Vector responds to IMP Group press release and announces $45 million equity
financing

    
    /NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR DISSEMINATION IN THE
    UNITED STATES/
    

TORONTO, Sept. 29 /CNW/ - Vector Aerospace Corporation ("Vector" or the "Corporation") (TSX:RNO) today acknowledged receipt of the press release issued by I.M.P. Group Limited ("IMP Group") on September 28, 2009 announcing its intention to make a partial insider bid to acquire up to 6,000,000 common shares of the Corporation (i.e., no more than approximately 16% of Vector's issued and outstanding shares or approximately 25% of the shares held by non-IMP Group shareholders) for not less than $6.52 in cash per share (all figures in Canadian dollars).

The special committee of independent directors formed in response to the IMP Group proposal (the "Special Committee") does not believe that the partial insider bid, as currently proposed by IMP Group, is in the best interest of the Corporation given that (among other things): (i) the proposed offer is a partial bid that would enable IMP Group to acquire control of the Corporation, but is not being made for all of the outstanding common shares held by Vector's minority shareholders; (ii) the proposed offer would only provide partial liquidity to shareholders but would reduce the liquidity of Vector's shares after the offer due to fewer shares being available for trading; (iii) the floor price of $6.52 set out in the proposed offer is below the closing price of Vector's shares on each of the 30 trading days preceding September 25, 2009 and (iv) Vector and IMP Group may compete from time to time, which introduces potential conflicts should IMP Group control Vector.

Pursuant to the Amended and Restated Shareholder Rights Plan ratified by the shareholders of the Corporation at the May, 2009 Annual and Special Meeting, IMP Group will be restricted from acquiring any Vector common shares pursuant to the proposed offer unless (among other things) the bid is left open for not less than 60 days. Furthermore, more than fifty percent (50%) of the then outstanding Vector common shares held by shareholders other than IMP Group must be tendered to the bid and not withdrawn. Should this condition be met, IMP Group must make a public announcement of this fact and extend the bid for a further period of not less than ten business days to allow those shareholders who did not originally tender to the bid to do so.

The Special Committee has in a confidential manner begun to explore alternatives to the partial insider bid that may provide superior value to Vector shareholders. The reference in the IMP Group press release to "indicative offers recently received to purchase Vector shares (being) below the ...price level being offered by IMP" appears to be a reference to an unsolicited non-binding expression of interest the Corporation received approximately four months ago (before the Special Committee was struck) which was rejected on the basis that the price of $6.50 per share for the acquisition of control of the Corporation being proposed was inadequate. The IMP Group announcement also refers to "in excess of 3,000,000 shares (that) have been for sale for months without finding a buyer". Vector believes that the vast majority of these shares are held by an institutional shareholder that has advised Vector that it is not under any time or price pressure to sell and is only looking to sell its position at a price significantly higher than the floor price being proposed by IMP Group.

IMP Group currently exercises control and direction over 14,054,214 Vector common shares, representing approximately 37.3% of the total outstanding common shares of the Corporation. Vector initially received a letter from IMP Group on July 16, 2009 indicating that it was "considering making an offer to acquire additional shares of Vector" and requesting that an independent valuation be procured. In response to the letter, the Board of Directors of Vector formed the Special Committee on July 24, 2009. The Special Committee wrote to IMP Group on July 30, 2009 requesting further details with respect to the potential offer including: (i) confirmation as to the form of consideration IMP Group would be prepared to offer; (ii) whether IMP Group would consider a bid for all (as opposed to part) of the remaining Vector shares, (iii) the price per share that IMP Group would be prepared to offer; and (iv) whether IMP Group had adequate arrangements in place to finance any potential offer. Although TD Securities Inc. was retained by the Vector Special Committee in August, 2009 to prepare a formal valuation of Vector's common shares in accordance with Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions (upon the confirmation of IMP Group that it would pay the fees and expenses of TD Securities), no such details were forthcoming from IMP Group until the press release it issued yesterday. Mr. Rowe communicated to a member of the Special Committee as recently as September 15, 2009 that IMP Group had not yet determined whether it intended to make an offer.

On September 25, 2009, one business day prior to IMP Group's press release, Messrs. Rowe and Plummer received notice of a Vector Board meeting at which a proposed equity offering was to be considered. IMP Group then issued its press release noting for the first time that its proposed offer is conditional upon "no unnecessary or extraordinary actions dilutive to Vector's shareholders ...".

Following careful consideration and deliberation by the Special Committee, with input from its financial advisors, and by the Board of Directors concerning the proposed offering and the substance of the IMP Group announcement, the Board of Directors has determined that it is in the best interest of the Corporation to proceed with the offering as (among other things) it is intended to broaden the shareholder base, enhance liquidity, repay debt and enhance the ability of the Corporation to execute on the growth strategy that has been agreed to by the full Board. To this end, the Corporation has entered into an agreement with TD Securities Inc. and Dundee Securities Corporation, on their behalf and on behalf of a syndicate of underwriters including CIBC, Scotia Capital Inc. and Versant Partners Inc. (collectively, the "Underwriters"), providing for the purchase by the Underwriters of 7,100,000 common shares in the capital of the Corporation (the "Shares"), at a price of $6.35 per Share for aggregate proceeds to the Corporation of $45.0 million (the "Offering"). Vector has also granted the Underwriters an over-allotment option to purchase 1,065,000 additional shares, representing 15% of the size of the Offering. The over-allotment option may be exercised for a period of 30 days following the closing of the Offering. The net proceeds from the Offering (after deducting the Underwriters' fee and estimated expenses of the Offering) will be used by the Corporation for repayment of indebtedness and general corporate purposes. The Offering is subject to a number of conditions for this type of transaction including a "disaster out", "market out", "regulatory out" and a "material adverse change out". The Shares will be offered for sale under a short form prospectus in all provinces of Canada, except Québec. The Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

Vector is an independent provider of aviation repair and overhaul services. Through facilities in Canada, the United States, the United Kingdom and Africa it provides services to commercial and military customers for various types of gas turbine engines, components and helicopter airframes. Principal operations include, Vector Aerospace Helicopter Services-North America, Vector Aerospace International Limited - UK, Vector Aerospace Engine Services - Atlantic and Vector Aerospace Engine Services - UK. It also provides information technology solutions to an international customer base. Vector has approximately 2,500 employees.

This news release contains certain information that may constitute forward looking information within the meaning of applicable securities laws. These statements are based on current expectations related to the markets in which Vector operates, its financial condition and its general business. By their very nature, forward-looking statements involve inherent risks and uncertainties that the expectations will not be achieved. Indeed, the forward-looking statements herein may differ materially from actual results or events. While Vector considers the assumptions on which these statements are made to be reasonable, based on information currently available to it, they may prove to be incorrect and readers are cautioned, therefore, not to place undue reliance on these statements as a number of important factors could cause actual results to differ materially from those expressed in such forward-looking statements.

These factors include, without limitation, global and local political and economic factors and future demand for Vector's services. Readers should also refer to Vector's continuous disclosure materials filed with Canadian Securities Regulatory Authorities for additional information with respect to certain of these risk factors. A discussion of risk factors is contained in Vector's 2008 Annual Report which is available on Vector's website and on SEDAR. Readers should not place undue importance on forward looking information and should not rely upon this information as of any other date. While Vector may elect to, it is under no obligation and does not undertake to update or revise this information at any particular time, except as required by law.

SOURCE VECTOR AEROSPACE CORPORATION

For further information: For further information: Declan O'Shea, President and CEO, Toronto, Ontario, Telephone: (416) 640-2115, Website: www.vectoraerospace.com; Randal L. Levine, Senior Vice-President and Chief Financial Officer, Toronto, Ontario, Telephone: (416) 640-2120

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VECTOR AEROSPACE CORPORATION

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