Ridgeline comments on GEM lawsuit

CALGARY, AB and SCOTTSDALE, AZ, May 20, 2013 /CNW/ - Ridgeline Energy Services Inc. ("Ridgeline" or the "Company") (TSXV: RLE, OTCQX: RGDEF, FSE: RL7) a technology driven company operating in the waste water industry provides comments on the recently filed lawsuit by Global Emerging Markets NA Inc. (GEM).

Ridgeline stock has been under considerable pressure due to a number of rumors and speculation in the market regarding the GEM lawsuit.  Following are the Company's comments on this legal matter.

Ridgeline recently announced (April 15^th, 2013) the acquisition of Changing World Technologies, L.P., a Delaware limited partnership ("CWT LP").  On May 1^ST, 2013 GEM announced that it had filed a lawsuit against Ridgeline for $27 million. Given the Company's strategy to acquire assets where its unique technology and knowhow can add considerable value, it is not uncommon in the U.S. to encounter legal disputes among minority legacy shareholders of an entity being acquired.  As it relates to CWT, the majority owners of the facility were sued by their minority shareholder, and Ridgeline was named in this action.  Ridgeline has acted properly in its management and acquisition of CWT LP. The Company and its attorneys are confident that GEM's lawsuit is frivolous and that their claims will be dismissed early in the litigation.

We are aware and concerned that the minority shareholder (GEM) issued a misleading and inflammatory press release and opted to try their case in the press thus pressuring our stock price rather than relying on presenting the facts to a Judge, who has already expressed doubts about the merits of their case.

Ridgeline's first goal will be to move for a dismissal of all claims. As this is an active legal matter, we are limited in what we may disclose. However, Ridgeline's responses to the allegations in the lawsuit will become a matter of public record in due course, and we believe it will become clear to everyone that the actions that GEM took were improper, at best and that Ridgeline acted appropriately.

It is very important to point out that this litigation actually began in March of this year before Ridgeline was included as a party, when GEM attempted to persuade the New York State court to block the acquisition of CWT LP by Ridgeline. At that time, the Honorable Shirley Werner Kornreich presiding over the case denied GEM's attempts to block or delay the acquisition and expressed skepticism that GEM would succeed on its claims in the lawsuit because there was evidence that GEM itself had breached its agreements.¹ Additionally, the Judge noted that GEM did not have clear and convincing evidence that would allow it to succeed in its case. All of the relief GEM sought was denied^2&3.

Indeed, GEM failed to comply with its contractual obligations to provide funding to operate CWT properly. As a result of GEM's failure to meet and breach of its funding obligations, CWT's business and Ridgeline's was severely constrained and put at substantial financial risk. The transaction that was ultimately completed with Ridgeline provided what was needed for the business to operate while enabling Ridgeline to gain full control of CWT.

To reaffirm, this legal matter will not distract the Company from its goals, and we remain 100% focused on the continued growth of the business. The integration of CWT has gone extremely well, and we have once again demonstrated our ability to acquire an underperforming asset and dramatically improve both the revenue and cash flow. The business remains on track, we have a solid and sustainable balance sheet and our growth potential has never been better.  The integration of Santa Fe Springs ("SFS") and Carthage (formerly "CWT") have exceeded our expectations.  Combined revenues from SFS and Carthage have increased from $15 million to a $40 million annual run rate and are still increasing. As we have discussed in the past, we have identified other similar assets and look forward to replicating this strategy across North America.

Excerpts from Transcripts dated March 13, 2013 - Honorable Shirley Werner Kornreich presiding.

1. "[T]here's very good evidence here that there was a breach of the subscription agreement [by GEM]" Source: May 13 Proceeding in New York Supreme Court, Page 19, lines 6-7
   
   
2. Page 25, lines 7-9: "I don't think there's clear and convincing evidence that you can possibly be successful on the breach of contract [claim]."
   
   
3. "I do not believe in this case, there's clear and convincing evidence that the plaintiff Gem Holdco, LLC will succeed on its case."  Source: May 13 Proceeding in New York Supreme Court, Page 38, lines 15-17

ON BEHALF OF THE BOARD OF DIRECTORS

"Dennis Danzik "

Dennis Danzik
CEO

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SOURCE Ridgeline Energy Services Inc.

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