GrowthWorks Reveals Undisclosed Coercive Terms in Latest VenGrowth/Covington Pact

TORONTO, ONTARIO--(Marketwire - June 29, 2011) - GrowthWorks Canadian Fund Ltd. ("GrowthWorks") today raised more concerns about the VenGrowth Funds Board and its efforts to find a suitor for the $300 million of VenGrowth Funds assets. The latest concerns surround proposed undisclosed coercive and discriminatory redemption conditions for VenGrowth Class A shareholders in the VenGrowth Funds Board's latest proposal (the "Second Covington Proposal" or "Transaction" ) to merge the VenGrowth Funds into Covington Fund II Inc. ("Covington").

According to a signed letter agreement provided to the Ontario Securities Commission on June 1 but not publicly disclosed, Class A shareholders of the three VenGrowth Funds that have suspended share redemptions will get the benefit of:

• a discounted redemption opportunity on closing; and,
• discount free redemption opportunities after closing (subject to a limit of 15% of their shares per year for the first four years following closing, with no restrictions after four years);

"should they vote in favour of the Transaction".

The letter agreement, which is stated to be binding on the VenGrowth Funds and Covington, goes on to provide that for a shareholder to exercise the discounted redemption option at closing, "he or she will be required to vote in favour of the Transaction." These conditions were not disclosed in the news release announcing the transaction or in the more recent news release announcing a lower redemption discount. GrowthWorks believes that this is yet further evidence of the lack of transparency stemming from the VenGrowth Funds Board and its Special Committee.

GrowthWorks believes that tying access to these limited redemption options to how a particular VenGrowth shareholder votes on the Second Covington Transaction is coercive, discriminatory and not in keeping with the fundamental principle of equal treatment of shareholders afforded under Canadian securities laws. It has written to the Ontario Securities Commission to bring this issue to their attention.

"We think this is unfair," stated David Levi, CEO of GrowthWorks. "The VenGrowth Special Committee knows that only a small proportion of shareholders are expected to vote at these shareholder meetings yet they have agreed with Covington that those who do not vote or vote against their proposal must essentially wait four years to redeem their shares. This is not the right way to treat these shareholders, who have already suffered through losses and illiquidity. This condition would likely reduce redemptions and increase fees for the VenGrowth and Covington managers. While this may be good for the managers, we think it is unfair to shareholders of the VenGrowth Funds."

David Levi also commented, "When the VenGrowth Funds Board announced the first Covington proposal, they failed to disclose the over $28 million in termination and other fees to be paid to the VenGrowth managers. This time they have failed to disclose a key redemption condition that if allowed to stand would disenfranchise a large proportion of suspended fund shareholders."

GrowthWorks expects to soon announce details of a new merger proposal that is expected to be superior to the Second Covington Proposal and remains deeply committed to improving the situation for VenGrowth Shareholders. This guiding principle has not changed since GrowthWorks launched its efforts to merge with the VenGrowth Funds in November 2010. GrowthWorks urges Class A shareholders of the VenGrowth Funds to wait for further announcements from GrowthWorks before making any decision regarding the Second Covington Proposal. David Levi went on to comment, "I can assure VenGrowth Funds Class A shareholders and their investment advisors that redemption options under a GrowthWorks proposal will continue to be available to all Class A shareholders, not just those who vote in favour of a GrowthWorks merger."

THIS PRESS RELEASE DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR OR AGAINST ANY PROPOSED OR POTENTIAL TRANSACTION OR IN RESPECT OF ANY MEETING OF SHAREHOLDERS. ANY SUCH SOLICITATION BY GROWTHWORKS WILL ONLY BE MADE IN ACCORDANCE WITH APPLICABLE LAWS.

There can be no assurance that GrowthWorks will deliver an alternative merger proposal that is superior to the Second Covington Proposal or, if it does, that the alternative merger proposal will be completed on the basis proposed or at all. Any alternative merger proposal will be subject to conditions similar to those outlined in the original GrowthWorks Proposal, including the need to secure shareholder and regulatory approvals for the merger. Commissions, trailing commissions, management fees and expenses all may be associated with investment fund purchases. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.