Matrix Provides Update on Sale of Seamark Assets and Matrix Fund Sub-Advisory Arrangements
Marketwired
TORONTO, ONTARIO--(Marketwired - Jun 28, 2013) - Matrix Asset Management Inc. (MTA.TO) ("Matrix") announced today, further to its announcement on June 4, 2013, an update with respect to the sale of all of the operating assets (excluding working capital) of SEAMARK Asset Management Ltd. ("Seamark"), a subsidiary of Matrix (the "Seamark Sale").
The Seamark operating assets will be sold to a newly formed company ("New Seamark") owned by Robert McKim, the Chief Investment Officer and a director of Seamark, and Marquest Asset Management Inc. ("Marquest"). Mr. McKim will indirectly own 67% of the outstanding shares of New Seamark on closing of the Seamark Sale and Marquest will own the remaining 33%. Mr. McKim is not on the board of directors of Matrix and does not serve as an officer of Matrix. The board of directors of Matrix, all of whom are independent of New Seamark, has unanimously approved the sale of the operating assets of Seamark on the terms disclosed in Matrix's June 4, 2013 press release and summarized below.
The Seamark Sale has a transaction value of approximately $1.62 million. The consideration is to be comprised of (i) $900,000 advanced on behalf of New Seamark to Matrix effective May 31, 2013, (ii) the forgiveness on May 31, 2013 of $218,739 of indebtedness owed by Seamark to a company related to Mr. McKim, (iii) $200,000 advanced by Marquest to Matrix effective June 4, 2013, (iv) $200,000 advanced on behalf of New Seamark to Seamark effective June 4, 2013, and (v) $100,000 advanced on behalf of New Seamark to Matrix effective June 4, 2013 (such advances being referred to herein as the "Advances").
Binding promissory notes in respect of the Advances and a binding asset sale term sheet have been executed by the parties and the terms of the promissory notes are the same as previously announced in Matrix's May 25, 2013 release. The promissory notes would be cancelled on closing of the Seamark Sale. Closing of the transactions remains subject to customary closing conditions, including obtaining TSX and regulatory approvals. It is unknown at this time if these conditions will be satisfied. Mr. McKim is an officer and director of Seamark, and therefore an insider of Matrix, and will participate in the transaction through an indirect ownership position in New Seamark. As such, under TSX rules Matrix must secure approval of the Seamark Sale from holders of more than 50% of the outstanding voting securities of Matrix who are not related to New Seamark. Matrix will rely on an exemption available under TSX rules that permits issuers to obtain this approval by way of a written resolution. No shares of Matrix will be issued in connection with the Seamark Sale and the Seamark Sale will not affect control of Matrix.
The parties to the Seamark Sale are working towards closing the transaction on or about July 5, 2013. While Matrix, Marquest and Mr. McKim have entered into binding term sheets in respect of the Seamark Sale, there can be no assurance that the transaction will be completed on the terms proposed or at all.
Upon completion of the Seamark Sale, and in advance of the previously announced change of manager to Marquest, it is anticipated that management of the Matrix group of investment funds (the "Matrix Funds") will move from Growth Works Capital Ltd.'s Matrix Funds Management division to Seamark. Seamark is an affiliate of Growth Works Capital Ltd. and has previously provided sub-advisor services to a number of the Matrix Funds. It is anticipated that there will be no change to the individuals performing fund and portfolio management activities for the Matrix Funds in connection with the transfer of management to Seamark. For those Matrix Funds which previously engaged Seamark as sub-advisor, it is anticipated that the same individuals performing those sub-advisor services will now provide those services through New Seamark as sub-advisor. The transfer of management of the Matrix Funds to Seamark is expected to occur on or before July 5, 2013, however it is subject to a number of conditions, including the completion of the Seamark Sale, obtaining necessary consents and regulatory approvals and Independent Review Committee approval. It is unknown at this time if these conditions will be satisfied or waived. The transition of management of the Matrix Funds to Seamark is not expected to impact the previously announced change of manager of the Matrix Funds to Marquest. Upon closing of the Marquest transaction, management of the Matrix Funds would move from Seamark to Marquest. Details on the Marquest transaction, including expected timing and conditions on the transfer of management of the Matrix Funds to Marquest, will be contained in meeting materials to be sent to Matrix Funds' investors in advance of the August 15, 2013 meeting date. There can be no assurance that the Marquest transaction will close on the terms proposed or at all.
Forward-looking statements: Certain statements in this press release are forward-looking statements including the statements about the terms and timing of the Seamark Sale, transfer of management of the Matrix Funds to Seamark and related matters. Forward-looking statements are based on beliefs and assumptions at the time the statements are made, including beliefs and assumptions about the satisfaction or waiver of conditions to the closing of the Seamark Sale, including regulatory, stock exchange and third party filings and approvals, and the completion of the transfer of management of the Matrix Funds to Seamark, including necessary consents and regulatory and Independent Review Committee approvals. While management considers these beliefs and assumptions to be reasonable based on information currently available to it, they are subject to numerous risks and uncertainties and no assurance can be given that such beliefs and assumptions will prove to be correct. Accordingly, actual results may differ significantly from those expressed or implied by forward-looking statements due to many factors including, but not limited to, risks associated with securing necessary regulatory, stock exchange and third party approvals for the Seamark Sale and transfer of management of the Matrix Funds to Seamark, satisfying other conditions to the Seamark Sale and transfer of management of the Matrix Funds to Seamark, risks associated with completing the Seamark Saleand transfer of management of the Matrix Funds to Seamark and risks associated with Matrix's ability to continue to operate as a going concern and maintain compliance with minimum working capital and other regulatory requirements. Many of these risks are beyond the control of Matrix. Other than as specifically required by law, Matrix undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect or to reflect new information, future unanticipated events or results or other factors.
