June 04, 2009 17:00 ET

H2O Innovation Announces the Closing of Proposed Equity Financing for CAD$2.75 M


H2O Innovation Inc. (TSX VENTURE:HEO)(ALTERNEXT:MNEMO:ALHEO) ("H2O Innovation" or the "Company") announces the completion of the equity financing previously announced by press release on May 28, 2009 in connection with the proposed acquisition of substantially all of the assets of Professional Water Technologies, Inc. (the "Acquisition").

As part of this equity offering, H2O Innovation has issued a total of 5,045,454 subscription receipts (the "Subscription Receipts"), for aggregate gross proceeds of CAD$2,774,999.70 at a price of CAD$0.55 per Subscription Receipt (the "Private Placement"). Each Subscription Receipt will entitle the holder thereof to receive, for no additional consideration and upon closing of the Acquisition, one unit of the Company (the "Units").

Each Unit consists of one common share in the share capital of the Company (the "Common Shares") and one Common Share purchase warrant (the "Warrants"). Each Warrant entitles the holder thereof to acquire, at any time before 5:00 pm (Montreal time) on December 5, 2011, one Common Share at a price of CAD$0.85 per Common Share. In the event that the Acquisition does not, for any reason, occur on or before August 31, 2009, an amount equal to the issue price of the Subscription Receipts will be returned to each holder of Subscription Receipts plus such holder's pro rata entitlement to the interest earned or income generated on such amount while held in escrow as per the terms of a subscription receipts agreement entered into as of today between the Company, Loewen, Ondaatje, McCutcheon Limited (the "Agent") and Computershare Trust Company of Canada.

The Agent, in compensation for acting as agent for this Private Placement, was granted by the Company a total of 129,877 warrants (the "Agent's Warrants") and was paid an amount of CAD$35,716.25, representing 50% of the commission payable to the Agent in relation with the Private Placement. The remaining portion of the commission will be paid upon closing of the Acquisition. Each Agent's Warrants will entitle the holder thereof to acquire one Unit for a price of CAD$0.55 per Unit at any time before 5:00 pm (Montreal time) on December 5, 2011.

The Subscription Receipts, the Warrants, the Agent's Warrants and the Common Shares underlying the Subscription Receipts, the Warrants and the Agent's Warrants are subject to a statutory four-month hold period.

The net proceeds of this financing is to be used for the partial payment of the purchase price for the Acquisition and all ancillary transaction costs.

Prospective disclosures

This press release may contain prospective disclosures representing current expectations of H2O Innovation and are subject to certain risks and uncertainties. For details of these risks and uncertainties please refer to the Company's Annual Information Form dated September 26, 2008 available on SEDAR (www.sedar.com). H2O Innovation is under no obligation to revise or update the prospective disclosures contained in this press release.

About H2O Innovation

Exclusively dedicated to water treatment, H2O Innovation is establishing itself as a key player in sustainable development and the field of clean technologies. H2O Innovation designs, develops, produces, and integrates state-of-the-art water treatment systems for the production of drinking water, the reclamation of water, the treatment of wastewater and industrial processed water in the municipal, commercial, pharmaceutical, industrial, mining, and energy markets. H2O Innovation has approximately 100 employees and eight offices including two manufacturing and assembly plants in Canada and the United States. Shares of H2O Innovation are listed on the TSX Venture Exchange (HEO) as well as on the NYSE Euronext Alternext Exchange (MNEMO:ALHEO).

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) nor the Alternext Exchange accepts responsibility for the adequacy or accuracy of this release.

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