Atlantis Systems Corp.
TSX VENTURE : AIQ.H

Atlantis Systems Corp.

November 09, 2011 17:02 ET

Atlantis Systems Corp. Announces Closing of Debt Refinancing

TORONTO, ONTARIO--(Marketwire - Nov. 9, 2011) - Atlantis Systems Corp. (NEX:AIQ.H) (the "Company") announced today the closing of the refinancing of its debt facilities (the "Refinancing Transaction") with ComVest Capital, LLC ("ComVest"), which was previously announced on August 17, 2011.

The Refinancing Transaction is intended to allow the Company to continue to develop the business plan for both Atlantis Systems International, based in Brampton, Ontario, and the Company's training and job performance solutions division, Atlantis Systems Eduplus, based in Dartmouth, Nova Scotia. The Refinancing Transaction has been conditionally approved by the NEX, a separate board of the TSX Venture Exchange on which the Company's common shares (the "Common Shares") are listed for trading (the "NEX").

The Refinancing Transaction involves a consolidation of the existing debt owed by the Company to ComVest through the issuance of two fixed and non-revolving debt instruments and an extension of the term of the existing debt facilities. The new notes issued by the Company are a convertible term note in the principal amount of US$6,000,000 (the "Convertible Note") and a term note in the principal amount of approximately US$6,540,000 (the "Term Note", and together with the Convertible Note, the "New Notes"), each maturing on the earlier of three years from the date of issuance and a change of control. The New Notes are secured by a first charge on the assets of the Company. No principal payments on the New Notes are required until maturity.

ComVest has the right to convert the unpaid principal balance of the Convertible Note into Common Shares ("Conversion Shares") at any time prior to the maturity date of the Convertible Note at a price per Conversion Share of US$0.30, which is equivalent to CDN$0.30 based on the exchange rate in effect on October 31, 2011.

The principal balance of the Convertible Note outstanding from time to time will bear interest at the rate of 12% per annum, increasing to 17% during the continuance of an event of default, and shall be added monthly to the principal balance of the Convertible Note. If the Convertible Note is not converted by ComVest prior to maturity, payment of the outstanding principal and accrued interest will be payable in cash. The Company shall have no right to voluntarily prepay all or any portion of the Convertible Note at any time.

The principal balance of the Term Note outstanding from time to time will bear interest at the rate of 12% per annum, increasing to 17% during the continuance of an event of default, which shall be payable monthly in arrears commencing on February 1, 2012. No principal payments are required until maturity, but the outstanding principal balance of the Term Note and the accrued interest thereon may be voluntarily prepaid by the Company in whole or in part at any time without penalty upon ten (10) days' written notice to ComVest.

In connection with the Refinancing Transaction, the Company will be obligated to pay ComVest approximately $302,598 in principal and accrued interest owed to ComVest under the outstanding notes issued by the Company in favor of ComVest. This amount is due and payable by the Company on or prior to December 31, 2011 and will accrue interest at the rate of 12% per annum, increasing to 17% in the event the amount is not paid on or prior to December 31, 2011. The Company will also be required to reimburse ComVest for all customary legal costs and other fees associated with the Refinancing Transaction, including a restructuring/commitment fee in the amount of $350,000.

The Company previously announced the Refinancing Transaction by press release dated August 17, 2011, and a material change report was filed on August 22, 2011. The Company then issued a further press release on November 8, 2011 to announce changes to the previously announced terms of the Restructuring Transaction, and a further material change report was filed the same day. The latter documents were filed less than twenty-one days prior to the closing of the transaction, which the Company considers both reasonable and necessary owing to the ongoing negotiations between the Company and ComVest relative to the terms of the Refinancing Transaction and the attendant uncertainty regarding the time of closing.

Forward-Looking Statements

Atlantis Systems Corp. assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or for any other reason. Additional information regarding risks and uncertainties that could affect Atlantis' business is contained in the Business Risk Factors section of Atlantis's Annual MD&A. which is available on SEDAR at www.sedar.com.

The completion of the Refinancing Transaction remains subject to the final approval of NEX.

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