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DEVELCON ELECTRONICS ANNOUNCES AGREEMENT

 SASKATOON, Saskatchewan, Jan. 4 /PRNewswire/ - Develcon Electronics Ltd. today announced that the company has reached agreement in principle with an employee-owned company headed by senior management of Develcon, Saskatchewan Economic Development Corporation (SEDCO) and another major creditor of the company.
 Under the terms of the agreement, the employee-owned company will acquire from SEDCO and the major creditor certain outstanding debt of Develcon. Develcon will eliminate $2.4 million of this debt through an issue of treasury shares to the employee-owned company on a private placement basis at $0.20 per share. The company has also agreed with SEDCO to enter into a sale/leaseback of its real estate for $600,000. The agreement provides that the proceeds of the sale will be used to reduce the debt of Develcon prior to its transfer to the employee-owned company.
 In addition, the employee-owned company has agreed to provide up to $200,000 in working capital to the company throughout 1993 in the form of debt convertible into common shares of Develcon at $0.20 per share. Upon closing of the transaction, the employee-owned company will control approximately 50 percent of the company. As a result of the transactions contemplated by the refinancing, long-term debt will be reduced from $4.4 million to approximately $1.4 million repayable over a period of six years, interest free until Jan. 1, 1996, and bearing interest thereafter at 8 percent per annum.
 The agreement in principle is subject to the approval of the Cabinet of the Province of Saskatchewan and of all required regulatory authorities as well as finalization of documentation.
 Bill Vancoughnett, president of Develcon, stated that this cooperative effort between the employee group and SEDCO demonstrates their combined commitment to the future of the company and an underlying confidence in the current corporate direction.
 The company estimates, that, subject to the required approvals, the closing conditions should be met on or before its annual shareholders' meeting in February 1993.
 Develcon Electronics Ltd. is a leading designer, manufacturer and supplier of high-performance information internetworking systems and data communications equipment to major industrials, medical organizations, aerospace installations, utilities, and government and education institutions throughout Canada, the United States, Europe and the Pacific Rim. The company specializes in Local Area Network Internetworking systems required by businesses, including Ethernet and Token Ring LAN Bridges, and a family of compatible communications servers. Shares of Develcon Electronics Ltd. are listed on the Toronto Stock Exchange under the symbol DLC.
 -0- 1/4/93
 /CONTACT: W.D. Vancoughnett, president and chief financial officer of Develcon Electronics Ltd., 306-933-3300/


CO: Develcon Electronics Ltd. ST: Saskatchewan IN: CPR SU: TNM

WB -- NY055 -- 1342 01/04/93 13:28 EST
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Date:Jan 4, 1993
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