The company said in a statement Monday that it filed for protection in a petition to the Supreme Court of British Columbia under the Companies' Creditors Arrangement Act (CCAA). Azure Dynamics, whose U.S. stock traded for about $11 a share a year ago, was trading on the Pink Sheets at about a quarter Tuesday.
"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."
Azure Dynamics, which makes the powertrain for the Ford Transit Connect Electric utility vehicle, joins a list of companies that were looking to capitalize on an increase in demand for battery-electric and plug-in hybrid-electric vehicles but have had problems staying afloat. Extended-range plug-in utility vehicle maker Bright Automotive folded last month amid its claims that the federal government took too long to process the $400 million in loans promised to the company, while Fisker Automotive, which makes the extended-range plug-in Karma, has faced questions about its own future and most of the federal government loans earmarked for the company have been delayed.
Through the first nine months of 2011, Azure Dynamics' revenue almost tripled to $23.1 million but its net loss widened 45 percent from a year earlier to $25.8 million. The company's cash balance as of September 30, 2011, was $1.29 million, down from $11.7 million at the end of 2010.
Burnaby, BC – March 26, 2012 – – Azure Dynamics Corporation (the "Company" or "Azure") (TSX: AZD)(OTC: AZDDD), a world leader in the development and production 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."
About Azure Dynamics
Azure Dynamics Corporation (TSX: AZD)(OTC: AZDDD) is a world leader in the development and production of hybrid electric and electric components and powertrain systems for light and medium duty commercial vehicles. Azure is strategically targeting the commercial delivery vehicle and shuttle bus markets and is currently working internationally with a variety of partners and customers. The Company is committed to providing customers and partners with innovative, cost-efficient, and environmentally-friendly energy management solutions. For more information please visit www.azuredynamics.com.
The TSX does not accept responsibility for the adequacy or accuracy of this release.
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This press release contains forward-looking statements. More particularly, this press release contains statements concerning the expected provisions of an Initial Order under the CCAA. The forward-looking statements are based on certain key expectations and assumptions made by Azure, including expectations and assumptions concerning approval by the Supreme Court of British Columbia of the Company's petition for an Initial Order under the CCAA. Although Azure believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Azure can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Risks relating to Azure are set out in more detail in Azure's annual information form which can be accessed at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and Azure undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.