KITCHENER, ON, Aug. 5 /CNW/ - Electrohome Limited announced today that is planning an orderly wind-up of the Corporation pursuant to a court supervised plan of arrangement.
The plan of arrangement proposed by the Corporation under the Business Corporations Act (Ontario) provides an expeditious and efficient way for the Corporation to sell its remaining assets, satisfy its outstanding obligations and maximize the amount of residual proceeds that can be distributed to its shareholders prior to the dissolution of the Corporation, all in an orderly fashion within a condensed and finite timeframe under the supervision of the Court.
The proposed plan of arrangement includes the sale of the Corporation's investment in Mechdyne Corporation, fulfillment and/or discharge of the Corporation's outstanding liabilities and obligations, cancellation of the issued and outstanding Class X Shares and the Class Y Shares, delisting of the Corporation's shares from the NEX board of the TSX Venture Exchange and the ceasing of the Corporation to be a reporting issuer, change of the Corporation's name to ELXY Holdings Inc., change in the Corporation's minimum number of directors from 3 to 1, appointment of an administrative agent to assist the Corporation with implementation of the plan of arrangement, distribution to shareholders of any residual proceeds, and dissolution of the Corporation.
As part of the plan of arrangement the Corporation proposes to sell its shares of Mechdyne Corporation back to Mechdyne in exchange for an initial cash payment of US $616,444 and a 10 year promissory note in the amount of US $3,082,222 bearing interest at an annual rate of 4.3% with principal payments subject to Mechdyne's annual earnings. Since the Corporation intends to wind up its operations, the Corporation's Chairman, President, Chief Executive Officer and controlling shareholder, Mr. John A. Pollock, has agreed to purchase the 10 year promissory note from the Corporation for a cash amount of US $2,394,592. A committee of independent directors of the Corporation reviewed the proposed sale transactions and engaged Deloitte & Touche LLP to provide it with an independent fairness opinion. The committee of independent directors determined that the sale transactions are fair to the minority shareholders of the Corporation.
In the interests of maximizing the amount of residual proceeds that can be distributed to shareholders, Mr. Pollock has also agreed to forgo payment of the amount of $450,000 with respect to the funding of his supplemental retirement plan with the Corporation. An independent actuary has determined that the liability of the Corporation to fully fund the retirement benefits under this plan is approximately $700,000.
A special meeting of the Class X and Class Y shareholders of the Corporation will be held on September 11, 2008 to consider and vote on the proposed plan of arrangement.
As previously announced, SYNNEX Canada Limited plans to continue to market and sell Electrohome branded consumer electronic products pursuant to the sale of the Corporation's trademarks and a related licensing agreement made with SYNNEXX Canada earlier this year.
TSX Venture Exchange has not reviewed and does not take responsibility
for the adequacy or accuracy of this release.
For further information: John A. Pollock, Chairman and Chief Executive Officer or Gary Dumoulin, Vice-President and Secretary at (519) 749-3319
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