RS Announces Financing with a Strategic Investor
June 06 2011 - 8:00AM
PR Newswire (Canada)
CALGARY, June 6, 2011 /CNW/ -- Not For Distribution to U.S. News
Wire Services or for Dissemination in the United States CALGARY,
June 6, 2011 /CNW/ - RS Technologies Inc. ("RS" or the
"Corporation") (RS.H - NEX), a technology innovator and
manufacturer of advanced composite products for infrastructure
markets, announced that it has entered into a commitment letter
(the "Letter") with Werklund Capital Corporation ("WCC") pursuant
to which the parties agreed, among other things, that: (a) WCC
intends to lend RS $6 million in the form of a first secured
convertible debenture ("Convertible Debenture") which shall be
convertible at WCC's option at a price of $0.33 per common share
("Common Share") until the maturity date ("Maturity Date") of the
Convertible Debenture, being 30 months from the date of closing
("Closing"). In the event that WCC elects to convert the
Convertible Debenture, the conversion will result in WCC owning not
less than 50.1% of RS's outstanding Common Shares, after giving
effect to the conversion of certain bridge funds ("Bridge Funding")
into Common Shares at a price of $0.33 per Common Share. The Bridge
Funding contemplated in the Letter for conversion into Common
Shares may be up to $1,800,000 at the time of Closing. The funds
from the Convertible Debenture shall be used to fund RS's working
capital needs. Completion of the Transaction is subject to a number
of (b) conditions and approvals including, but not limited to, the
following: (i) the approval by a majority of the holders of Common
Shares, excluding those Common Shares where direct or indirect
beneficial ownership of (or control or direction is held by)
directors and officers of RS, for the delisting of the Common
Shares from the facilities of the NEX and the approval of the NEX
for such delisting, all as more fully described in the
Corporation's news release of June 1, 2011 and in the information
circular - proxy statement that the Corporation has mailed to
shareholders and posted on SEDAR; (ii) the conversion of the
Corporation's existing $6,666,480 in outstanding 10% secured notes
("Secured Notes") into preferred shares, with the terms of such
preferred shares to provide that they be redeemed for cash or
Common Shares in the first half of 2016; (iii) the receipt of
certain third party consents and waivers from certain of the
Corporation's lenders, including the holders of Secured Notes, for
the transaction, whom the Corporation has approached and have
provided their agreement in principle such that the transaction as
contemplated in the Letter may proceed as agreed to by RS and WCC;
(iv) that nothing shall have occurred, between the signing of the
Letter and Closing, that would have a material adverse effect on
the business, operations, properties, financial position, prospects
or the ability of RS to perform any of its obligations; and (v) the
execution and delivery of all definitive documents, including the
final form of Convertible Debenture, (the foregoing matters being
collectively referred to as the "Transaction"). The Board of
Directors of RS believes that the Transaction provides RS with
financial stability that will allow the Corporation to execute its
business plan. In addition, the Corporation believes that RS's
balance sheet will be strengthened as a result of the Transaction
due to both the injection of additional new equity and the
conversion of the Secured Notes into preferred shares, the latter
of which would eliminate certain interest payments and provide the
Corporation with the option to ultimately redeem the preferred
shares for Common Shares in lieu of cash. "The Transaction assures
our customers that we will be able to continue our record of
meeting 100% of our product delivery schedules and steadfastly
support our sales efforts, today and in the future" said Paul
Giannelia, president and CEO of RS. Blake Lyon, president and CEO
of WCC said, "Werklund Capital is excited to assist RS in
solidifying its balance sheet to ensure it can deliver its business
plan. We believe in this industry changing technology and look
forward to being a part of its positive impact on the
infrastructure industry." About Werklund Capital Corporation
Werklund Capital Corporation is your global creative capital
partner. As one of Canada's largest family-owned investment
companies, WCC's business philosophy is to achieve an above average
return on its capital by seeking investment opportunities in which
WCC can make a significant and positive contribution. WCC was
founded by Mr. David P. Werklund, a successful and respected
Calgary businessman, and is comprised of a team of highly
experienced and focused professionals committed to partnering with
our portfolio companies to achieve advanced financial growth and
maintaining Mr. Werklund's solid reputation for superior business
practices. About RS RS is an ISO 9001:2008 certified technology
innovator that develops advanced composite material products for
infrastructure markets. The composite products manufactured using
the company's proprietary resins and processes are typically
lighter, more durable and longer-lasting than competing products
made from the traditional building blocks of wood, steel or
concrete. RS's flagship product is its award-winning RStandard(®
)composite pole. The pole is used as transmission and distribution
poles to carry electric grids and as communication structures for
various uses including wireless networks and microwave
communications systems. For the latest on RS's developments, go to
the company's website at www.grouprsi.com. "RStandard" is a
registered trademark of RS. Reader Advisory Certain information set
forth in this news release, including: the failure to close the
Transaction on the terms disclosed or any terms at all; the
negotiation and settlement of certain definitive documentation in
respect of the Transaction; the delisting of the Common Shares from
the NEX; the conversion of the secured notes; and the mailing of an
information circular to approve, among other things, the delisting
of the Common Shares from the NEX, contains forward-looking
statements which are based on RS's current internal expectations,
estimates, projections, assumptions and beliefs, which may prove to
be incorrect. Some of the forward-looking statements may be
identified by words such as "expects", "anticipates", "believes",
"projects", "plans" and similar expressions. These statements are
not guarantees of future performance and undue reliance should not
be placed on them. Such forward-looking statements necessarily
involve known and unknown risks and uncertainties, which may cause
events to differ materially from any projections expressed or
implied by such forward-looking statements. These risks and
uncertainties include, among other things, failure to secure the
requisite shareholder approval for the delisting; the failure to
secure requisite third party consents to the Transaction, including
the Corporation's lenders and holders of Secured Notes; a condition
precedent set forth in the Letter not being satisfied or waived by
either party; RS not having adequate funds to continue as a going
concern prior to Closing; RS's lack of revenues and
unpredictability of future revenues; the uncertainty of the
profitability of existing and contemplated products of RS; RS's
ability to attract and retain key employees; competition from
established competitors with greater resources; the uncertainty of
the developing markets in which RS operates; the risks associated
with rapidly changing technology; RS's reliance on third parties to
supply raw materials and the cost of such raw materials;
intellectual property risks; foreign exchange rate fluctuations;
and changes in general economic, market and business conditions.
Many of these risks and uncertainties are described in RS's annual
information form for the year ended December 31, 2010 and other
documents RS files with the Canadian securities authorities. The
forward-looking statements are made as of the date hereof and RS
assumes no obligation to update or revise such statements to
reflect new events or circumstances except as required by
applicable securities laws. This news release does not constitute
an offer to sell or the solicitation of an offer to buy any
securities within the United States. The securities to be offered
have not been and will not be registered under the U.S. Securities
Act of 1933, as amended, or any state securities laws, and may not
be offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of such Act
or other laws. To view this news release in HTML formatting, please
use the following URL:
http://www.newswire.ca/en/releases/archive/June2011/06/c2909.html p
RS Technologies Inc.br/ Laurien Abel, Investor Relationsbr/ Tel:
(403) 219-8000 Fax: (403) 219-8001br/ Email: a
href="mailto:info@grouprsi.com"info@grouprsi.com/a /p
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