Working Opportunity Fund Declares Venture Series Cash Dividend and Provides Portfolio UpdateFriday, November 20, 2015
David Levi, President, Chief Executive Officer and Director of GrowthWorks Ltd.
Vancouver, BC, November 20, 2015--(T-Net)--Working Opportunity Fund (EVCC) Ltd. announced this week that it has declared a $7.5 million cash dividend under the Cash Dividend Distribution Policy adopted for the Fund's Venture Series with an effective date of December 1, 2015 and provides a portfolio update.
The $7.5 million cash dividend represents approximately 5% of Venture Series pricing net asset value.
As previously reported, the Fund adopted a cash dividend distribution policy for the Venture Series to distribute available cash through an orderly realization of value from dispositions in the Venture Series portfolio while maintaining funds for strategic follow-on investments, liabilities and anticipated operating expenses of the Venture Series. In declaring the dividend, the Board assessed the amount of funds received from exits in the venture portfolio for 2015 in light of potential follow-on investments in the portfolio and operating expenses.
"We are pleased to report that several portfolio companies continued to make good progress advancing their technologies and relationships with partners in 2015. One of Venture Series portfolio companies, Burnaby-based General Fusion, was profiled for the cover feature of the November 2, 2015 issue of Time magazine", stated the company in a press release.
"We believe the Venture Series portfolio is well positioned to generate exit transactions in 2016. The value of the most widely held Venture Series shares, Balanced Shares (Series 2), increased 14.09% during the ten month period ended October 31, 2015".
"The Commercialization Series portfolio has generated sufficient income such that the Fund expects to declare and pay the final dividend for the series in the first quarter of 2016 in accordance with the dividend policies adopted on its previously offered shares. The Commercialization Series remains open for redemption; however, it is closed for sales. The value of the most widely held shares, Commercialization '05 Series, increased 2.82% during the 10 month period ended October 31, 2015".
"The adoption of the cash dividend distribution policy for the Venture Series followed a full review of strategic options directed towards realizing on the potential value of the Venture Series portfolio and providing liquidity to Venture Series shareholders. For more information about the cash dividend distribution policy for Venture Series, we encourage you to review the Fund's most recent Management Report of Fund Performance and a set of frequently asked questions available on the Fund's website at www.growthworks.ca".
"Redemption requests for Venture Series may be submitted to the Fund; however, the board of directors of the Fund currently intends that available cash from the sale of the Venture Series portfolio companies will be distributed to shareholders through the cash dividend distribution policy and does not expect to open redemptions of the Venture Series"
"The Fund expects to continue to process Venture Series shares redemptions only in very limited circumstances that amount to a hardship disposition, provided there are available funds to do so. The amount and timing of future cash dividends to Venture Series shareholders under the cash dividend distribution policy will depend on the timing and realizations of exits, the timing of which are largely beyond the control of the Fund and, therefore, difficult to predict. As such, no assurance can be given as to the timing or amount of any future cash dividends to Venture Series shareholders or that the Venture Series will be able to complete an orderly realization of value".
Venture Series' Portfolio Update
The Fund and its manager reported that it continues to work towards maximizing the return for all shareholders by working with the companies in the Venture Series portfolio and positioning several of them for exit. We are encouraged by the maturity of many of the companies in the Venture Series portfolio in terms of revenue, revenue growth, and in some cases having achieved profitability, and believe there are several companies well positioned for near to medium term exit.
During 2015 the Venture Series completed full divestments from the following five companies: Avcorp Industries (TSX:AVP), Celator Pharmaceuticals (Nasdaq: CPXX), Dermira (Nasdaq: DERM), Metafor Software, and GenoLogics. Three of the divestments were sales of publicly held shares. Vancouver-based Metafor and Victoria-based GenoLogics were acquired by large technology companies Splunk (Nasdaq: SPLK) and Illumina (Nasdaq: ILMN) respectively.
The Venture Series also received a final escrow payment 2015 on the 24 month anniversary of the June 2013 sale of Layer 7 Technologies to Computer Associates. In aggregate these exits totalled $22.0 million. During 2015 the Venture Series made $2.6 million in follow-on investments. In each case the investments were in-the-money warrant exercises or were defensive investments at or below Venture Series' pro-rata.
At October 31, 2015 the Venture Series held active venture investments in 17 investee companies. Several of these companies are well-positioned for medium-term exit. Venture capital funds like the Fund rely on favourable M&A and IPO market conditions for full value, cash generating exit opportunities. If favourable market conditions continue, the Fund's manager is optimistic that exit markets for will remain favourable for portfolio companies, although the Fund can provide no assurance as to if or when any exits may be completed.
At October 31, 2015, the Ventures Series Net Asset Value (NAV) was $142.5 million composed of $123.8 million of venture assets and includes $17.0 million in cash and other liquid assets and $1.7 million in other assets. Strategic follow-on investments may be required for the Venture Series portfolio companies that have not yet achieved profitability. While no assurance can be made with respect to the amount of future strategic follow-ons in the Venture Series' portfolio, follow-on levels are expected to be minimal. The top holding of the Venture Series is Teradici, valued at $33.4 million and comprising 23.5% of NAV. The top five holdings of the Venture Series are investments in Teradici, D-Wave Systems, ResponseTek, BuildDirect, and General Fusion which totalled $96.3 million, or 67.6% of NAV.
Commercialization Series Portfolio Update
During 2015, the Commercialization Series completed partial exits from Inetco Systems and LightHaus Logic and full exits from Lite Access Technologies and GenoLogics. The Commercialization Series also received a final escrow payment on the 24 month anniversary of the June 2013 sale of Layer 7 to Computer Associates. In Aggregate these exits totalled $4.3 million. During 2015 the Commercialization Series made $2.5 million in follow-on investments.
At October 31, 2015 the Commercialization Series holds active venture investments in 8 investee companies. As the portfolio matures, some of the additional features in our investment holdings focused on capital appreciation, such as conversion rights and warrants to purchase shares in the companies to whom loans were made, may result in increases in value for the venture investment portfolio. The cash dividend distribution policy adopted for the Venture Series does not apply to the Commercialization Series which remains open for redemption.
At October 31, 2015 the Commercialization Series NAV was $32.3 million composed of $18.3 million of venture assets, $13.2 million in cash and other liquid assets and $0.8 million of other assets. Debt investments represent 65.6% of the Commercialization Series venture investment portfolio. The top five venture holdings in the Commercialization Series total $15.6 million, or 48.2% of NAV. The Commercialization Series venture investment portfolio has generated sufficient income to maintain its dividend policy and the Fund expects to declare and pay the final dividend in the first quarter of 2016 in accordance with dividend policies adopted on previously offered shares. Dividends are not guaranteed.
Forward Looking Statements:
This press release contains forward looking statements which primarily relate to assessments of the liquidity position of the Venture Series, implementation of the cash dividend distribution policy, the targeted timing of exits (also referred to as divestments) from the Venture Series venture investment portfolio, future economic and market conditions, including M&A and IPO market conditions, the Venture Series ability to make follow-on investments, redemptions of Commercialization Series shares and statements regarding the Fund's dividends policies and plans to pay a dividend in 2016 on Commercialization Series shares. All forward looking statements are based on management's current beliefs and assumptions which are subject to numerous known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others assessments of the targeted timing of exits (also referred to as divestments) from the Fund's venture investment portfolio, general economic and business conditions, including changing market conditions, changing governmental regulations, unforeseen developments, and other factors referenced in the Fund's filings with the Canadian securities regulators. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Neither the Fund nor its manager assumes any obligation to update any forward-looking statements made in this letter.
Returns: Without considering tax credits, the returns for Balanced Series 2 to October 31, 2015 are: year to date: 14.09%; one year: 16.46%; three years: 12.84%; five years: 5.64%; and ten years: 1.07%. Without considering tax credits, the returns for Commercialization '05 Series to October 31, 2015 are: year to date: 2.82 %; one year: 1.78%; three years: 2.96%; five years: 3.62%; and ten years: 4.71%. Past performance does not necessarily indicate how a series will perform in the future.
David Levi, President & CEO
Working Opportunity Fund (EVCC) Ltd.
Tel: (604) 895-7253
Suite 2600, Royal Centre
1055 West Georgia Street
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