ProSep sells joint venture for $5 million, starts review of alternatives

MONTREAL – ProSep Inc. (TSX:PRP) has signed a deal to sell its 51 per cent investment in a South Korean joint venture to its partner, Kolon Group, for $5 million and says it’s looking at other strategic moves.

The oil and gas technology company said Tuesday it has formed a special committee to review financing opportunities and other strategic alternatives, which could include more asset sales or a sale of the company — although it noted no decision has been made.

ProSep said after reimbursement of a related $1 million debenture, the sale of its stake in the ProSep Kolon joint venture will give it approximately $4 million that will be used as working capital.

“Although revenues grew in 2012, the company recently implemented a cost optimization program and reduced headcount in order to provide annual operating savings of almost 15 per cent of operating expenses and divested its investment in its South Korean joint venture,” president and chief executive Jacques Drouin said in a statement.

“These initiatives provide additional liquidities to support projected growth with the objective of reaching profitability.”

Licensing agreements will remain in place and both companies will continue operating as commercial partners.

One of ProSep’s wholly-owned subsidiaries has been in breach of covenants under its borrowing facilities.

The company said it is in negotiations with the bank in order to obtain a waiver.

Shares in the company last traded for 31 cents on the Toronto Stock Exchange.