Pacific Safety Products Inc.

Pacific Safety Products Inc.

May 12, 2006 16:53 ET

Pacific Safety Products Announces Debt Reduction and Improved Financial Arrangements

KELOWNA, BRITISH COLUMBIA--(CCNMatthews - May 12, 2006) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or "the Company") today announced that as a result of its improved balance sheet and cash position, it has secured from the Bank of Nova Scotia an increase to its annual capital equipment covenant limit from $200,000 to $500,000. The company has also negotiated with Roynat Capital Inc. an early payment of a bonus obligation associated with the subordinated debt instrument and will make a "catch up" payment of subordinated debt principal. The net effect of these transactions will be a one time expense of $285,000 in Q4 FY2006 for the elimination of the bonus obligation.

"In total, these transactions reduce our debt obligation by a million dollars, strengthen our balance sheet and will have a positive improvement to our income statement commencing in Q1 FY2007," says David Scott, Chief Executive Officer. "We anticipate that cash flow generation within the next two quarters will fully replace the cash applied to the debt reduction."

About PSP

The mission statement of Pacific Safety Products Inc. is ...we bring everyday heroes home safely™. PSP is an established industry leader in the production, distribution and sale of high performance and high quality safety products. These products primarily include body armor to protect against ballistic, stab and fragmentation threats. PSP is the largest armor manufacturer in Canada and has significant international customers. The Company also produces tactical clothing and emergency medical kits.

Pacific Safety Products is a reporting issuer in British Columbia, Alberta and Ontario, Canada and publicly trades under the symbol PSP on the TSX Venture Exchange.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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