CALGARY, AB and
SCOTTSDALE, AZ, May 20, 2013 /CNW/ - Ridgeline Energy Services
Inc. ("Ridgeline" or the "Company") (TSXV: RLE, OTCQX: RGDEF,
FSE: RL7) a technology driven company operating in the waste
water industry provides comments on the recently filed lawsuit by
Global Emerging Markets NA Inc. (GEM).
Ridgeline stock has been under considerable pressure due to a
number of rumors and speculation in the market regarding the GEM
lawsuit. Following are the Company's comments on this legal
matter.
Ridgeline recently announced (April
15th, 2013) the acquisition of Changing World
Technologies, L.P., a Delaware
limited partnership ("CWT LP"). On May
1ST, 2013 GEM announced that it had filed a
lawsuit against Ridgeline for $27
million. Given the Company's strategy to acquire assets
where its unique technology and knowhow can add considerable value,
it is not uncommon in the U.S. to encounter legal disputes among
minority legacy shareholders of an entity being acquired. As
it relates to CWT, the majority owners of the facility were sued by
their minority shareholder, and Ridgeline was named in this
action. Ridgeline has acted properly in its management and
acquisition of CWT LP. The Company and its attorneys are confident
that GEM's lawsuit is frivolous and that their claims will be
dismissed early in the litigation.
We are aware and concerned that the minority shareholder (GEM)
issued a misleading and inflammatory press release and opted to try
their case in the press thus pressuring our stock price rather than
relying on presenting the facts to a Judge, who has already
expressed doubts about the merits of their case.
Ridgeline's first goal will be to move for a dismissal of all
claims. As this is an active legal matter, we are limited in what
we may disclose. However, Ridgeline's responses to the allegations
in the lawsuit will become a matter of public record in due course,
and we believe it will become clear to everyone that the actions
that GEM took were improper, at best and that Ridgeline acted
appropriately.
It is very important to point out that this litigation actually
began in March of this year before Ridgeline was included as a
party, when GEM attempted to persuade the New York State court to block the acquisition
of CWT LP by Ridgeline. At that time, the Honorable Shirley Werner
Kornreich presiding over the case denied GEM's attempts to block or
delay the acquisition and expressed skepticism that GEM would
succeed on its claims in the lawsuit because there was evidence
that GEM itself had breached its agreements.1
Additionally, the Judge noted that GEM did not have clear and
convincing evidence that would allow it to succeed in its case. All
of the relief GEM sought was denied2&3.
Indeed, GEM failed to comply with its contractual obligations to
provide funding to operate CWT properly. As a result of GEM's
failure to meet and breach of its funding obligations, CWT's
business and Ridgeline's was severely constrained and put at
substantial financial risk. The transaction that was ultimately
completed with Ridgeline provided what was needed for the business
to operate while enabling Ridgeline to gain full control of
CWT.
To reaffirm, this legal matter will not distract the Company
from its goals, and we remain 100% focused on the continued growth
of the business. The integration of CWT has gone extremely well,
and we have once again demonstrated our ability to acquire an
underperforming asset and dramatically improve both the revenue and
cash flow. The business remains on track, we have a solid and
sustainable balance sheet and our growth potential has never been
better. The integration of Santa Fe Springs ("SFS") and
Carthage (formerly "CWT") have
exceeded our expectations. Combined revenues from SFS and
Carthage have increased from
$15 million to a $40 million annual run rate and are still
increasing. As we have discussed in the past, we have identified
other similar assets and look forward to replicating this strategy
across North America.
Excerpts from Transcripts dated March 13,
2013 - Honorable Shirley Werner Kornreich presiding.
- "[T]here's very good evidence here that there was a breach of
the subscription agreement [by GEM]" Source: May 13 Proceeding in New York Supreme Court, Page 19, lines 6-7
- Page 25, lines 7-9: "I don't think there's clear and convincing
evidence that you can possibly be successful on the breach of
contract [claim]."
- "I do not believe in this case, there's clear and
convincing evidence that the plaintiff Gem Holdco, LLC will succeed
on its case." Source: May 13
Proceeding in New York Supreme
Court, Page 38, lines 15-17
ON BEHALF OF THE BOARD OF DIRECTORS
"Dennis Danzik
"
Dennis Danzik
CEO
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SOURCE Ridgeline Energy Services Inc.