GrowthWorks President Surprised by Vengrowth Shareholder Vote

Dan Levi, President of GrowthWorks, said today that he is surprised by a shareholder vote Thursday that approved the merger of five Vengrowth Asset Management funds into two funds from Covington Capital. A vote tabulation Friday further indicated Vengrowth shareholder approved the proposed transaction with Covington. Last month, Covington struck a deal to take over five Vengrowth funds. The funds had $360 million in AUM. GrowthWorks had challenged the merger in a proxy fight. GrowthWorks, of Toronto, is a major consolidator in the Canadian VC retail industry. Vengrowth is a Canadian PE firm.

PRESS RELEASE

At a shareholders meeting of the VenGrowth Funds held today, VenGrowth announced a vote tabulation indicating shareholders had approved the proposed transaction with Covington II Fund. As earlier announced, GrowthWorks Ltd. (“GrowthWorks”) filed a dissident proxy circular urging VenGrowth Fund shareholders to vote against the Covington proposal so it could present an alternate proposal with significantly better terms. The aim was to improve the situation for VenGrowth class A shareholders.

David Levi, President of GrowthWorks, commented “We are surprised at the announced vote count. The results are inconsistent with the views and voting intentions expressed by a large number of advisors and shareholders that we were in contact with over the past two weeks.”

As is standard with contested shareholder meetings, GrowthWorks requested the opportunity to undertake an advance review of proxies submitted for the meeting. VenGrowth refused this request. At the meeting, GrowthWorks requested an opportunity to inspect the proxies lodged, including proxies submitted which were declared invalid. However, GrowthWorks was advised that the proxies were not available for inspection at the meeting.

Mr. Levi said “We were sorely disappointed with the lack of transparency around how the vote was conducted. The shareholder proxies were to have been brought to the shareholders’ meeting but they were not. Shareholders had no way of determining at the meeting whether the proxy count was proper and how determinations about the exclusion of proxies were made. GrowthWorks raised objections about these irregularities at the meeting and despite the results announced at the meeting intends to perform a full review of all proxies submitted.”

GrowthWorks also received confirmation from the proxy tabulator that the fax line published in the VenGrowth Funds’ shareholder materials was largely inaccessible during the final two days of voting, which prevented an unknown number of votes from being lodged. Late in the process, VenGrowth issued instructions about how dealer/nominee voting could be conducted which also impeded the vote. These kinds of issues go the heart of the fairness of the process. Once GrowthWorks has had an opportunity to inspect the proxies, it will decide on next steps.

About GrowthWorks* (www.growthworks.ca): GrowthWorks™ managed funds provide investment capital for Canadian companies and tax-advantaged investment opportunities for Canadian investors. GrowthWorks manages approximately $560 million in assets through the GrowthWorks Canadian Fund Ltd., GrowthWorks Commercialization Fund Ltd., GrowthWorks Atlantic Venture Fund Ltd., and Working Opportunity Fund (EVCC) Ltd. GrowthWorks identifies, analyzes and structures investments in companies with high growth potential. Building on more than 18 years of investment expertise, GrowthWorks is a leader in Canadian venture capital management.