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GKI COMPLETES FUNDING

 GKI COMPLETES FUNDING
 ROCKVILLE, Md., Oct. 29 /PRNewswire/ -- General Kinetics


Incorporated (GKI) (AMEX: GKI), a designer, producer and marketer of high-end, digital secure facsimile equipment, plastic sorting and food testing equipment and precision enclosures headquartered in Rockville, makes the following announcements:
 As previously announced, GKI entered into a letter agreement in early October with Chichester Foundation, as representative of a Swiss investor, providing for an infusion of new capital into the company. GKI has now executed a definitive agreement with the investor which is Gutzwiller and Partner A.G., a Swiss investment bank. Pending the closing of the transaction and issuance of the shares and debentures, as further detailed below, Gutzwiller has released funding of approximately $2.25 million to the company.
 The transaction involves GKI issuing 2.6 million shares of its common stock at a per share price of $1.375 per share, which represents the closing price of the stock on the trading day preceding execution of the letter agreement, for an aggregate gross purchase price of $3,575,000. The proceeds to the company, net of fees and commissions, will be $3,000,000.
 In addition, Gutzwiller will purchase 10-year subordinated convertible debentures in the aggregate face amount of $2,750,000. The debentures bear interest at 1 percent per year and will be sold for 72.7 percent of their face amount, i.e. $2,000,000. The debentures are convertible, at a conversion price of $1.375 per share, into 2 million shares. GKI will also issue 300,000 shares as a finder's fee to a non-U.S. entity that assisted in locating the investor group.
 Due to the foreign nationality of Gutzwiller, as previously announced, GKI will need to take steps to maintain its facility security clearances under the Department of Defense regulations. In addition, GKI and Gutzwiller anticipate providing notice to the Committee on Foreign Investment in the United States under the Regulations Pertaining to Mergers, Acquisitions and Takeovers by Foreign Persons and taking any other necessary steps to comply with any applicable laws governing foreign investment in the United States.
 GKI will apply a portion of the proceeds of the offering to immediately reduce the borrowings under the revolving credit line with its principal lender by approximately $475,000. This reduction will return the company to compliance with its borrowing base restrictions and will eliminate the over-advance amount which is permitted by the amended loan agreement. Accordingly, the interest rate will be reduced from prime plus 6 percent to prime plus 3 percent. GKI intends to begin negotiations with its principal lender to restructure its credit facility.
 It is anticipated this $5 million investment will permit the company to reduce its bank debt, resume normal production and shipping schedules and reduce its accounts payable to trade creditors on mutually acceptable terms.
 -0- 10/29/92
 /CONTACT: David A. Shaw of General Kinetics Incorporated, 301-881-2044/
 (GKI) CO: General Kinetics Incorporated ST: Maryland IN: CPR FIN SU:


DC -- DC019 -- 6693 10/29/92 15:02 EST
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Publication:PR Newswire
Date:Oct 29, 1992
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