Quebec City, Canada (April 7, 2006). Lyrtech Inc. (TSX Venture Exchange: LYT), a worldwide leader in digital signal processing (DSP) technologies, is pleased to announce that it has entered, on April 5, 2006, into a letter of intent to acquire the business assets of Innovator Electronic Assembly, a Montreal-based company that provides advanced electronic manufacturing services. Completion of the transaction will be concurrent with and conditional upon the closing of a private placement financing of a minimum of $4.0 million and maximum of $6.5 million as well as the establishment of a new banking facility of approximately $9.5 million. Additionally, Lyrtech plans to issue a subordinated non-convertible debenture of $2.0 million. Closing of the above transactions is expected to take place on or about April 13, 2006. Closing will be subject to the parties entering into a definitive acquisition agreement and to usual closing conditions including regulatory approvals.
“This is a very significant development for Lyrtech” said Migüel Caron, President & CEO of Lyrtech. As per the un-audited internal financial statements of Innovator, adjusted to reflect the accounting standards of Lyrtech, for the financial year ended on January 31, 2006, Innovator generated revenues of $14 million, EBITDA of $1.5 million and net income of $300 thousand, having grown revenues over 40% in each of the past 3 years. The same un-audited internal financial statements demonstrate total assets of $6.5 million, total liabilities of $5.2 million and shareholders equity of $1.3 million. Added Mr. Caron, “As a manufacturer of very complex circuit boards, many of which incorporate DSP technology, there is a high level of complementarity with Lyrtech’s business of providing advanced DSP engineering and new product turnkey solutions. Furthermore, the concurrent financing of a minimum of $15.5 million in equity and debt provides Lyrtech with the financial resources and flexibility to grow its business going forward.”
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The purchase price for the acquisition is $5.4 million, with $3.6 million payable in cash and $1.8 million payable in Lyrtech common shares, at a deemed price of $0.18 per share, representing an aggregate amount of 10 million common shares. $1.2 million of the common shares to be issued as payment of the acquisition price will be subject to a 2-year performance provision, and will be payable in full only if the acquired business achieves a specified level of revenues in each of the 2 years following the acquisition. Lyrtech will assume the majority of the assets and outstanding liabilities of Innovator at closing. Mr. Brian Mink, co-founder, President and Chief Operating Officer of Innovator, will join Lyrtech’s executive management team as President of Innovator and assume responsibility for all of Lyrtech’s electronic manufacturing activities.
Concurrently with the acquisition, Lyrtech plans to effect a brokered private placement financing of a minimum of $4 million and a maximum of $6.5 million through the issuance of units at an issue price of $0.18. Each unit will be composed of 1 common share and 1 common share purchase warrant, with each warrant exercisable at $0.30 for a period of 4-years. Additionally, Lyrtech plans to issue a 5-year subordinated non-convertible debenture of $2 million, carrying annual interest of 10.9%, the capital of which will be payable only at maturity, and will issue to the purchaser of the debenture 11 million common share purchase warrants exercisable at a price of $0.30 for a period of 2-years. Lyrtech will also enter into a banking facility with a Canadian chartered bank providing a combination of credit lines and term loans totaling no less than $9.5 million. Dundee Securities Corporation acted a lead agent to Lyrtech under the private placement financing, and acted as exclusive financial advisor to Lyrtech in relation to the acquisition of Innovator.
“This acquisition combines two high growth companies that serve a similar client base with different yet complementary product and service offerings. Following the acquisition, Lyrtech will be able to offer its clients advanced DSP engineering solutions coupled with a state of the art electronics manufacturing capability. We are excited about the potential of the combined operations going forward,” said Migüel Caron.
About Lyrtech
In today’s world, digital signal processing technology is vital to network and wireless communications, audio and video processing, as well as electronic systems in all fields of technology. Lyrtech has more than 20 years of experience in the delivery of advanced digital signal processing solutions to companies worldwide. Serving clients across the Americas, Asia, and Europe, Lyrtech offers a full range of DSP-FPGA development platforms, as well as design, prototyping, and manufacturing of electronic products. The company works in partnership with industry leaders such as StarCore, Texas Instruments, The MathWorks, and Xilinx. Lyrtech’s customers include many prestigious names of the consumer electronics, telecommunications, aerospace, and defense fields, such as BAE Systems, Defence Research and Development Canada (DRDC), European Aerospace Defence and Space Company (EADS), Fujitsu, Harris, ITT, Neural Audio, Nissan, Nokia, NTT DoCoMo, Samsung, and Sony.
About Innovator
Since its in inception in 1999, Innovator Electronic Assembly has been offering specialized manufacturing services of complex electronic assemblies to a diversified clientele. From the company’s state-of-the-art 50,000 square foot facility, Innovator offers customers rapid prototype servicing, new product introduction services, turnkey assembly, box build assembly and other electronics manufacturing services, providing customers with a quality production run of highly complex products with a fast turn around.
TSX Venture Exchange has neither approved nor disapproved the information contained herein and accepts no responsibility for the adequacy or accuracy of this release.