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MTI Global Inc.: MTI Global Announces New Lender Agreement

^{Published on 2009-09-10 14:23:35 - Market Wire}
 

MISSISSAUGA, ONTARIO--(Marketwire - Sept. 10, 2009) - MTI Global Inc. (the "Company") (TSX:MTI) announced today that it has entered into a new $7.4 million subordinated debt financing agreement with Wellington Financial LP ("Wellington"), which complements the forbearance agreement recently entered into with its principal Canadian bank.

"This represents a significant step forward in our recovery to profitability" said Bill Neill, MTI President and CEO. "Following our earlier agreement with our principal Canadian bank, we have successfully secured support and flexibility from our largest lender to set the corporation back on track."

Financing Details

The financing amends the existing Series A Secured Debenture in the principal amount of $7 million. Under the terms of the agreement:

- All existing defaults have been waived and there are no financial ratio covenants in the new arrangement.

- Additional principal in the amount of $418,824 has been added to the principal balance of the Debenture as consideration for default interest.

- The debenture will continue bear interest at an annual rate of 12.75%.

- The Company will issue 2.6 million common shares and cancel 3,230,769 special warrants previously issued to Wellington Financial LP.

- The maturity date is June 3, 2011 or otherwise on demand or immediately prior to a change of control.

The issuance of the common shares to Wellington constitutes a shares-for-debt private placement (the "Private Placement") under the rules of the Toronto Stock Exchange (the "TSX"). Wellington is an unrelated arms-length party to the Company and the issuance of the common shares will not materially affect control of the Company. The number of common shares issuable pursuant to the Private Placement will represent in aggregate approximately 9.3% of the 27,808,334 currently issued and outstanding common shares of the Company on a non-diluted basis. Wellington, upon issuance of the common shares, will own approximately 8.5% of the issued and outstanding common shares of the Company.

The Private Placement is subject to the approval of the TSX and since the Private Placement will provide for the issuance of additional common shares to Wellington rather than warrants pursuant to the Private Placement, the rules of the TSX require that the Company obtain approval of the Private Placement from the holders of a majority of the voting shares of the Company. However the rules of the TSX also provide that such approval may be obtained in writing from shareholders without the requirement to convene a shareholders' meeting for such purposes, and the Company intends to rely on this exemption in connection with the Private Placement. The closing of the Private Placement is anticipated to occur on or as soon as possible after September 16, 2009.

About MTI Global:

MTI Global Inc. (TSX:MTI) designs, develops and manufactures custom-engineered products using silicone and other cellular materials. The Company serves a variety of specialty markets focused on two main areas: Silicone and MTI Polyfab, comprising, Aerospace and Fabricated Products. The Company designs and fabricates energy management systems from a variety of flexible, cellular materials. MTI Global also produces and distributes specialty silicone elastomer products. MTI Global's primary markets are aerospace and mass transit. Secondary markets include sporting goods, automotive, industrial, institutional, electronics, and the medical market through a 51% interest in MTI Sterne SARL of Cavaillon, France. MTI Global's head office and Canadian manufacturing operations are located in Mississauga, Ontario, with international manufacturing operations located in Bremen, Germany, Milton, Florida and a contract manufacturer venture in Ensenada, Mexico. The Company also maintains engineering support centres in Brazil and Toulouse, France. The Company's website is [ www.mtiglobalinc.com ].