KANATA, ONTARIO--(Marketwire - July 20, 2010) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or "the Company") today announced that the memorandum of understanding ("MOU") previously announced on June 15, 2010 that was entered into with Revision Eyewear Inc. ("Revision") for the sale of PSP's headborne system and helmet liner assets to Revision for $1,275,000 (the "Headborne Transaction") has been terminated by Revision. Under the MOU, Revision had the right to terminate if the sale was not completed by July 15, 2010. The Company continues to be in discussion with Revision for a partial sale of certain assets of PSP's Headborne System, however at this time no formal MOU has been signed.
As previously announced, the Company is currently offside a financial covenant in its bank loan agreement; and the bank has previously indicated that its waiver of default is conditional upon the sale of the headborne system assets being used, in part, to bring the Company into compliance with its bank covenants. The proceeds from the partial sale now being contemplated would, if the sale is completed, be insufficient to bring the Company on-side its covenants and there are no assurances that the bank will extend its waiver of default.
The Board of Directors and management of PSP are considering the Company's strategic alternatives, including or securing additional funds through a financing transaction. There are no assurances that the Company will successfully complete such a transaction on a timely basis, in which event the Company may have insufficient cash to continue its operations.
About PSP
The mission statement of Pacific Safety Products Inc. is ...we bring everyday heroes home safely™. PSP is an established industry leader in the production, distribution and sale of high-performance and high-quality safety products for the defence and security market. These products include body armour to protect against ballistic, stab and fragmentation threats, ballistic blankets to reduce blast effects, and protective products against chemical and biological hazards. PSP is the largest armour manufacturer in Canada, directly supplying the Canadian Department of Defence, Federal Government Agencies and major Canadian law enforcement organizations. The Company also provides specialized law enforcement and safety products through APS Distributors, a division of PSP that services law enforcement and public safety agencies across the country. The Company, through its U.S. subsidiary Sentry Armor Systems Inc., provides body armour products to U.S. based law enforcement and private security firms. Pacific Safety Products is a reporting issuer in British Columbia, Alberta and Ontario, Canada and publicly trades under the symbol PSP on the TSX Venture Exchange.
Forward-Looking Statements: This news release contains forward-looking statements based on management's expectations, estimates and projections. All statements that address expectations or projections about the future, including, without limitation, comments on the prospects of the Company successfully completing a transaction with Revision or another sale or merger transaction, the Company's ability to source additional capital and the prospects of obtaining further waivers from its bank are forward-looking statements. Some of the forward-looking statements may be identified by words like "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. In particular, there are no assurances that the Company will complete a transaction with Revision, source additional equity capital or come to satisfactory arrangements with its banker with respect to a further waiver of its breach of a financial covenant in its credit agreement. Many factors, including those discussed more fully elsewhere in this release and in documents which may be filed with the British Columbia Securities Commission, the Alberta Securities Commission, the Ontario Securities Commission, the TSX Venture Exchange, as well as others, could cause results to differ materially from those stated.