OneRoof Energy, Inc. (“OneRoof”), a residential solar services provider and wholly-owned subsidiary of OneRoof Energy Group, Inc. (the “Company”) (TSX VENTURE:ON) announced today that it has entered into an agreement to sell certain of its direct and indirect interests in various residential solar project portfolios containing approximately 747 residential solar systems and related leases and power purchase agreements (the “Portfolios”) to Greenbacker Residential Solar LLC (“Greenbacker”), an unrelated third party, for an aggregate purchase price of US$8 million in cash (the “Transaction”). The Transaction was entered into as part of the Company’s previously-announced wind down process, which is ongoing. The closing of the Transaction is anticipated to occur in several tranches, subject to the satisfaction of various customary conditions precedent, including applicable TSX Venture Exchange approval and approval by the shareholders of the Company at a duly called shareholder meeting. There can be no assurance that the Transaction will be completed as proposed or at all.
Approximately US$1.8 million of the net proceeds of the Transaction will be used to repay principal and accrued interest on a loan from New Resource Bank (an unaffiliated lender), which is secured by one of the Portfolios. In addition, OneRoof expects that substantially all of the net proceeds from the Transaction will be used to pay project-related expenses, including relating to the completion of the development of certain solar projects contained within the Portfolios, other accrued payables, and the ongoing costs related to the Company’s wind down of its affairs. The Company does not anticipate that the Transaction nor any other transaction that the Company may enter into will generate sufficient funds to pay claims of creditors in full. As a result, there will not be sufficient proceeds for any recovery by the shareholders of OneRoof.
In January 2017, the Company announced that it was then in default under its head office lease for failure to pay rent. OneRoof has since entered into an amendment of such office lease to permit OneRoof to remain in its head office until March 31, 2017, for the payment of a total of US$173,150 (covering the months of December 2016 – March 2017), which is approximately half of the previous stated rent under the lease agreement. In addition, the landlord agreed to permit OneRoof to cancel the US$50,000 letter of credit that was previously in place in support of OneRoof’s obligations under the lease. The Company has substantially reduced its workforce, and expects that any office space needed after March 31, 2017 will be minimal.
The prior default under OneRoof’s head office lease also resulted in a default under the Company’s secured loan facilities, giving the secured lenders the right to accelerate and demand immediate payment of all outstanding balances, including principal and accrued interest, under such loans, totally approximately US$100 million in the aggregate. The agreement with the landlord described above does not cure the default under the secured loan facilities. The Company has not received any notice of acceleration under such secured loan facilities, however there can be no assurance that the lenders will not cause such indebtedness to be accelerated and immediately due and payable in full. The Company’s liabilities under the secured loan facilities greatly exceeds the value of its assets, and an acceleration of the secured loans could result in the foreclosure of all or substantially all of the Company’s assets.
