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Argo Corporation provides update on restructuring, divestment and other activities relating to prior ventures of the predecessor in its entity Steer Technologies Inc.
TORONTO, Oct. 1, 2024 /CNW/ - Argo Corporation ("Argo") (TSXV: ARGH) (OTCQX: ARGHF), a new venture delivering the first-ever vertically and publicly integrated city transit system, announced today, updates to its previously disclosed restructuring and divestment activities relating to prior ventures of the predecessor in its entity Steer Technologies Inc. ("Steer").
Vehicle Subscriptions Venture
Further to its May 23, 2024 disclosure, Argo's wholly owned subsidiaries, Steer EV Canada Inc. and Steer Holdings LLC, shut down their electric vehicles subscription business operations in Canada and the United States, which has allowed new management to launch Argo and focus on its core business. Additionally:
Steer EV Canada Inc.: On October 1, 2024, Steer EV Canada Inc. filed an assignment into bankruptcy under the Bankruptcy and Insolvency Act in Canada. A first meeting of creditors will occur on October 21, 2024, with B. Riley Farber Inc. appointed as the licensed bankruptcy trustee. This subsidiary has in excess of $4.8M in liabilities (net of certain intercompany balances) and minimal assets, as of June 30, 2024.
Steer Holdings LLC: On September 27, 2024, Steer Holdings LLC ("Assignor"), made a General Assignment for the Benefit of Creditors (the "Assignment") to Steer Holdings (assignment for the benefit of creditors), LLC ("Assignee"), as Assignee, pursuant to California law. Pursuant to the Assignment, Assignor transferred ownership of all of its rights in tangible and intangible assets (collectively the "Assets") to Assignee for liquidation. The Assignee has confirmed that Assignor has debt in an amount substantially in excess of the value of the Assets. Accordingly, there will be no distribution to any equity holder in Assignor on account of the equity interest of such holder. This subsidiary has in excess of $5.8M in liabilities (net of certain intercompany balances) and minimal assets, as of June 30, 2024.
FoodsUp
Argo maintains a 59.95% non-controlling ownership interest in FoodsUp Inc. ("FoodsUp"), one of Canada's leading restaurant supply platforms. Further to its May 23, 2024 disclosure, since February 9, 2024, Argo has been undertaking steps to achieve the divestment of most of its interest in FoodsUp (the "FoodsUp Divestment"). While Argo had previously been working toward a transaction structure whereby Argo's shareholders as of a to-be-determined record date, would receive a direct ownership interest in FoodsUp, Argo's view is that it has not received the cooperation needed from FoodsUp to give effect to that transaction structure. However, Argo remains committed to implementing the FoodsUp Divestment and is exploring alternative transaction structures, the effect of which will be to provide the shareholders of Argo with either the proceeds of sale of its interest in FoodsUp to a third party, or an indirect or tracking ownership interest in FoodsUp, in each case, as of a to-be-determined record date. The FoodsUp Divestment, if it occurs, will mark an important step in Argo's formal separation between the business of FoodsUp and Argo.
While Argo works toward achieving the FoodsUp Divestment, Argo is also navigating a number of issues presented by its ongoing association with FoodsUp, including Argo's view of failures by FoodsUp to comply with contracts entered into between Argo and FoodsUp, delays by FoodsUp in providing financial information to Argo in connection with Argo's continuous disclosure obligations (which prior delays resulted in Argo being the subject of a cease trade order earlier this year) and the status of FoodsUp's ongoing fundraising efforts, which have the potential to impact Argo's ownership position in FoodsUp.
Steer's Former CEO, Suman Pushparajah
100 Consilium Place Office Lease
Argo's balance sheet for the six-months ended June 30, 2024 includes a $3.1M liability related to a disputed office lease with landlord 8174709 Canada Inc. and Steer's former CEO, Suman Pushparajah, who was previously dismissed by Steer with cause. Under the disputed office lease, Mr. Pushparajah is subject to a personal indemnity of up to $1M. On October 1, 2024, Argo filed a statement of claim against Mr. Pushparajah and Steer's former landlord alleging that Mr. Pushparajah breached his fiduciary duty as CEO of Steer in negotiating and executing the disputed office lease without the knowledge or approval of Steer's Board of Directors and to advance his own personal benefit, and that Steer's former landlord knowingly assisted in the breach of his fiduciary duties.
Baseless Court Action
On September 27, 2024, Argo was served a statement of claim by Mr. Pushparajah. The claim seeks $10M from Argo, its current Co-CEO, Qamar Qureshi, and its former CEO, Junaid Razvi, alleging breach of a settlement agreement, slander and defamation (the "Action"). Argo believes the Action is entirely without merit and intends to vigorously defend it.
About Argo
Argo delivers the first-ever vertically and publicly integrated city transit system, designed to augment public transportation and create a network of intelligently routed vehicles that work together to serve and scale to the needs of entire cities, putting people in control of their mobility. You can learn more at www.rideargo.com.
Certain information set out in this news release constitutes forward-looking information within the meaning of applicable securities laws. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "hope", "plan", "continue", "estimate", "expect", "may", "will", "intend", "could", "might", "should", "scheduled", "believe" and similar expressions. The forward- looking information set out in this news release relates to future events or our future performance and includes, without limitation statements concerning the Assignment in Bankruptcy, any proceedings or settlements with the Steer Subsidiaries' creditors, the timing of the Creditors' Meeting, actions the Trustee may take in connection with its appointment as bankruptcy trustee and the FoodsUp Divestment, including the potential delivery to shareholders of proceeds or tracking interests therefrom.
Although the forward-looking information contained in this news release is based upon what management of Argo believes are reasonable assumptions on the date of this news release, Argo cannot assure readers that actual results will be consistent with such forward-looking information. Forward-looking information involve substantial known and unknown risks, uncertainties and other factors which cause actual results to vary from those express or implied by such forward looking information, including without limitation those risks and uncertainties described in more detail in Argo's securities filings available at www.sedarplus.ca. Forward-looking information should not be read as a guarantee of future performance or results and will not necessarily be an accurate indication of whether or not such results will be achieved.
The forward-looking information contained in this news release is provided as of the date hereof. Argo disclaims any intention or obligation to update or publicly revise any forward–looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws. All forward-looking information contained in this news release is expressly qualified in its entirety by the foregoing cautionary statements.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
