Amadeus announces details of its financial restructuring
Quebec City, February 26th, 2007 — On December 15th, 2006, Amadeus International (TSX-V : AII) (“Amadeus” or “the Company”) requested a cease trade order (CTO) as to negotiate and implement its financial restructuring plan.
Amadeus today discloses details of this plan, which consists of three main components:
Consolidation of outstanding common shares and new trading symbol
In a first phase, Amadeus will proceed to a consolidation of all its issued and outstanding common shares (“Shares”). Henceforth, the common shares of Amadeus are traded on the Venture Exchange on a consolidated basis of twenty (20) old shares for one (1) new share. The consolidation affects all common shares, convertible notes (“Convertible notes”), warrants and options to purchase common shares that are currently outstanding. No fractional shares will be issued, and any fractions resulting from the consolidation of common shares will be rounded down to the nearest whole number of common shares. The number of common shares outstanding, post-consolidation, is expected to be 1,752,792 on a non‑diluted basis.
Non-registered shareholders who hold their Amadeus shares through accounts in a brokerage firm will not be required to take any action since their Amadeus shares will automatically be adjusted to reflect the 1:20 consolidation. As for registered shareholders who hold Amadeus share certificates, they will receive a letter from the Company's Transfer Agent, CIBC Mellon Trust Company, with instructions to return their share certificates in order to receive new share certificates that reflect the 1:20 consolidation.
Amadeus will thus commence trading under the new symbol “AII”. A press release confirming the resumption of its stock trading will be issued once approval of consolidation is obtained from the TSX Venture Exchange Inc.
Rights Offering
Secondly, Amadeus will raise equity of a minimum $1,500,000 and a maximum of $4,000,000 through a Rights Offering to its current shareholders living the provinces in which it is a reporting issuer (“Shareholders”), and this, without recourse to a stock broker. In connection with the Rights Offering, the Company will file a short form prospectus. Each shareholder will receive 9.128 rights for each share held at the closing of the record date. Each right will give the holder the right to acquire one additional common share of Amadeus at a price of $0.25. The closing of the record date will be confirmed once all regulatory approvals are obtained. Should the Rights Offering be fully subscribed, gross proceeds will be approximately $4,000,000.
Under a Stand-By Purchase Agreement, Société Innovatech Québec et Chaudière-Appalaches, Fier Succès, s.e.c., SIPAR Inc., Fier Cap Diamant, s.e.c., some individuals, as well as Directors and Managers (“the Investors”) have agreed to acquire a maximum of $1,500,000 in new equity to the extent that all the rights are not exercised through the Rights Offering, and this, at the same price per share and on the same terms and conditions as those offered to shareholders.
The Rights Offering will be made in accordance with the policies of the TSX Venture Exchange Inc. and with applicable securities laws, regulations and policies.
Amendment and conversion of the convertible notes
In fiscal years 2003 and 2006, the Company issued convertible notes, a face value of $2,950,000. The conversion price of the convertible notes issued in June 2003 was $8.26 per share (post-consolidation), whereas for those issued in February 2006, the conversion price was $3.00 per share (post-consolidation). Included with these convertible notes was the interest payment, as well as the issuance of warrants in favour of holders of convertible notes.
According to the restructuring plan, holders of convertible notes will agree: (i) to stop collecting interests, starting July 1st, 2006 for the debentures issued February 2006, and starting December 1st, 2006 for the debentures issued June 2003, therefore resulting in no balance due, and; (ii) to void their warrants that aggregated to a total of 2,200,000. The conversion price of the convertible notes was adjusted to $0.25 per share (post-consolidation), i.e. the same price as the Rights Offering share price. Upon completion of all phases of the restructuring plan, all holders have agreed to convert their convertible notes into common shares, upon condition that all convertible notes were converted.
For investment purposes, Amended convertible notes and underlying shares will be qualified under a simplified prospectus.
Upon completion and closing of the Rights Offering, the amount of capital owed will be converted into common shares, against the issuance of 11,800,000 common shares. As a result of this operation, Société Innovatech Québec et Chaudière-Appalaches will hold more than 20% of the Company’s issued and outstanding shares on a non-diluted basis.
"This restructuring allows Amadeus to eliminate a very significant portion its long-term debt, and provides the Company with a financial structure conducive to the continuity of its operations and to the acceleration of its commercial and corporate development”, said Mr. Yves Leblanc, President and CEO of Amadeus International. “Amadeus’ Board of Directors and Management both acknowledge the dilutive aspect of such restructuring for current shareholders, insofar as the latter choose not to avail themselves of their subscription rights. However, this restructuring had become necessary for the Company to overcome the barriers hampering its growth. Over the last eight months, we have vainly sought ways to finance the Company’s development without altering the debt structure, but our efforts were met with resistance by development capital corporations—local and international. Our financial structure was also problematic from a commercial point of view, since our debt load incurred high interest costs and thus constrained extension of our credit facilities from our financial institution. Management strongly believes that the restructuring announced today properly positions the Company, and will be instrumental in helping it successfully execute its growth plan”, added Mr. Leblanc.
The proposed restructuring plan is subject to approval of the TSX Venture Exchange Inc. and securities regulators.
Furthermore, Amadeus announced today that, on December 22nd, 2006, its financial institution, in light of the short-term unsecured loan of $150,000 the Company was granted by members of its Management and by an external investor, extended its credit facilities, and this, until completion of the financial restructuring. Its financial institution also committed to participating in the restructuring. In addition, the Company has negotiated with Fujitsu Consulting Canada ltd the early payment of the sales price balance resulting from the sale of some of the assets of its corporate governance consulting services dated April 30th, 2006. The outstanding balance receivable totaled $1,074,240 at early payment date. Since the outstanding balance did not bear any interest, Amadeus consented to a discount as to accelerate collection, which, net after discount, aggregated to $985,000. With this amount, the Company was able to repay the balance of the loan contracted to acquire the unit in June 2005. The loan balance amounted to $408,809, including capital and accrued interests.
About Amadeus International Inc.
Amadeus International is a pioneer and leader in compliance process control solutions. Its flagship product, eQCM®, is a flexible, Web-based integrated suite of applications that allow organizations to help manage and control compliance and quality by automating processes such as document management, CAPA, nonconformances, customer satisfaction, audits, and other related quality and business processes. The application suite is coupled with powerful business intelligence capabilities, enterprise content management, and related technologies that help organizations achieve sustained compliance. Amadeus International’s global headquarters are located in Quebec City, Canada. Amadeus’ solutions are distributed across four continents.- 30 -
For further information:
Frédéric Garand, Vice President and Chief Financial Officer
Phone: +1 (418) 525-0606, ext. 2268
E-mail: frederic.garand@amadeussolutions.com
Isabelle Rivoal
Communications Manager
Phone: +1 (418) 525-0606, ext. 2231
E-mail: isabelle.rivoal@amadeussolutions.com
