GrowthWorks Atlantic Venture Fund, a labour-sponsored VC fund based in Halifax, issued the following press release:
GrowthWorks Atlantic Venture Fund Provides Update on Sales and Redemptions
November 20, 2014, Halifax, Nova Scotia – GrowthWorks Atlantic Venture Fund Ltd. (“Atlantic Fund”) reported today that it has suspended until further notice sales and weekly redemptions of its Class A Shares (the “Shares”), specifically the Balanced Series and the GIC Series.
The Fund’s Board of Directors considered several factors in determining to suspend redemptions and sales of Shares, including forecasted exit opportunities, redemption demand and the need to preserve investment and operating capital, and the long term impact of the federal government’s announcement in 2013 to phase out the 15% federal labour-sponsored venture capital corporation tax credit on future capital raising. The Board of Directors determined that, at this time, it is in the best interests of its shareholders to preserve capital for key follow-on investments and operating commitments and therefore decided to suspend redemptions.
Atlantic Fund continues to work towards maximizing the value of its holdings and focusing on realizing exit opportunities in its venture portfolio to ease increased liquidity pressures.
Liquidity pressures have recently increased as exit opportunities regarding select venture investments have been delayed. With expected low levels of capital raising from the long term impact of the phase out of the federal tax credit, the Fund’s ability to ease liquidity pressures is entirely dependent on levels of divestment activity in the venture portfolio, activity that is highly sensitive to market conditions. While Atlantic Fund and its manager are encouraged by the exit opportunities with several portfolio companies, discussions and negotiations remain at an early stage at this point and there can be no certainty as to if or when such transactions will be completed.
The Board of Directors of Atlantic Fund has commenced a full review of strategic options aimed at realizing on the potential value of its venture portfolio and providing liquidity for shareholders. These options will be considered in light of a range of factors, including the Share’s cash position, actual and projected levels of divestment activity, the prospects for generating exit values in excess of carrying values, the prospects of resuming weekly redemption processing and capital raising.
The Board of Directors of Atlantic Fund believes the closure of redemptions of Shares is in the best interests of all shareholders. Tom Hayes, President and CEO of Atlantic Fund, commented “The Board of Directors of the Fund remains confident that certain companies in the venture portfolio have potential to increase value materially for shareholders and provide some meaningful liquidity through exit transactions.”
Atlantic Fund will continue to allow shareholders to request redemptions of their Shares. However, Atlantic Fund cannot process Share redemption requests at this time and redemption requests must be submitted manually, as opposed to electronically through FundSERV. You may complete and sign our redemption request form, which is available at http://www.growthworks.ca, or provide written instructions containing the information that is set out in the redemption request form. Further terms and conditions may be determined by the Board of Directors of Atlantic Fund from time to time.
For questions related to processing redemptions please email firstname.lastname@example.org or call 1-800-268-8244. Atlantic Fund will not process redemption requests that are submitted until such time as the Board of Directors of Atlantic Fund determines that Atlantic Fund meets the legal requirements and financial ability for doing so.
There can be no assurance regarding the outcome of the strategic review or that Atlantic Fund will resume weekly redemptions or sales of Shares or process requested redemptions of Shares.
Forward Looking Statements: This press release contains forward looking statements about the liquidity of Atlantic Fund including future divestment activity, the value of the portfolios, resumption Share redemptions, future sales of Shares and the strategic review by Atlantic Fund’s board. These statements are based on beliefs and assumptions of management of Atlantic Fund at the time the statements are made, including beliefs and assumptions about future market conditions, levels of sales, divestment activity, redemption requests and the strategic review by Atlantic Fund’s board. These beliefs and assumptions are subject to known and unknown risks and uncertainties, including risks and uncertainties associated with volatility of market conditions and, in turn, the future climate for sales of Atlantic Fund’s shares, divestment activity, redemption requests, and factors affecting sales of portfolio companies, other factors affecting the performance of portfolio companies, valuations of portfolio companies, financing needs of portfolio companies and the availability of capital to satisfy such financing needs and other risks and uncertainties disclosed in Atlantic Fund’s most recent prospectus and other regulatory filings posted on SEDAR at http://www.sedar.com. These risks and uncertainties may cause actual results, events or developments to be materially different from those expressed or implied by such forward-looking statements. Unless required by law, neither Atlantic Fund nor its manager assumes any obligation to update any forward-looking statements or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results or other factors.