POSEIDON CONCEPTS – FORMS SPECIAL COMMITTEE; SUSPENDS FUTURE DIVIDENDS AND ANNOUNCES BOARD AND MANAGERIAL CHANGES
Calgary, Alberta – December 27, 2012 – Poseidon Concepts Corp.
(the "Company" or "Poseidon") has established a Special Committee of the Board of Directors to review and address various issues arising from the recent write-off of certain accounts receivable and the evolving business plan of the Company. The Special Committee’s mandate includes the review and assessment of the Company’s business processes and controls. In addition, the Special Committee will make recommendations to the Board of Directors of Poseidon regarding further changes including managerial changes that will strengthen the operations and finance functions of the Company.
In consideration of the review being conducted by the Special Committee, the Board of Directors has determined to suspend the payment of undeclared dividends effective January 16, 2013 until such time as the Special Committee delivers its report to the Board. Although the Company hopes that dividend payments will resume upon completion of the Special Committee review, there is no assurance about the resumption of dividend payments, or that payments, if resumed, will be consistent with historical payments. The Board of Directors will utilize the results of the Special Committee's review to prioritize the use of the Company's future cash flows from operations towards future dividend payments, reduction in bank indebtedness or future capital expenditures. The Board of Directors is currently reviewing the previously declared dividend payable January 15
th, 2013 to shareholders of record on December 31st, 2012.
The Company has been diligently addressing its accounts receivable in recent weeks and is actively pursuing collections, including commencing formal collection processes in appropriate circumstances. While a final number cannot yet be determined, the Company may need to make additional write downs of accounts receivable in future periods and such write downs may be significant. In accordance with previously stated policy, the Company will update guidance as appropriate however in the event that significant additional write downs of accounts receivable are necessary previously provided guidance will be negatively affected.
In recent months, exploration and development activity has slowed considerably due to weakness in commodity prices and uncertainty in the financial markets.
As a result, some oilfield service companies, including Poseidon, are seeing reductions in realized pricing and contraction in earnings margins. In the face of reduced oilfield demand and increased market competition, all operational and cost components of Poseidon's business are being reviewed to ensure the company's profitability. Although the business environment has remained weak in the fourth quarter, Poseidon remains confident in the quality of its products and in the longer term growth potential in the industry
The Company also announces that effective immediately Mr. A. Scott Dawson will assume the role of Interim President and Chief Executive Officer, Mr. Michaluk will assume the role of Interim Chief Financial Officer and Mr. Wiebe will assume the role of Chief Technology
Officer. Messrs. James McKee, Lyle Michaluk and Cliff Wiebe have resigned from the Board of Directors.