Mecachrome announces agreement to restructure its debt



    
    The Steering Committee for the Ad Hoc Committee of Noteholders enters
         into an agreement supporting Mecachrome's restructuring plan
    

    TOURS, France, and MONTREAL, Aug. 5 /CNW Telbec/ - Mecachrome
International Inc. ("Mecachrome" or the "Company") announced today that it has
reached an agreement (the "Support Agreement") with the steering committee
(the "Steering Committee") for the ad hoc committee (the "Ad Hoc Committee")
of holders of its 2014 Senior Subordinated Notes (the "Notes") on the
principal terms and conditions of Mecachrome's debt restructuring plan (the
"Plan") pursuant to the Companies' Creditors Arrangement Act ("CCAA"). The
Plan will be funded by FCPR Aerofund, FCPR Aerofund II, and the Fonds de
solidarité FTQ (the "Investors"). The Fonds Stratégique d'investissement (the
"FSI") is also participating in this investor consortium via an equity
contribution. In connection with the foregoing, Mecachrome has entered into an
Amended Plan Funding Agreement (the "Agreement") with the Investors. The Plan
was filed with the Superior Court of Québec on August 4, 2009 and provides for
a creditors' vote date on August 26, 2009.
    "We are very pleased to have reached a consensual agreement with the
Steering Committee of the Noteholders and the Investors. This is an essential
and important milestone in our restructuring and I believe that the nature of
this agreement should reassure our customers, suppliers and employees. I would
also like to take this opportunity to thank them for the confidence they have
maintained in Mecachrome during this difficult period. I continue to believe
that upon emergence from the proceedings Mecachrome will be, more than ever,
well-equipped to support its clients and continue its development." said Julio
De Sousa, Mecachrome's President and Chief Executive Officer.
    Under the Plan, the Investors will invest approximately (euro)62 million
in Mecachrome (including an exit financing of (euro)22 million) in exchange
for a 100% equity interest in the Company upon its emergence from CCAA. In
addition, among other elements, the Plan (subject to its terms) provides (i)
for a cash consideration to Noteholders of approximately (euro)33 million
(including a minimum cash consideration of (euro)32 million and the (euro)1
million Support Agreement minimum payment described below), representing a
recovery of approximately 16%, and (ii) that the other Canadian creditors will
receive a cash consideration also representing a recovery of approximately
16%.
    The Support Agreement provides that the members of the Steering
Committee, representing today 33.3% of the aggregate principal amount of the
Notes, will support and vote in favor of the Plan. In addition, the Plan
provides among other things that, if Noteholders representing at least 66 2/3
% of the aggregate principal amount of the Notes enter into the Support
Agreement on or before August 19, 2009, (i) Noteholders and the other Canadian
creditors will share on a pro rata basis an additional incentive amount of
(euro)1 661 766 at closing of the restructuring, and (ii) Noteholders who
executed the Support Agreement on or before August 19, 2009 will share on a
pro rata basis among themselves, as part of the incentive amount of (euro)1
661 766, a minimum amount of (euro)1 million. Other Noteholders interested in
executing the Support Agreement and receiving a pro rata portion of the
minimum incentive amount of (euro)1 million should contact counsel to the Ad
Hoc Committee (Goodmans LLP; c/o: boneill@goodmans.ca).
    The Agreement is subject to certain conditions, including (a) the
approval of the Plan pursuant to the CCAA by the creditors of the Company on
or before August 31, 2009; (b) that Mecachrome obtains exit financing in an
amount of no less than (euro)22 million for the implementation of the Plan
under terms and conditions satisfactory to the Investors; (c) that Mecachrome
maintains a minimum liquidity position at closing; (d) that the Company will
have terminated or renegotiated certain of its Canadian lease agreements to
the satisfaction of the Investors; (e) that the Company obtains all required
court and regulatory approvals in France and Canada; and (f) other customary
closing conditions. If all of these conditions are not satisfied there can be
no assurances that they will be waived or that alternate financing will be
available on acceptable terms. Furthermore, subject to Court approval of the
Agreement and the Plan, the Company and the Investors have agreed to extend
the maturity of the existing debtor-in-possession financing facility entered
into in December 2008 with the Investors until the earliest of (i) the
Company's emergence from CCAA or (ii) December 31, 2009.

    
    About Mecachrome International Inc.
    -----------------------------------
    

    Mecachrome is a leader in the design, engineering, manufacture and
assembly of complex precision-engineered components for aircraft and
automotive applications, including aerostructural and aircraft engine
components, high-end automobile engine components and motor racing engines.
Since 1937, Mecachrome has established a significant presence and global
reputation in certain high-precision sectors of the aerospace, automotive and
industrial equipment industries, providing services primarily to original
equipment manufacturers.

    
    About the Investors
    -------------------
    

    The Aerofund and Aerofund II funds, managed by ACE Management, are
sponsored by, amongst others, large industrial groups in the aeronautics
sector. The funds' mission is to support the consolidation and development of
subcontractors in the industry. The Fonds de solidarité FTQ is a development
capital investment fund that invests in all sectors of the economy to help
create and maintain jobs and to further Québec's economic growth.

    
    About the Fonds stratégique d'investissement
    --------------------------------------------
    

    The FSI is a société anonyme 51% held by the Caisse des Dépôts et
Consignations and 49% by the French State. The FSI is an experienced equity
investor taking minority interests in high-potential French companies that
contribute to the competitive position of the French economy.

    
    Forward-looking statements
    --------------------------
    

    All statements, other than statements of historical facts, included in
this news release are forward-looking statements or contain forward-looking
information (within the meaning of the Québec Securities Act and the Ontario
Securities Act). Although we believe that the expectations reflected in these
forward-looking statements and forward-looking information are reasonable,
these statements involve risks and uncertainties and are not guarantees of
future performance.
    We can give no assurance that these estimates and expectations will prove
to have been correct, and actual outcomes and results may differ materially
from what is expressed, implied or projected in such forward-looking
statements and forward-looking information. There are a number of important
risks and uncertainties that could, and often do, cause our actual results to
differ materially from those indicated or implied by forward-looking
statements and forward-looking information, including the risks and
uncertainties discussed in Mecachrome's Annual Information Form for the year
ended December 31, 2007. Given the uncertainty of forward-looking statements
and forward-looking information, investors are cautioned not to place undue
reliance on these statements and information. The forward-looking statements
and forward-looking information speak only as of the date made, and Mecachrome
expressly disclaims any intention or obligation to update or revise any
forward-looking statements or forward-looking information, whether as a result
of new information, future events or otherwise, except as may be required by
applicable law.

    Mecachrome is currently subject to Court protection under the Companies'
Creditors Arrangement Act in Canada and under similar protection from the
Courts for its French subsidiaries under the safeguard procedure (procédure de
sauvegarde) in France. The documentation related the Canadian and French court
filings is available on Ernst & Young Inc.'s web site at:
http://documentcentre.eycan.com/Pages/Main.aspx?SID=91




For further information:

For further information: Mr. Jocelyn Côté, (514) 373-1206

Organization Profile

MECACHROME INTERNATIONAL INC.

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