TORONTO, ONTARIO -- (MARKET WIRE) -- 11/04/08 --
C.A. Bancorp Inc. (TSX: BKP) ("C.A. Bancorp") announces that it will reimburse Sentry Select Capital Corp. ("Sentry Select") for the salaries of certain Sentry Select employees who provide full time services to C.A. Bancorp. As approved by the independent members of C.A. Bancorp's board of directors (the "Independent Directors"), this change becomes effective immediately.
Moving forward, C.A. Bancorp's payments to Sentry Select pursuant to the Administration Agreement and related Management Agreement between the parties (collectively the "Agreements") will increase from approximately $1.9 million to $3.0 million per annum. As a result of the reimbursement, it is expected that C.A. Bancorp's annual pre-tax earnings will be reduced by approximately $1.1 million, based on current data.
The decision to reimburse employee salaries was made after C.A. Bancorp received a notice (the "Notice") from Sentry Select under the terms of the Administration Agreement. The Administration Agreement provides Sentry Select with the right to request reimbursement for the salaries of certain employees providing services to C.A. Bancorp.
To date, Sentry Select has been paying the salaries of all C.A. Bancorp employees directly since their respective dates of hire. Since C.A. Bancorp's inception in 2005, Sentry Select has deemed it desirable to provide management and other services to help foster its development. This arrangement was instrumental in attracting and securing senior management for C.A. Bancorp throughout its start-up phase, while providing stability from which to raise a base of meaningful capital and generate operating revenue.
Most recently, C.A. Bancorp has grown to a size where it has more employees than the Administration Agreement had envisioned when it was entered into in 2006. Sentry Select will continue to provide the services of four senior management personnel to C.A. Bancorp on a full-time basis including C.A. Bancorp's President; Chief Financial Officer; Chief Compliance Officer and Managing Director, Private Investments. Sentry Select will also provide other administration services and staffing to C.A. Bancorp under the Agreements. To date, the costs incurred by Sentry Select in providing employees and other services under the Agreements have significantly exceeded the fees generated for Sentry Select.
As required by the terms of the Administration Agreement, the Independent Directors considered C.A. Bancorp's options in response to the Notice. Following such consideration and with advice from independent legal counsel, Macleod Dixon LLP, it was determined that C.A. Bancorp was obligated to reimburse the employee salaries as identified by the Notice if it wished to continue to have access to such employees. The Independent Directors, in the course of their review, concluded that the services provided by these employees are essential to C.A. Bancorp based on recommendations made by C.A. Bancorp management.
C.A. Bancorp, through a wholly-owned subsidiary, is also obligated to provide certain services and personnel to Charter Real Estate Investment Trust ("Charter REIT"). The salaries of such individuals have, to date, been borne by Sentry Select. However, under the terms of the Administration Agreement, Sentry Select has the right to request reimbursement for the salaries of such individuals. If such reimbursement is requested, this could amount to an additional $900,000 of expenses per annum.
Trading information
C.A. Bancorp Inc.'s common shares trade on the Toronto Stock Exchange under the symbol BKP.
C.A. Bancorp Inc. C.A. Bancorp is a publicly traded Canadian merchant bank and alternative asset manager that provides investors with access to a range of private equity and other alternative asset class investment opportunities. With over $500 million of assets invested or under management, C.A. Bancorp is focused on investments in small- and middle-capitalization public and private companies, with emphasis on the industrials, real estate, infrastructure and financial services sectors.
This news release contains forward-looking statements. These statements relate to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent C.A. Bancorp's beliefs regarding future events. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "will", "expect", "intend", "plan", "estimate", "anticipate", "believe" or "continue", similar words or the negative thereof, or variations of such words and phrases that certain actions, events or anticipated outcomes "may", "would" or "might" be taken, occur or be achieved. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. The future business, operations and performance of C.A. Bancorp discussed herein could differ materially from those expressed or implied by such statements. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are based on a number of assumptions which may prove to be incorrect. Additional, important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, interest rates, tax related matters, loss of personnel, reliance on key personnel and a request to reimburse the salaries of the Charter REIT employees. C.A. Bancorp cautions that risk factors discussed in applicable continuous disclosure filings required by law that C.A. Bancorp has made and filed on SEDAR should also be considered carefully and that undue reliance not be placed on forward-looking statements as events and results could differ materially from those expressed or implied by forward-looking statements made by C.A. Bancorp. The cautionary statements qualify all forward-looking statements attributable to C.A. Bancorp and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release. C.A. Bancorp does not undertake, and specifically disclaims, any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.
C.A. Bancorp Inc.
The Exchange Tower
130 King Street West
Suite 2810, P.O. Box 104
Toronto, Ontario M5X 1A4
Telephone: (416) 214-5985
Fax: (416) 861-8166
Contacts:
C.A. Bancorp Inc.John Driscoll
Chief Executive Officer
1-866-388-5985
(416) 861-8166 (FAX)
C.A. Bancorp Inc.Mark Gardhouse
President
1-866-388-5985
(416) 861-8166 (FAX)
Email: info@cabancorp.com
Website: www.cabancorp.com
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