VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 1, 2013) - Matrix Asset Management Inc. (TSX:MTA) ("Matrix" or the "Company") and its subsidiary, GrowthWorks WV Management Ltd. ("GWWV"), announced today that the GrowthWorks Canadian Fund Ltd. ("Canadian Fund") has obtained an order for creditor protection under the Companies' Creditors Arrangement Act ("CCAA") and delivered notice to GWWV purporting to terminate the Management Agreement between Canadian Fund and GWWV (the "Management Agreement"), effective immediately. The termination notice was delivered prior to Canadian Fund obtaining the order for a court-supervised process under the CCAA. In Canadian Fund's CCAA filing, GWWV and GrowthWorks Capital Ltd. ("GWC") were named as "critical suppliers" of services to Canadian Fund. GWWV and GWC's status as critical suppliers and the terms on which GWWV and/or GWC would provide any services to Canadian Fund will be reviewed at a subsequent court hearing.

Neither Matrix nor GWWV had prior notice of Canadian Fund's intention to deliver a termination notice. Matrix and GWWV strongly disagree with Canadian Fund's position. While the Management Agreement contemplates that all disputes between Canadian Fund and GWWV are to be referred to binding arbitration, the CCAA order secured by Canadian Fund may limit GWWV's ability to pursue binding arbitration with respect to the termination of the Management Agreement and any other matters in dispute. The termination of the Management Agreement would have a material adverse effect on Matrix's operating revenues and results of operations.

Canadian Fund has reserved the right to claim damages in respect of any breaches of the Management Agreement by GWWV. There can be no assurance as to the outcome of claims made by Canadian Fund with respect to such breaches, if any, or by GWWV with respect to what Matrix believes is a wrongful termination of the Management Agreement. Further, there can be no assurance as to the outcome of the CCAA proceedings initiated by Canadian Fund and the impact of such proceedings on the Management Agreement and GWWV's ability to pursue and, if successful, recover amounts that GWWV may otherwise be entitled to.

GrowthWorks Capital Obtains $5 million Debt Financing

Matrix also announced today that it has entered into financing arrangements for loan financing of up to $5 million (the "Debt") with an independent Canadian lender (the "Lender"). This loan facility repays and replaces the loan facility between the Lender and Matrix announced on August 8, 2013. The Debt is to be advanced over two tranches of $4 million and $1 million. The first tranche has been advanced to GWC. The remaining tranche will be advanced to GWC, at its option, upon satisfactory due diligence by the Lender at the time of advance. The right to a second tranche will terminate on December 31, 2013.

The Debt is secured by the assets of GWC, a guarantee from and a charge over the assets of Matrix and certain of its non-registrant subsidiaries and a secured guarantee from David Levi, President of Matrix. The Debt shall be repaid over 60 months from the date of the advance of each tranche. The Debt bears interest at a rate of 12% annually, payable quarterly. An annual processing fee of 6.5% of the principal amount of the Debt will also be payable quarterly. An initial structuring fee of 3.5% of the principal of the Debt advanced is also payable to the Lender, less the amount previously paid by Matrix to the Lender. The Lender would also be entitled to receive up to 10% of incentive participation payments, if any, received by GWC or any affiliate of GWC in respect of managed venture capital portfolio assets, excluding up to 25% of the payments which may be distributed by GWC or its affiliates to employees as bonuses. Any unpaid balance of the Debt may be prepaid after 40% of the Debt has been repaid.

A third party related to the Lender ("Consultant") entered into a five-year service agreement with GWC ("Services Agreement") whereby it will assist GWC and affiliates of GWC as managers for various venture capital funds to source, oversee, negotiate and close sales of certain underperforming fund portfolio assets. Under the Services Agreement, the Consultant will be paid an average consulting fee of 1.8% of the net asset value of those portfolio assets (valued at present at approximately $23 million). The Services Agreement also provides that GWC will pay the Consultant a success fee of 20.0% of the gross proceeds of the sale of any of the portfolio assets, to an aggregate success fee of $1 million for all assets sold. The Services Agreement can be terminated by Matrix at any time subject to the repayment of the Debt owing to the Lender and subject to a payment to the Consultant of consulting fees and success fees otherwise applicable in the 12 months following termination. The applicable managed venture capital funds are not a party to the Services Agreement and will not be responsible for paying any fees to the Consultant. This Services Agreement replaces the previous services agreement entered into between the Consultant and Matrix.

While GWC and the Lender have entered into binding legal agreements providing for a further $1 million loan advance, there can be no assurance that the subsequent loan tranche will be completed on the terms proposed or at all. Likewise, while GWC and the Consultant have entered into the Services Agreement providing for future services to encourage fund portfolio asset sales, there can be no assurance that such fund portfolio asset sales will occur.

With the advance of the $4 million facility, GWC believes that it has rectified its previously announced regulatory working capital deficiency but securities regulators have not finalized their review of the matter and any confirmation of that rectification is still pending. There can be no assurance that the securities regulators will agree with management's determination or when such a final determination will occur. A failure to rectify GWC's working capital deficiency may result in the suspension of GWC's securities registrations. If these registrations are suspended, GWC will no longer hold the registrations necessary to provide fund and portfolio management services, eliminating Matrix's ability to continue operations and generate operating revenues. This would have a material adverse effect on Matrix's financial position and future operating results. GWC also undertakes portfolio and investment fund management activities for Working Opportunity Fund (EVCC) Ltd., GrowthWorks Commercialization Fund Ltd. and GrowthWorks Atlantic Venture Fund Ltd. There can be no assurance as to whether GWC will maintain the securities registrations needed to continue to provide such services.

Forward-looking statements: Certain statements in this press release are forward-looking statements, including statements about the termination of the Management Agreement, a further advance on account of the Debt, the ability of GWC to comply with regulatory working capital requirements to the satisfaction of securities regulators and in turn to continue to provide portfolio and investment fund management services. Forward-looking statements are based on beliefs and assumptions at the time the statements are made, including beliefs and assumptions about the satisfaction of conditions to a further advance on account of the Debt, the status of GWC's regulatory working capital position, the outcome of ongoing discussions with regulatory authorities regarding GWC's working capital position and other regulatory requirements and the outcome of discussions and potential claims by and against GWWV in respect of the Management Agreement and the possible outcomes of the CCAA proceedings initiated by Canadian Fund. While management considers these beliefs and assumptions to be reasonable based on information currently available to it, they are subject to numerous risks and uncertainties and no assurance can be given that such beliefs and assumptions will prove to be correct. Accordingly, actual results may differ significantly from those expressed or implied by forward-looking statements due to many factors including, but not limited to, risks associated with GWC's working capital deficiency and its ability to maintain compliance with working capital and other regulatory requirements and Matrix's ability to continue to operate as a going concern, market and other risks associated with completing the second $1 million tranche under the Debt transaction, risks associated with possible claims under the Management Agreement and risks and uncertainties associated with the possible outcomes of the CCAA proceedings initiated by Canadian Fund. Many of these risks are beyond the control of Matrix. Other than as specifically required by law, Matrix undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results or otherwise.

Contact Information:

Matrix Asset Management Inc. / GrowthWorks Capital Ltd.
David Levi
President & CEO
(604) 895-7274 or (416) 934-7700