of the prospectus, would be that a receipt not be issued for the prospectus on the basis that it would not be in the public interest to do so.”
In light of the fact that the Company’s current liquidity position leaves it without sufficient time or cash resources to pursue its right to be heard before the Director and, if necessary, to appeal any decision of the Director following such hearing to a panel of commissioners of the OSC, the Board of Directors has determined that the Company’s best remaining alternative is to pursue a restructuring under the protection of CCAA .
“The Board of Directors strongly disagrees with any suggestion that it would not be in the public interest to issue a receipt for the prospectus for the Offering”, said Cam Deacon, Chair of the Board of Directors of Azure. “In our view, any determination of what is in the public interest should weigh all relevant interests, including the interest of the Company in being able to access the capital markets and the interests of the Company’s existing shareholders, employees, suppliers, customers and other stakeholders. Potential investors had the benefit of very detailed risk factor and other disclosure regarding the Company’s liquidity and financial hardship, and the Company was prepared to include in the prospectus virtually all additional disclosure demanded by OSC Staff, except where it was not possible for the Company to include the demanded disclosure. In the circumstances, we are deeply troubled by the notion that investor protection would require allowing such unfortunate consequences to be visited upon a world industry leading company and its existing shareholders, employees, suppliers, customers and other stakeholders, particularly given our understanding that investors themselves, having had the benefit of such detailed disclosure, continued to have significant interest in the Offering. We wish to convey to the Company’s stakeholders both our terrible sadness at this outcome and our commitment to pursuing the best outcome remaining available in the circumstances through CCAA proceedings.”