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Avcorp Announces Private Placement
Tuesday, March 2, 2010
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Vancouver, BC, March 2, 2010--(T-Net)--Avcorp Industries Inc. (TSX: AVP) announced that it has completed a private placement of 17,773,211 common shares at $0.055 per share for gross proceeds of approximately $978,000.
Subscribers in the private placement are Panta Holdings B.V. (“Panta”), which has subscribed for 15,995,890 common shares through a wholly-owned subsidiary, and Working Opportunity Fund (EVCC) Ltd. (“WOF”), which has subscribed for 1,777,321 common shares. The common shares issued under the private placement are subject to a restriction on resale for a period of four months and one day from the date of issue, in accordance with applicable Canadian securities laws.
Before completion of the private placement, Panta and WOF held 72,318,286 and 17,964,157 common shares, respectively, representing approximately 40.7% and 10.1% of Avcorp's outstanding shares, respectively. After completion of the private placement, Panta and WOF hold 88,314,176 and 19,741,478 common shares, respectively, representing approximately 45.2% and 10.1% of Avcorp's outstanding shares, respectively.
The proceeds from the private placement will be used for working capital purposes, and to fund tooling and equipment. As stated in its rights offering prospectus filed in August 2009, the Company has revised its operating plans as a result of a forecasted reduction in revenues, primarily as a result of the market deferral of business jet deliveries. The Company forecasted its operating and financing requirements for 2010 would exceed the availability of its operating lines of credit, and that it would continue to seek to obtain additional debt financing to increase the likelihood that it will have liquidity in excess of forecasted requirements. The Company expects that it will continue to seek to raise additional capital in 2010.
This private placement constitutes a “related party transaction” as defined in Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions (“MI 61-101”), as Panta and WOF are both “related parties” under MI 61-101 by virtue of their significant share ownership positions. However, the transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the common shares issued to Panta and WOF, nor the fair market value of the consideration for the transaction, exceeded 25% of Avcorp's market capitalization, as per section 5.5 and 5.7 of MI 61-101. A material change report in respect of this transaction was not filed at least 21 days in advance of the closing of this transaction. Avcorp believes a shorter period between this disclosure and the closing of these transactions is reasonable, in light of its need to ensure it has sufficient working capital to properly manage and operate its business.. The board of directors of Avcorp unanimously approved the transactions, with Jaap Rosen Jacobson, a director of Avcorp and an insider of Panta, and David Levi, a director of Avcorp and an insider of WOF, abstaining from voting.
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, 483 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. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).
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