Automodular Corporation
TSX : AM

Automodular Corporation

April 14, 2010 14:57 ET

Automodular Announces Termination of Oshawa-Area Contracts

TORONTO, ONTARIO--(Marketwire - April 14, 2010) - Automodular Corporation ("Automodular") (TSX:AM) has received notice from General Motors of Canada Limited ("GM") that GM is cancelling Automodular's contracts for sub-assembly and sequencing services to the Camaro program in Oshawa, effective September 20, 2010. As a result, Automodular will close its Thornton Road facility and expects to terminate the employment of the majority of the personnel employed therein effective September 21, 2010.

Automodular has instructed its counsel to serve and file a statement of claim against GM for damages of $20 million arising from GM's termination of these contracts. There can be no assurance that Automodular will be successful in its claim or that it will recover any amounts from GM.

The financial impact of the closure is estimated to be an after tax loss of approximately $7 million in the current year with potential additional losses arising from the Thornton facility lease commitment in future years, the extent of which will depend on Automodular's ability to find a sub-tenant for the vacated space.

Automodular is a supplier of sub-assembly, sequencing and transportation services to three OEM plants in Ontario and Ohio. The Company has four operating facilities and employs approximately 650 people.

This press release contains forward-looking statements that involve a number of risks and uncertainties. Specific forward-looking statements in this document include those relating to the expected closure of Automodular's Oshawa-area operations in September 2010, Automodular's claim that will be filed against GM and any potential outcome and the estimated financial impact of the closure of the Oshawa-area operations including any residual lease costs over the remaining balance of the lease. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are market and general economic conditions, the outcome of the intended litigation, our ability to sub-let our excess facility space and otherwise offset severance and other closure costs and the risk factors detailed from time to time in the Company's periodic reports filed with the Canadian securities regulatory authorities and on SEDAR at www.sedar.com. Readers are cautioned not to rely on forward-looking statements. Except as required under continuous disclosure obligations, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Automodular does not provide financial outlooks.

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