Common Stock Listed
Trading Symbol: AVP
VANCOUVER, Oct. 2 /CNW/ - Avcorp Industries Inc. ("Avcorp" or the "Company") (TSX: AVP) announced today that it has entered into an agreement with its bank to amend the terms of its operating lines of credit. As disclosed in its prospectus related to the Company's rights offering and filed with Canadian securities regulatory authorities in all of the provinces and territories of Canada on August 31, 2009 (the "Prospectus"), the Company and its bank had entered into a Forbearance Agreement relating to the operating lines of credit pursuant to which, among other things, the Company was required to replace by September 15, 2009 a $2 million guarantee provided to the bank on the Company's behalf by a shareholder of the Company. Since the date of the Prospectus, the shareholder has agreed to maintain a guarantee in the amount of $1 million.
Pursuant to the terms of an amending agreement dated as of September 17, 2009, the Company and its bank agreed that commencing October 15, 2009 the margin formula used to determine the credit available to the Company under the operating lines of credit would be amended such that the availability of such credit would be reduced by $1 million until such time as a $1 million guarantee is provided on the Company's behalf by a party acceptable to the bank. The Company is continuing its efforts to obtain such guarantee. As stated in the Prospectus, the Company forecasts its operating and financing requirements (assuming negotiation of a repayment schedule for the debt due Export Development Canada and the royalties due Technology Partnerships Canada) for 2009 and 2010 to exceed the current availability of the operating lines of credit. The Company expects to make up this shortfall, including the increased shortfall due to the effective reduction in the credit available under the operating lines of credit, principally from customer revenues and the proceeds of the rights offering.
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, approximately 500 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).
MARK VAN ROOIJ
CHIEF EXECUTIVE OFFICER
Certain statements in this release and other oral and written statements made by the Company from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or projected revenues, income, returns or other financial measures. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following: (a) the extent to which the Company is able to achieve savings from its restructuring plans; (b) uncertainty in estimating the amount and timing of restructuring charges and related costs; (c) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (d) the occurrence of work stoppages and strikes at key facilities of the Company or the Company's customers or suppliers; (e) government funding and program approvals affecting products being developed or sold under government programs; (f) cost and delivery performance under various program and development contracts; (g) the adequacy of cost estimates for various customer care programs including servicing warranties; (h) the ability to control costs and successful implementation of various cost reduction programs; (i) the timing of certifications of new aircraft products; (j) the occurrence of further downturns in customer markets to which the Company products are sold or supplied or where the Company offers financing; (k) changes in aircraft delivery schedules or cancellation of orders; (l) the Company's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (m) the availability and cost of insurance; (n) the Company's ability to maintain portfolio credit quality; (o) the Company's access to debt financing at competitive rates; and (p) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.
The Company does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, except as required by law. Other than as specifically required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results or otherwise.
SOURCE Avcorp Industries Inc.
For further information: For further information: Sandi DiPrimo, Investor Relations Contact, (604) 587-4938