GrowthWorks Canadian Fund Ltd. enters into Investment Advisor Agreement

TORONTO, May 15, 2014 /CNW/ - GrowthWorks Canadian Fund Ltd. (the "Fund") today announced that it has entered into an investment advisor agreement (the "Investment Advisor Agreement") with Roseway Capital S.a.r.l. ("Roseway") in connection with the management of the Fund's venture portfolio.  The Fund also announced that it has obtained an order of the Ontario Superior Court of Justice (the "Court") approving the Investment Advisor Agreement and an order further extending the "Stay Period" until and including November 30, 2014 pursuant to the Fund's proceedings (the "CCAA Proceedings") under the Companies' Creditors Arrangement Act (Canada).

Under the terms of the Investment Advisor Agreement, Roseway will serve as investment advisor to the Fund and make investment and divestment decisions in respect of the Fund's venture portfolio on behalf of the Fund and provide related services to the Fund for a term of four years.  As compensation for providing those services to the Fund, Roseway will be entitled to receive an annual base fee of $350,000 plus reimbursement of certain expenses.  Following the payment in full of all amounts owing by the Fund to Roseway (including certain amounts currently in dispute) under the Participation Agreement and related agreements between the parties (the "Roseway Obligations"), Roseway will also be entitled to receive an incentive fee equal to 15% of the aggregate proceeds of disposition of the remaining assets of the Fund at such time.  As of May 9, 2014, the total indebtedness owing by the Fund to Roseway was approximately $18.9 million (which amount may be increased or decreased upon a resolution of the amount in dispute, which is approximately $1.9 million).

The Investment Advisor Agreement also contains provisions regarding the review and resolution of conflicts of interest involving Roseway and the Fund.  In particular, investment and divestment opportunities, including follow-on investment opportunities ("Follow-on Financings") in the Fund's portfolio companies, will require the review and approval of the monitor appointed by the Court in the CCAA Proceedings.  The Fund will be entitled to receive an amount equal to 5% of any net divestment proceeds or distributions received by Roseway in respect of securities acquired by Roseway in connection with any Follow-on Financing funded and completed by Roseway while any Roseway Obligations remain outstanding.

Subject to the Fund's right to retain a specified amount of cash and cash equivalents for the purpose of satisfying certain ordinary course expenses of the Fund, including the fees and certain expenses of Roseway (in its capacity as investment advisor to the Fund), proceeds of disposition from the sale of the Fund's investments will be used primarily to satisfy the Roseway Obligations for so long as any of those obligations remains outstanding.

The Investment Advisor Agreement may, in certain circumstances, be terminated by the Fund or Roseway prior to the end of the term of the agreement, including by either party in the event of a material breach of the agreement which remains uncured and by the Fund upon full repayment of the Roseway Obligations.

The Fund intends to enter into separate arrangements with third party service providers with respect to the administrative functions of the Fund that are not related to the management of the Fund's venture portfolio.

The Fund intends to pursue an orderly disposition of its assets with a view to satisfying its payment obligations to Roseway and the Fund's unsecured creditors, following which the Fund's board of directors expects to consider alternatives reasonably available to the Fund at that time, including a distribution to the Fund's shareholders of any remaining assets of the Fund.

The extension of the "Stay Period" until and including November 30, 2014 continues and extends the stay of proceedings, which has stayed certain creditor claims and the exercise of contractual rights against the Fund.

Forward-Looking Information

This press release contains forward looking statements, including statements with respect to the Fund's proceedings under the Companies' Creditors Arrangement Act (Canada).  These forward-looking statements reflect the Fund's current views and are based on certain assumptions, including assumptions as to future operating conditions and courses of action, sale or refinancing alternatives, economic conditions and other factors the Fund believes are appropriate. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in these statements, including the risk that a disposition of the Fund's portfolio investments will not yield proceeds sufficient to satisfy in full the Fund's payment obligations to Roseway, the Fund's other creditors or any distribution to the Fund's shareholders; the risk that litigation or defence proceedings involving claims by the former manager of the Fund or other third parties against the Fund may involve substantial expense and, if successful, could require the Fund to pay substantial damages; and those risks and uncertainties disclosed in the Fund's most recently filed prospectus and other regulatory filings posted on SEDAR at 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, the Fund does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or results or other factors.

SOURCE: GrowthWorks Canadian Fund Ltd.

FTI Consulting Canada Inc. Court Appointed Monitor of GrowthWorks Canadian Fund Ltd., Phone: [phone], Hotline: [phone], Email: [email protected]