TSX-Venture: Tier 1
SEC Exemption No. 82-3378
RICHMOND, BC, April 5 /CNW/ - CON-SPACE Communications Ltd. (TSX-V: CCB),
(http://www.con-space.com), a world leader in specialized voice communication
products, today announced that it has concluded negotiations to acquire all of
the outstanding shares of Search Systems, Inc. ("Search Systems") of
Bakersfield, CA, a leading manufacturer and supplier of enhanced search and
inspection systems using video, sound and vibration technology.
CON-SPACE expects the combination of the two companies to increase both
sales and earnings to the benefit of its shareholders. The combined 2008
annual sales are expected to exceed $17M with annual earnings in excess of
"We are very pleased with this transaction," said CON-SPACE Chairman,
James L. Swanson. "The owners and management of Search Systems are to be
commended for having built such a fine company. Their products are
second-to-none and we look forward to carrying on their legacy with pride."
The acquisition of Search Systems is for a purchase price of
US$9.9 million plus adjustments for working capital and certain recent product
development expenses. The purchase price is payable in cash on closing,
subject to vendor take-back financing to the owners of US$1.5 million payable
with interest at 6% per annum over a 7-year term. The vendor financing is to
be secured by a charge on the assets of Search Systems, subject to senior
Financing for the acquisition includes a proposed loan from an
international company (the "Lender") of Cdn$6 million with a five year term
and interest at the rate of 18% per annum payable quarterly. Principal on the
loan is due at maturity and is subject to certain rights of prepayment. The
Lender is to receive warrants for 300,000 shares of CON-SPACE exercisable over
five years at a price of $1.00 per share during the first three years, $1.10
per share during the fourth year and $1.22 per share during the fifth year.
The loan is to be secured by all of the assets of CON-SPACE and its
subsidiaries subject to security with respect to bank credit facilities with
the Bank of Montreal.
As further financing for the acquisition, CON-SPACE is to complete a
private placement of 4,000,000 units totaling Cdn$4 million, including
1,500,000 units to the Lender. Each unit is priced at Cdn$1.00 per unit and
consists of one common share of CON-SPACE and one-quarter of one common share
purchase warrant, with each whole warrant exercisable into one common share on
payment of $1.00 per share if exercised during the first three years, $1.10
per share if exercised during the fourth year and $1.22 per share if exercised
in the fifth year.
The acquisition of Search Systems and the financings, which are to close
concurrently, are anticipated to be completed next week and are subject to
finalization of documentation and to regulatory approval.
About SEARCH SYSTEMS
Search Systems is a world leader in the design and manufacture of
technical search, surveillance and inspection systems. Its video/audio
systems, including the Searchcam 2000, Searchcam Patrol System, Under Vehicle
Inspection System, the Searchcam EntryLink plus the DELSAR Life Detector are
used around the world by search and rescue teams, law enforcement, the
military, customs inspection tactical teams and industrial inspection
CON-SPACE is recognized worldwide as the leading designer and
manufacturer of specialized voice communication equipment used by police,
fire, rescue teams, government agencies, militaries, municipalities and
general industry. CON-SPACE has distribution throughout North America, Great
Britain, Australia, parts of Asia, South America, and Europe. CON-SPACE also
supplies many other manufacturers with private labeled products.
As a combined organization, economies of scale can be achieved in the
design and engineering of new products, the sales efforts to foreign countries
and the use of both manufacturing facilities in the future development of
CON-SPACE's overall development and penetration into more market areas. "We
are both in the same industry, serving the same customers with similar but
different equipment and both companies are well known and respected for their
product lines. This acquisition just makes good sense," said Swanson, adding,
"We intend to retain the current management and use their knowledge and
technical abilities to continue the development of many new products."
This press release is available on CON-SPACE's official on-line investor
relations site for investor commentary, feedback and questions. Investors are
asked to visit http://www.agoracom.com and view the CON-SPACE Investor Contact
& Information Centre. Alternatively, investors are asked to e-mail all
questions and correspondence to CCB@Agoracom.com.
"Forward-looking" statements in this release involve risks and
uncertainties associated with, among others, economic, industry conditions,
technological development, and competition and should not be relied upon as
actual results may differ materially from those projected.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
For further information:
For further information: James L. Swanson, Chairman, CON-SPACE, Tel:
(800) 755-2528 or firstname.lastname@example.org; Investor Relations, AGORACOM Investor
Relations, http://www.agoracom.com or CCB@agoracom.com