Avcorp Announces New Bank Facility, Revised Terms for EDC Convertible Debenture and New Private Placement.Business Editors VANCOUVER, British Columbia--(BUSINESS WIRE)--Jan. 13, 2004 Avcorp Industries Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :AVP AVP arginine vasopressin. ) today announced continued progress in its refinancing Refinancing An extension and/or increase in amount of existing debt. initiatives with the closing of new agreements with the Bank of Montreal “BMO” redirects here. For the mathematics competition, see British Mathematical Olympiad. Bank of Montreal/Banque de Montréal (TSX: BMO, NYSE: BMO) is Canada's fourth largest bank[1], and is classified as a Domestic Chartered Bank (Schedule I). and with Export Development Canada Export Development Canada (EDC) is Canada's export credit agency and a Crown corporation that provides financing and risk management services to Canadian exporters and investors in up to 200 markets worldwide. (EDC EDC See: Export Development Corp. ). The Company has secured a new operating credit facility with the Bank of Montreal to replace the temporary arrangements under which it has operated for the past twelve months. The credit facility is secured by a General Security Agreement and by limited guarantees from EDC and from related parties. The new credit facility, for up to $10,000,000, will be used to repay approximately $5,500,000 of temporary working capital debt and to provide ongoing working capital. The Company has also concluded revised terms for an existing $5,000,000 convertible debenture Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. with EDC. The revised terms include: -- an option to pay interest accrued between July 31, 2002 and December 31, 2003 in shares and warrants instead of cash; -- quarterly interest payments commencing on March 31, 2004; and -- repayment of principal in sixteen equal installments commencing on December 31, 2005 and ending with a final payment on September 30, 2009. Subject to regulatory approval, the Company announces a private placement of 1,113,950 units at $0.58 per unit to exercise its option to pay the 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. of $646,091 on the EDC convertible debenture with shares and warrants. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant will entitle en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: EDC to purchase one common share at a price of $0.638 if exercised in 2004 or for $0.667 if exercised in 2005. The warrants expire on December 31, 2005. To date, the Company has closed on a $16,000,000 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, raised $4,500,000 of new equity in a private placement, renegotiated terms and reduced debt by over $15,000,000. This quarter, the Company expects to conclude all of the refinancing initiatives commenced last year with additional new equity from the exercise of outstanding warrants being used to partially repay a convertible debenture and other debt. The partial repayment of the convertible debenture by February 15, 2004 will trigger forgiveness of approximately $1,450,000 of debt and accrued interest. Operationally, the Company has continued to invest in productivity improvements and strategic outsourcing to reduce costs. These operational improvements, combined with the refinancing and projected revenue increases from previously announced new contracts, position the Company well for growth and profitability in 2004. 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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