MagIndustries Corp.
TSX : MAA

MagIndustries Corp.

June 15, 2009 09:35 ET

MagIndustries Corp. Provides Additional Details Regarding the Memorandum of Understanding With a Strategic Party and an Update on Equity Financing

TORONTO, ONTARIO--(Marketwire - June 15, 2009) - MagIndustries Corp. ("MagIndustries" or the "Company") (TSX VENTURE:MAA) is pleased to provide further details with respect to the Memorandum of Understanding ("MOU") announced in its press release of June 12, 2009.

The Company entered into the MOU with a large Chinese based multi-national company (the "Subscriber") that intends to subscribe for 400 million MagIndustries shares at a price of Cdn$0.70. Although the MOU does not itself serve as a binding obligation in respect of the share subscription, the terms contained therein will serve as the basis for the negotiation and finalization of definitive documentation. MagIndustries has agreed to negotiate exclusively with the Subscriber until the earlier of July 31, 2009 and the date definitive documentation is entered into.

In addition to the above terms, the MOU provides that the definitive documentation will contain a right for the subscriber to participate pro rata in any future financings completed by the Company and to appoint a majority of directors to the Company's board.

If the proposed transaction is completed the following fees would be payable to the agents who assisted the Company with the negotiation of the transaction: a cash fee of 3% to the lead agent in respect of the proposed transaction plus 2% to other agents payable pursuant to pre-existing agreements, for a total of 5% of the value of the equity raised; a cash fee of up to1% of the value of the debt, to be agreed by the debt provider; and a number of broker warrants equal to 6% of the number of common shares to be issued with each broker warrant exercisable for a period of two years at an exercise price of $0.70.

Closing of the transaction contemplated by the MOU is subject to a number of conditions and approvals which include approval of the transaction by MagIndustries' Board of Directors, approval by a majority of MagIndustries shareholders at a special meeting of shareholders, the approval of all relevant regulatory and government authorities and satisfactory completion of due diligence. The share subscription is also conditional on the Subscriber arranging substantially all of the debt financing required for the completion of Phase I of the Company's Kouilou Potash Project in the Republic of Congo (the "Project") as an alternative to debt financing that might be available to the Company from other sources. Given these conditions there is no assurance that the transaction will be completed.

The Company would be in a fully funded position with respect to the Project if the transaction contemplated by the MOU is completed.

Upon conclusion of the investment, the Subscriber would hold approximately 52.7% of the Company's common shares outstanding (after giving effect to MagIndustries' recently announced equity financing, assuming the full exercise of the over-allotment option).

Financing Update

Given the developments set forth in this release, the Company is required to file an amendment to its short form final prospectus which was filed in connection with the previously disclosed $26 million equity financing. The Company anticipates that this filing will be completed on Monday June 15, 2009 and that the closing of the financing will take place on or about Thursday June 18, 2009.

About MagIndustries Corp.

MagIndustries is a Canadian company whose common shares are listed on the TSX-Venture Exchange and trades in Canadian currency under the symbol "MAA". The Company has 288,079,962 shares outstanding on an undiluted basis. MagIndustries' resource subsidiaries are operating and developing major industrial projects in the Republic of Congo and the Democratic Republic of Congo. More information on the Company is available at its website, www.magindustries.com

Except for historical information, this press release contains forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those statements. Those risks and uncertainties include, but are not limited to, changing market conditions, and other risks detailed from time-to-time in the Company's ongoing filings. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events in this press release might not occur.

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

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