VANCOUVER: Avcorp Industries Inc. (“Avcorp”) (TSX: AVP) announced today that it has entered into an amended transaction with Panta Holdings B.V. (“Panta”). Avcorp and Panta have amended their Investment Agreement dated June 15, 2009, the original terms of which did not receive the approval of the Toronto Stock Exchange (“TSX”). Under the amended agreement, Panta has agreed to purchase 16,157,465 common shares of Avcorp at a price of C$0.15 per share for a total gross proceeds of C$2,423,620 (the “Panta Private Placement”). The proceeds from the Panta Private Placement will be used as working capital and to repay a bridge loan of approximately C$1.5 million advanced by Panta on June 15, 2009 and a shareholder loan owing to Michael Scholz, a former director of the Company, in the principal amount of C$400,000. The shares issuable to Panta under the Panta Private Placement represent 50% of the current outstanding common shares of Avcorp. On closing, Panta will own approximately 33.3% of the outstanding common shares of Avcorp.
The TSX has approved the Panta Private Placement, subject to customary conditions. As the private placement will result in the issue of listed securities in excess of 25% of the current issued and outstanding common share capital of Avcorp, the TSX has required as condition of its approval that shareholders of Avcorp approve the Panta Private Placement. To satisfy this condition, Avcorp has, as permitted under section 604(d) of the TSX Company Manual, obtained written consents in support of the Panta Private Placement and resulting change in control from persons who beneficially hold in excess of 50% of the issued and outstanding voting shares Avcorp. The Panta Private Placement, which still remains subject to a number of customary conditions, is scheduled to complete on or about July 17, 2009.
In support of Avcorp’s efforts to bolster its cash balances, Panta has also agreed to guarantee a rights offering of Avcorp to be undertaken immediately following the completion of the Panta Private Placement. Avcorp currently intends to issue to each shareholder the right to purchase two and one?half shares for every share held as of the record date for the issue of such rights. It is expected that the rights will permit the purchase of common shares of Avcorp at a price of C$0.06 per share, for total gross proceeds of approximately C$7.3 million. Panta will be paid a fee in rights of Avcorp equal to 10% of the gross number of rights issued under the rights offering, less the portion of rights attributable to shares already held by Panta. Each right issued to Panta as a fee will be exercisable at C$0.06 per share for additional potential proceeds of approximately C$500,000.
As an interim measure, Panta has also agreed to loan the Company C$4 million in tranches during the period up to the closing of the rights offering. Such loan will either be repaid from the proceeds of the rights offering or settled against the exercise of rights taken up by Panta.
Panta is a private investment vehicle, the principal of which is Mr. Jaap Rosen Jacobson. Mr. Jacobson, through Panta, was formerly the principal of VLM Airlines, a regional airline based in Europe, and has extensive knowledge of the manufacturing business in the aircraft industry. Given Panta’s industry experience, the directors determined that the proposed investment by Panta would enhance the prospect for the long-term financial stability of Avcorp. In making this determination, the directors also considered an unsolicited, conditional, proposal from a third party to acquire all outstanding shares of Avcorp. In considering this proposal and the Panta Private Placement, the Board made a determination that the Panta Private Placement was superior for long-term shareholder value.
Following the closing of the Panta Private Placement, Panta will have the right to nominate one person to the board of directors of Avcorp.
About Avcorp
Avcorp designs and builds major airframe structures for some of the world’s leading aircraft companies, including Boeing, Bombardier, and Cessna. With more than 50 years of experience, approximately 500 skilled employees and 354,000 square feet of facilities, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light-weight, strong, reliable structures.
MARK VAN ROOIJ
CHIEF EXECUTIVE OFFICER
Investor Relations Contact: Sandi DiPrimo 604-587-4938