Magellan Announces Appointment and Update on Financing for Payment of Convertible Debentures on Maturity
Toronto, Ontario – January 28, 2008 – Magellan Aerospace Corporation (“Magellan” or the “Corporation”) is pleased to announce that Mr. James Butyniec has been appointed as the President and Chief Executive Officer of Magellan effective immediately. Mr. Butyniec was most recently Magellan’s President and Chief Operating Officer and has been with the Corporation since 1997 when it acquired Bristol Aerospace Limited. Mr. Richard Neill, former Chief Executive Officer of Magellan into 2007, will continue as Vice Chairman of the Corporation.
Magellan is also providing an update on the status of its proposed financing arrangements to pay the currently outstanding principal amount of approximately $70 million of 8.5% unsecured subordinated debentures (the “Existing Debentures”) in cash on the maturity date of January 31, 2008. The Corporation had previously announced its intention to complete a private placement of up to $35 million aggregate principal amount of 8.5% convertible unsecured subordinated debentures due January 31, 2010 (the “New Debentures”) to fund, in part, the payments on maturity of the Existing Debentures. Edco Capital Corporation, a corporation controlled by N. Murray Edwards, Magellan’s principal shareholder, had agreed to, directly or indirectly, loan $50 million to the Corporation (the “Original Loan”) to fund the repayment of the remaining $35 million on the maturity of the Existing Debentures and to provide the Corporation with funds to retire $15 million of subordinated debt.
The Corporation has revised its proposed financing arrangements as it now expects to raise approximately $20 million of aggregate principal amount of New Debentures pursuant to the private placement which includes $17.5 million principal amount of the New Debentures to be acquired by Mr. Edwards. The remaining $50 million needed to fund the repayment on the maturity of the Existing Debentures will be paid out of $35 million of the proceeds from the Original Loan and from the proceeds of a new $15 million loan (the “Bridge Loan”) from Edco Capital Corporation. The Bridge Loan will be secured and will be repayable on July 31, 2008 and will bear interest at 10% per annum. In consideration for the provision of additional security for the Corporation’s obligations under its existing secured credit facility, the Corporation has also agreed to increase the standby guarantee payable to Mr. Edwards from 0.1% per annum to 1% per annum of the principal amount guaranteed.
The above transactions are subject to regulatory approval, including the Toronto Stock Exchange, and are expected to close on or before January 31, 2008.
Magellan Aerospace Corporation is one of the world’s most integrated and comprehensive aerospace industry suppliers. Magellan designs, engineers, and manufactures aeroengine and aerostructure assemblies and components for aerospace markets, advanced products for military and space markets, and complementary specialty products. Magellan is a public company whose shares trade on the Toronto Stock Exchange (TSX: MAL), with operating units throughout Canada, the United States and the United Kingdom.
Forward Looking Statements:
This press release contains information and statements of a forward-looking nature concerning the plans of the Corporation in relation to financing the repayment of its existing 8.5% Unsecured Subordinated Convertible Debentures.
These statements are based on assumptions and uncertainties, including regulatory approvals and marketing of the securities, as well as on management’s reasonable evaluation of future events. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, and/or are beyond the Corporation’s control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements.
For further information contact:
John B. Dekker
Vice President Finance & Corporate Secretary
(905) 677-1889 ext. 224