Automodular Corporation
TSX : AM

Automodular Corporation

April 09, 2015 08:03 ET

Automodular Announces Normal Course Issuer Bid and Provides Corporate Update

AJAX, ONTARIO--(Marketwired - April 9, 2015) -

Normal Course Issuer Bid

Automodular Corporation (TSX:AM) ("Automodular" or the "Corporation") announces that the Toronto Stock Exchange ("TSX"), has accepted the Corporation's notice of intention to undertake a normal course issuer bid. Under the terms of the normal course issuer bid, Automodular may acquire up to 1,389,738 of its common shares, representing 10% of the 13,897,383 common shares comprising Automodular's public float of common shares issued and outstanding as of March 31, 2015, as defined by the policies of the TSX. In the opinion of the Board of Directors of Automodular, its common shares have recently traded in a price range that does not reflect the underlying value of the Corporation. Accordingly, depending upon future price movements and other factors, Automodular believes that repurchasing its outstanding common shares is a desirable use of a portion of its corporate funds. Automodular's strong cash position allows for the implementation of the bid without adversely affecting other growth opportunities.

As of March 31, 2015, the Corporation had 19,378,904 common shares outstanding. The average daily trading volume of Automodular's common shares over the last six completed calendar months was 26,703. Accordingly, under TSX rules and policies, Automodular is entitled on any trading day to purchase up to 6,675 of its common shares. The TSX rules also provide that once a week, in excess of the daily 6,675 common share repurchase limit, Automodular may also purchase a block of shares not owned by an insider (i) having a purchase price of $200,000 or more, (ii) of at least 5,000 common shares having a purchase price of at least $50,000, or (iii) of at least 20 board lots of common shares which total 150% or more of the average daily trading volume of the common shares.

The normal course issuer bid will begin on April 13, 2015 and will terminate on April 12, 2016, or on such earlier date as Automodular may complete its purchases pursuant to the notice of intention to make a normal course issuer bid filed with the TSX. All shares purchased by the Corporation will be purchased on the open market through the facilities of the TSX in accordance with the rules, regulations and policies of the TSX and will be cancelled. The prices that Automodular will pay for any of the common shares purchased will be the market price of the shares at the time of acquisition, determined in accordance with the rules of the TSX.

Under its previous normal course issuer bid, which expired on August 18, 2014, the Corporation purchased 421,400 of its common shares at an average price of $1.98 per share.

As previously disclosed by the Corporation, the TSX has commenced a review of the Corporation's eligibility for continued listing pursuant to Part VII of The Toronto Stock Exchange Company Manual. Specifically, the TSX is reviewing the Corporation with respect to the listing requirement that it must be actively engaged in an ongoing business. The Corporation is being reviewed under the Remedial Review Process and has been granted until July 16, 2015 to comply with all requirements for continued listing.

Corporate Update

In its March 5, 2015 press release, Automodular referred to the fact that it was undertaking an in-depth review of an Ontario-based private manufacturing company. In the interim, following consultation with certain stakeholders, the Corporation concluded that the opportunity was not an appropriate fit. While our focus has been on trying to leverage our core manufacturing and project management skills, many of our resources have now left Automodular and secured alternate roles.

We are working to rationalize our cost structure while still retaining adequate resources to properly address the GM litigation and meet our public company reporting obligations. By mid-year, we expect our staffing complement will be reduced to 2 full-time employees and 2 part-time consultants. In conjunction with the paring down of our cost structure, we are moving to a smaller corporate office and will be proposing a reduction in board size from 7 to 5 directors. Our expected annual cash burn rate starting in July is estimated to be the $1.25 million figure previously provided in Automodular's Management's Discussion and Analysis, dated March 5, 2015. Cash expenditures will fluctuate depending on the status of the GM litigation. If the litigation goes to trial, costs will increase.

Automodular believes that its cash balance and public company listing have value and our goal is to unlock that value to enhance shareholder wealth. Accordingly, we will no longer narrow our focus to opportunities that leverage our core skills but rather will consider all available opportunities. As part of this process, we will look to leverage the resources on hand to deal with the GM litigation.

This press release contains forward-looking statements that involve a number of risks and uncertainties. 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 and the risk factors detailed from time to time in the Corporation'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 Corporation 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.

Contact Information

  • Automodular Corporation
    Christopher S. Nutt
    President and Chief Executive Officer
    905 619 4202
    cnutt@automodular.com