Vancouver, BC, November 8, 2005--Avcorp Industries Inc. announces the completion of a $3.4 million private placement and the addition of a new director.
Close of Private Placement
Further to its news releases of August 29 and October 25, 2005, on October 27, 2005, the Company closed a previously-announced private placement, issuing 3,750,034 units at a price of $0.90 per unit, for gross proceeds to the Company of $3,375,030. Insiders comprising Working Opportunity Fund (EVCC) Ltd., Michael Scholz and Earnest Beaudin collectively purchased 1,244,444 units of the financing. Each unit consists of one common share and one-half of one non-transferable common share purchase warrant. One whole common share purchase warrant entitles the holder thereof to purchase one common share of the Company at the price of $1.00 per share until October 27, 2006. All shares issued pursuant to this private placement together with any shares issuable on the exercise of the warrants have a hold period expiring February 28, 2006. A cash finder's fee is payable, only with respect to arms-length placees. Proceeds of the offering will be used for general working capital purposes.
In accordance with Toronto Stock Exchange (TSX) policy, this placement required the approval of a majority of the holders of the voting shares of Avcorp to be obtained at a shareholders meeting. In certain circumstances, the TSX permits shareholder approval to be obtained by written consent, and not at a meeting. The TSX has allowed Avcorp to proceed by way of written majority consent, which the Company has obtained.
As a result of the private placement, the Working Opportunity Fund (EVCC) Ltd. (WOF) now owns an aggregate of 3,873,928 common shares of Avcorp, representing approximately 17.3% of the issued and outstanding common shares of Avcorp, following completion of the private placement. WOF also holds warrants to purchase 55,555 common shares at a price of $1.50 per common share until February 5, 2006, 400,000 warrants to purchase 200,000 common shares at a price of $0.90 per common share until January 4, 2006, the above mentioned warrants to purchase 222,222 common shares at a price of $1.00 per common share until October 27, 2006, an 8.75% convertible debenture in the principal amount of $1,350,000 dated August 18, 2004 and a secured non-convertible promissory note dated February 27, 2004 for $315,000. In addition, options to purchase 50,000 common shares at a price of $1.86 per common share until November 20, 2008 are held on behalf of WOF. Assuming the exercise of these warrants and options and the conversion of the convertible debenture, WOF would hold 5,044,562 common shares, representing approximately 21.4% of the issued and outstanding common shares of Avcorp. WOF has acquired the units for investment purposes only. Although it is not anticipated at this time, WOF may make further purchases of securities of Avcorp for investment purposes only. Working Opportunity Fund (EVCC) Ltd. is a venture capital fund located at Suite 2600 - 1055 West Georgia Street, PO Box 11170, Vancouver, British Columbia, V6E 3R5. GrowthWorks Capital Ltd. is the manager of Working Opportunity Fund (EVCC) Ltd.
As a result of the private placement, Michael Scholz now owns an aggregate of 3,203,632 common shares of Avcorp, representing approximately 14.3% of the issued and outstanding common shares of Avcorp, following completion of the private placement.
New Director
Chairman Michael Scholz is pleased to announce the appointment of Mr. Kees de Koning to the Company's Board of Directors and to its Executive Committee. Mr. de Koning has extensive knowledge and experience in the aerospace industry, serving until recently as president and CEO of Stork Aerospace Industries in The Netherlands. Mr. de Koning has a Masters degree in Aerospace Engineering from Delft University and served or has served on many boards and advisory committees in aerospace, engineering and information technology. The Avcorp Board of Directors welcomes Mr. de Koning's expertise to assist the Company in meeting or exceeding its objectives.
About Avcorp
Avcorp Industries Inc. designs and builds major airframe structures for some of the world's most respected aircraft companies, including Bombardier, Boeing and Cessna. With over 40 years of experience, more than 580 skilled employees and a 300,000 square foot facility near Vancouver, Canada, the company's depth and breadth of capabilities are unique in the aerospace industry for a company of its size. Avcorp is a Canadian public company traded on the Toronto Stock Exchange. More information is available at www.avcorp.com.
Forward-Looking Statements
This release should be read in conjunction with the Company's unaudited financial statements contained in the Company's 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 projected 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 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; (o) the Company's ability to maintain portfolio credit quality; (p) the Company's access to debt financing at competitive rates; and (q) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.
For further information
Sheryl Brecknell, Investor Relations, (604) 587-4921