OTTAWA, April 4 /CNW Telbec/ - Allen-Vanguard Corporation (the "Company" or "Allen-Vanguard") (TSX: VRS) of Ottawa, Canada announced today that it has amended the terms of the payout to HMS, acquired June 13, 2007, and has fixed the amount of the payout at approximately $14.2 million, with $5.9 million payable in cash and $8.3 million payable in the form of 2,135,746 common shares ("Shares") of Allen Vanguard, effective and payable immediately. All figures are in Canadian dollars.
In conjunction with the amendment, Roger Davies, former majority owner and Managing Director of HMS, has been appointed Vice President, Business Development of Allen Vanguard.
"We are very pleased to have agreed this amendment with the HMS vendors," said David E. Luxton, President and CEO of Allen Vanguard. "It is mutually advantageous - it crystallizes and accelerates payment for the HMS vendors and provides them better tax treatment, in return for a favourable price adjustment to Allen Vanguard. It also aligns their interests with the wider interests of the Company. We are especially pleased at the confidence they have shown in Allen Vanguard's prospects as a whole by taking personally meaningful payment in the form of Company shares."
At the time of the acquisition of HMS, Allen Vanguard paid $17.8 million in cash plus consideration in the form of interest-bearing vendor loan notes ("Vendor Notes") in the amount of approximately $9.5 million, repayable in three annual instalments conditional upon the continued employment of the HMS principals. The Company also agreed to pay additional consideration ("EBITDA Incentives") of up to $10.5 million, conditional upon the achievement of EBITDA(1) targets for HMS over a three-year period, and potentially up to a further $10.5 million as a "super-achievement" bonus for significant EBITDA over-performance. Based on today's exchange rates, the Company has Escrowed Funds totaling $14.3 million as security for the Vendor Notes and EBITDA Incentives.
The agreement announced today, valued at approximately $14.2 million, is in full satisfaction of the Vendor Notes and EBITDA Incentives. After the cash payment, the remaining balance of the Escrowed Funds of $8.4 million will be returned to the Company. The Shares will be subject to a two-year hold period. The HMS principals will execute new two-year employment agreements, which will include appropriate performance incentives.
"HMS has been a strong strategic and financial contributor to our business from the outset," said David Luxton. "The amendment announced today will enable us to leverage HMS's deep expertise in counter-IED and accelerate plans to take advantage of major business development opportunities for integrated systems capability across the full spectrum of Allen-Vanguard products and services, without the constraint of earn-out restrictions in the original HMS acquisition arrangement. We are very pleased that Roger Davies has agreed to lead this effort, and that he will now have a significant personal shareholder stake in the success of Allen Vanguard."
Forward looking statements
This press release may contain forward-looking statements, which reflect Allen-Vanguard's current expectations regarding future events, its strategy, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects," "anticipates," "plans," "believes," "estimates" or negative versions thereof and similar expressions. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future acquisitions or dispositions, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company and economic factors. Forward-looking statements are not promises or guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made about the Company. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. We stress that the above-mentioned list of important factors is not exhaustive. We encourage you to consider these and other factors carefully before making any investment decision and we urge you to avoid placing undue reliance on forward-looking statements. Further, you should be aware that the Company disclaims any obligation to publicly update or revise any such forward-looking statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Discussion and Analysis to be released by the Company or except as required by law .
(1) Earnings before interest, income taxes, depreciation and
amortization, stock-based compensation, foreign exchange, goodwill
impairment and acquisition and financing related charges and
amortization.
About Allen-Vanguard
Allen-Vanguard Corporation supports the mission of military and homeland security forces around the world with leading proprietary solutions for protection and counter-measures against hazardous devices of all kinds, whether chemical, biological, radiological or explosive (CBRNE), including improvised explosive devices (IEDs) and remotely controlled IEDs (RCIEDs). Allen-Vanguard equipment is in service in more than 120 countries. Products include Electronic Counter-Measures ("ECM") equipment for jamming remote detonation of terrorist devices, specialty security equipment for Explosive Ordnance Disposal ("EOD"), remote intervention robots for hazardous applications, and personal protective wear for use in dealing with explosive and bio-chemical agents. Allen-Vanguard is the developer and/or sole, worldwide licensee of proprietary technologies such as the Med-Eng bomb suit, the DefenderTM and Vanguard TM Mk2 bomb disposal robots, and the Universal Containment System and CASCAD Foam system for blast mitigation and decontamination of bio-chemical warfare agents. Professional services encompass counter-IED intelligence, training and advisory services, including the TritonTM Report on terrorist incidents around the world. The Company operates globally through its wholly-owned subsidiaries under the names "Allen-Vanguard", "Med-Eng" and "Hazard Management Solutions". Head office operations are located in Ottawa, Ontario, Canada, with manufacturing operations in Stoney Creek and Pembroke, Ontario; Ogdensburg, New York; Tewkesbury, U.K.; and Cork, Ireland; The Company has professional services operations in Shrivenham, UK, Canada and in the U.S. in Arlington, Virginia, plus sales offices in Canada, the U.S., the U.K. and Asia. Allen-Vanguard's shares are listed on The Toronto Stock Exchange (TSX) under the symbol "VRS".
To find out more about Allen-Vanguard Corporation (TSX: VRS), visit our website at www.allen-vanguard.com.
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