Kingsmill Capital Ventures II Inc. announces agreement in principle



    BURLINGTON, ON, Aug. 15 /CNW/ - Kingsmill Capital Ventures II Inc.
("KII") (KII.P-TSX Venture), a Capital Pool Company, is very pleased to
announce that it has entered into an agreement in principle with Innovative
Composites Inc ("ICI") on August 7, 2008 to acquire (the "Acquisition") all of
the issued and outstanding securities of ICI in exchange for securities of
KII. This transaction is intended to be the qualifying transaction (the
"Qualifying Transaction") of KII as such term is defined in Policy 2.4 of the
Corporate Finance Manual of the TSX Venture Exchange (the "Exchange").

    About ICI

    ICI is an Ontario corporation with a registered head office at 100 King
Street West, Suite 5700, Toronto, ON M5X 1C7. ICI was formed by Terry Ball and
a group of executives having extensive experience in the plastics and
automotive industries. ICI's manufacturing assets are located in Michigan,
USA.
    ICI is seeking to become the leader in the supply of lightweight, cost
effective, structural products to equipment manufacturers, and intends to do
so by leading the composites industry in the design, engineering and
manufacturing of patented products featuring continuous fiber reinforced
thermoplastics ("FRT") technology. Management believes that ICI's structural
products, featuring FRT, offer a distinct competitive advantage over existing
structural products, and is seeking to place its products in the marine,
construction, automotive, military, recreational vehicles, equine and
furniture industries.
    On June 23, 2008, ICI executed a letter of intent and is currently in the
process of executing a formal purchase agreement to acquire all of the assets
of Lakeshore Diversified Products Inc. ("LDP"). This acquisition is intended
to close concurrently with and form a part of the Qualifying Transaction.
Despite the fact that LDP is operating at less than 50% of its capacity, it
has been producing a positive EBITDA. With ICI's experience and network of
contacts in the automotive industry, management intends to fill this capacity
and thereby achieve increased profits and improved margins. In addition, LDP
is currently is in the process of installing three high tonnage molding
machines, which it has acquired at a significant discount to market and which
will broaden the company's manufacturing and production capabilities. LDP is a
Michigan corporation with a 70,000 square foot injection molding and assembly
manufacturing facility in Spring Lake, Michigan, providing ample space and
plant machinery to provide for the planned growth of the resulting issuer.
    ICI, to date, can be best characterized as a development stage company,
and accordingly, sales revenues have been limited and the company has incurred
operating losses since inception. For the year ended December 31, 2007, ICI's
manufacturing operations generated revenues of $5,000 and incurred losses of
$800,000 primarily due to investment into specialized material and product
applications. (All financial numbers for ICI are unaudited.) As of December
31, 2007 there were assets of $442,300 and liabilities of $833,600 in respect
of these operations. For the year ended December 31, 2007, LDP had revenues of
$6.3 million and EBITDA of $309,000. As of December 31, 2007, LDP had total
assets of $3.35 million and total liabilities of $3.0 million. (All financial
numbers for LDP are unaudited.)
    Terry Ball of Michigan, U.S.A., is the President and CEO of ICI, and
beneficially controls 11.4% of ICI. Mr. Ball has worked for over 25 years in
the auto industry, including 18 years at Magna International of Toronto,
Ontario. Terry Ball brings extensive experience in plastics, composites, and
manufacturing, starting out as a tool and die maker to become President of
Decoma Exterior Trim. At Decoma, Mr. Ball oversaw the launch of many new
products and applications in the plastic and composites sector and in the
automotive markets globally. Upon becoming a publicly traded company, Mr. Ball
became COO of Decoma Exterior Trim, a subsidiary of Magna International Inc.
and was responsible for all aspects of the $800 million in sales and 7000
employee company, from research and development through profit and loss. Under
Mr. Ball's leadership, Decoma Exterior Trim became a benchmark in
profitability, cost reduction and new product development. Mr. Ball is an
entrepreneur with a proven track record whose past experience and industry
contacts provide access to a vast array of management, engineering, and
manufacturing talent and opportunities.
    Fraser Wray of Oakville, Ontario is the CFO of ICI, and beneficially
controls 9.0% of ICI. Mr. Wray has expertise related to all aspects of
financial advisory services. He has completed numerous acquisitions,
divestitures, restructurings and recapitalizations as a principal, advisor and
as a senior officer of large multi-national corporations. He is a former
senior executive of Magna International Inc. and the former president and CEO
of Decoma International Inc. He has been on the boards of several automotive
parts companies both private and public and is currently a partner in an
injection molding company, Ritz Plastics, a transport/logistics company
Canamex Trucking Services Inc, and a real estate development company. Mr.
Wray's creative and insightful skill sets related to acquisitions,
divestitures, restructurings and recapitalizations are routinely called upon
by a wide variety of large public and private corporations in Canada and the
United States. Mr. Wray graduated with a Bachelor of Commerce from the
University of Toronto and obtained a CA designation while employed by Ernst
and Young.
    Dennis Woods, a director of ICI and an anticipated director of the
resulting issuer, beneficially controls 16.5% of ICI. The remaining common
shares (approximately 67%) of ICI not owned by Terry Ball, Fraser Wray or
Dennis Woods are held by other members of management and shareholders, none of
whom individually own or control 10% or more of the total issued and
outstanding.

    The Qualifying Transaction

    Subject to regulatory approval, KII will acquire all of the currently
issued and outstanding common shares of ICI, by issuing 11,250,000 common
shares of KII (the "KII Shares") to the shareholders of ICI, at a deemed
issuance price $0.30 per KII Share, in exchange for all of the issued and
outstanding common shares of ICI (the "ICI Shares"), being 11,250,000 common
shares. Each ICI shareholder will be entitled to receive one KII Share for
each ICI Share owned. Additionally, all outstanding convertible securities of
ICI will also be converted into convertible securities of KII, on a one for
one basis. The proposed Qualifying Transaction constitutes an arm's length
transaction, and as such, will not require approval by the shareholders of
KII.
    Management of ICI anticipates closing a private placement of 2,400,000 of
ICI common shares shortly, but in any event prior to the closing of the
Acquisition. This private placement will result in aggregate gross proceeds of
up to $600,000, which will be used for the acquisition of LDP and for general
working capital purposes. Pursuant to the Agreement in Principal, ICI will
reserve for issuance 2,400,000 additional KII Shares to be exchanged pursuant
to the Qualifying Transaction for any ICI common shares issued in this private
placement.
    Additionally, and concurrently with the closing of the Qualifying
Transaction, a private placement (the "Private Placement") of a minimum of
5,000,000 and a maximum of 8,333,333 common shares of KII, at an issue price
of $0.30 per share for gross proceeds of between $1,500,000 and $2,500,000
will be completed. Standard fees and commissions are anticipated to be paid in
connection with the Private Placement, and the net proceeds of this issuance
will be used for general working capital purposes.
    It is currently anticipated that the Board of Directors of the resulting
issuer will consist of Mr. Ball, Mr. Wray, Marc Wade, Kenneth Keeley, and
Dennis Woods, each of whom are currently directors of ICI. The current
directors of KII will resign upon the closing of the Qualifying Transaction.
    Marc Wade is currently Managing Director of Britton Hill Partners. Prior
to Mr. Wade's involvement with Britton Hill Partners, he Co-founded Ed-Lynn
Network LLC, an Ohio based polymer additives company with multiple offices and
production facilities throughout North and South America. Kenneth Keeley has
been an owner, developer and investor in a variety of businesses. He was
Division President of Airgas, Inc. (NYSE) until his retirement in May 1997.
Dennis Woods has a proven track record as a true entrepreneur. In 1999 Mr.
Wood started DW Aluminum and Extrusion business. He grew the DW Aluminum
business to US$230 million in sales in manufacturing through 4 distributors.
Mr. Woods sold DW Aluminum in 2008. Mr. Woods beneficially controls 1,875,000
common shares or 16.5% of ICI.
    The Acquisition is conditional upon, among other things, receiving all
necessary regulatory and third party approvals and authorizations, the receipt
of an independent valuation of ICI if required by the Exchange, approval by
each of the board of directors of ICI and KII, the entering into of
satisfactory employment agreements for senior management, confirmation of no
material adverse change having occurred for either entity prior to close, the
completion of a definitive agreement setting forth the terms and conditions
for the closing of the Acquisition, the completion of due diligence
satisfactory to each party, and the completion of a sponsorship report
satisfactory to the Exchange (or waiver by the Exchange of that requirement).
    KII is currently confirming the terms of a sponsorship relationship for
this transaction with a Member firm, which will be disclosed as soon as an
engagement is formalized.

    Completion of the transaction is subject to a number of conditions,
including but not limited to, Exchange acceptance. There can be no assurance
that the transaction will be completed as proposed or at all.
    Investors are cautioned that, except as disclosed in the management
information circular or filing statement to be prepared in connection with the
transaction, any information released or received with respect to the
transaction may not be accurate or complete and should not be relied upon.
Trading in the securities of a capital pool company should be considered
highly speculative.

    
    The TSX Venture Exchange Inc. has in no way passed upon the merits of the
    proposed transaction and has neither approved nor disapproved the
    contents of this press release.
    





For further information:

For further information: about KII, please contact David Mitchell,
President, at (905) 336-9996 ext. 217, or by email at
david@kingsmillcapital.com; For further information about ICI, please contact
Terry Ball, President, at (906) 630-1339, or by email at tlball@live.com

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KINGSMILL CAPITAL VENTURES II INC.

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