Avcorp Announces Closing of Financial Restructuring Initiatives.Business Editors VANCOUVER, British Columbia--(BUSINESS WIRE)--Aug. 12, 2003 Avcorp Industries Inc. (the "Company") is pleased to announce that it has reached several significant milestones in its financial restructuring program initiated in the fall of 2002. The Company has closed its Private Placement for 15,000,000 units at a price of $0.30 per unit for gross proceeds of $4.5 million before expenses and commissions. Each unit comprising one common share and one share purchase warrant. Two share purchase warrants will entitle the holder to subscribe for one additional common share at $0.35 per share for a six-month period from August 6, 2003. Certain insiders, directors and officers of the Company participated in the private placement, acquiring approximately 44% of the Units offered. The proceeds will be used to reduce bank debt by approximately $2.5 million and the balance for general working capital purposes. On July 17, 2003, the Company closed the sale and leaseback sale and leaseback The sale of a fixed asset that is then leased by the former owner from the new owner. A sale and leaseback permits a firm to withdraw its equity in an asset without giving up use of the asset. Also called leaseback. of its premises located at 10025 River Way, Delta, British Columbia Delta is a district municipality in British Columbia, Canada. Located south of Richmond, it is bordered by the Fraser River to the north, the United States (Point Roberts, Washington) to the south and the city of Surrey to the east. . Pursuant to the terms of the sale between the Company and the real estate division of a major Canadian insurance corporation, the Company sold its premises for $16,000,000, of which $1,500,000 represents prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. rent
relating to relating to relate prep → concernantrelating to relate prep → bezüglich +gen, mit Bezug auf +acc the 15-year leaseback of the premises. The balance of the proceeds was applied towards the discharge of mortgages on the Company's premises, commissions, reduction of current bank debt and for general working capital purposes. In connection with the sale and leaseback of the Company's premises, the Company negotiated the forgiveness of $3,300,000 of principal indebtedness and any accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. to a secured lender, which is expected to close this quarter. The Company has negotiated, and expects to close this quarter, a principal reduction and forgiveness of accrued interest totaling $1,458,000 with a related party unsecured lender. The balance of the indebtedness to the lender is, by agreement, to be repaid in full on or before December 31, 2003. As consideration of the principal reduction and interest forgiveness, the Company has agreed to issue 500,000 share purchase warrants exercisable at a price of $0.35 per share for a period of six months from the date of issue of the warrants, which has been conditionally approved by the regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . The Company is also currently negotiating with various lenders for the purposes of securing an operating line of credit. Currently, the Company has outstanding credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities with a Canadian chartered bank Chartered Bank A financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, but usually a chartered bank in operation has obtained government permission of approximately $3,000,000, which is to be repaid on or before September 30, 2003 or upon the finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of an operating line of credit. The transactions above significantly strengthen the Company's balance sheet and capital resources and will reduce operating costs operating costs npl → gastos mpl operacionales . The Company's 2003 third and fourth quarter financial statements will reflect the positive effects of the financial restructuring. About Avcorp Industries Inc. Avcorp Industries Inc. is a Canadian aerospace industry manufacturer. The Company is a single-source supplier for engineering design, manufacture and assembly of subassemblies and complex major structures for aircraft manufacturers. For more information, please visit www.avcorp.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release should be read in conjunction with the Company's audited financial statements contained in the 2002 Annual Report and with the quarterly financial statements and accompanying notes filed with Sedar (www.sedar.com). Certain statements in this release and other oral and written statements made by the Company from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or project revenues, income, returns or other financial measures. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following; (a) the extent to which the Company is able to achieve savings from its restructuring plans; (b) uncertainty in estimating the amount and timing of restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and related costs; (c) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (d) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (e) government funding and program approvals affecting products being developed or sold under government programs; (f) cost and delivery performance under various program and development contracts; (g) the adequacy of cost estimates for various customer care programs including servicing warranties; (h) the ability to control costs and successful implementation of various cost reduction programs; (I) the timing of certifications of new aircraft products; (j) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (k) changes in aircraft delivery schedules or cancellation of orders; (l) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (m) the availability and cost of insurance; (n) pension plan income falling below current forecasts; (o) the Company's ability to maintain portfolio credit quality; (p) the Company's access to debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay at competitive rates; and (q) uncertainty in estimating contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. and establishing reserves tailored to address such contingencies. JOHN H. NICHOLSON, President and Chief Executive Officer |
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