The closing of the deal was subject to a number of conditions, including the completion by Carmanah of a public offering of its securities in an amount of not less than US$15.0 million.
On October 25, 2010, a corporation holding approximately 9.5% of Carmanah's issued and outstanding common shares requested a special meeting of Carmanah’s shareholders. The meeting was to consider an ordinary resolution directing Carmanah not to complete the proposed financing to secure the Lightech deal. Failing that, the resolution would seek to remove Carmanah’s board of directors.
Because of the uncertainty surrounding this resolution, Carmanah has concluded that it is incapable of satisfying the financing condition by December 31, 2010, and has therefore terminated the agreement with Lightech.
“The decision to terminate the Lightech agreement was a very difficult one, but after due deliberation, the Board of Directors determined that it was the only decision that could be made in light of the fact that the financing condition is incapable of being fulfilled by December 31, 2010,” stated Rob Cruickshank, Chairman of Carmanah.
However, Lightech has stated that it believes that Carmanah's stated reasons for terminating its Merger Agreement with Lightech are entirely without merit. Lightech also says that Carmanah has failed to discharge its obligations under the Merger Agreement.
“Carmanah has missed an opportunity to grow its business and create value through the merger with Lightech,” said David Schreiber, Chairman and CEO of Lightech. “Lightech continues to show strong and profitable growth in its core OEM market in Europe and North America, providing state-of-the-art power supplies for the rapidly growing LED lighting and signage markets, with focus on quality dimming and energy efficiency. We have confidence in our excellent team and strong customer relationships and are very excited about ground-breaking products coming to market over the next few months.
Carmanah’s sales for the quarter ended September 30 were $8.6 million, down $0.9 million from the same period last year.
Third quarter Signals & Illumination sales increased by $0.4 million over the third quarter of the prior year, reaching $5.78 million, mainly due to a significant increase in marine product sales.
Within the Signals & Illumination segment, sales of EverGEN™ illumination outdoor area lighting products were $0.7 million for the quarter, down $0.5 million from the second quarter of 2010. Carmanah attributed this decline in sales to the “lumpiness” of orders for this product line, but said that “trends are suggesting some recovery towards year end.”