SOURCE: Groen Brothers Aviation, Inc.

Groen Brothers Aviation, Inc.

May 22, 2012 07:00 ET

Groen Brothers Aviation Announces Definitive Agreement to Restructure Company and Eliminate $170 Million in Debt

SALT LAKE CITY, UT--(Marketwire - May 22, 2012) - On May 2, 2012, Groen Brothers Aviation, Inc. ("GBA") (PINKSHEETS: GNBA) announced that it has reached an agreement with its creditors for a major financial reorganization of the Company. That announcement also reported that on the same day the Company had filed both an SEC Form 8-K Significant Events Statement and a "Preliminary" SEC Form 14C Information Statement with the U.S. Government describing the transaction, noting that approval for the transaction has already been received from the holders of a majority of its voting shares. On May 16, 2012, following the statutory review period for SEC review, the Company further filed the "Definitive" SEC Form 14C Information Statement that permits the Company to carry out the restructuring transaction on or after June 10, 2012. Both the May 2nd and May 16th SEC Form 14C filings may be found on the GBA website at

As previously reported, the restructuring will result in the elimination of substantially all of the Company's debt obligations, which currently exceed $170 million. In this transaction, GBA will transfer all of its assets, notably all of its technologies, know-how, and associated patents into a new private entity to be formed by GBA, which is expected to be called "Groen Brothers Aviation Corporation" (GBAC). Complementing this action by GBA, these creditors have agreed to exchange essentially all of their debt instruments for a majority ownership of common stock in GBAC. GBA will continue to hold ownership of 4% of the common stock of GBAC.

As a result of this transaction, GBAC will become the operating company engaged in the exploitation of gyroplane and gyrodyne technology developed by GBA, unconstrained by the debt burden that limited GBA's ability to do so. GBA itself will become a "non-operating" entity that will derive its revenue and value from its interest in GBAC, enabling GBA's common shareholders to retain a stake in the continued development of GBA technology.

About Groen Brothers Aviation, Inc.

Groen Brothers Aviation, Inc. has been developing gyroplane technology since 1986 and is recognized as the world's leading authority on sustained autorotative flight. Powered by a Rolls-Royce gas turbine engine, GBA developed the world's first commercially viable modern gyroplane -- the first "autogiro" to utilize a jet engine -- the Hawk 4 Gyroplane. The Hawk 4 was used extensively for security aerial patrol missions during the 2002 Winter Olympics in Salt Lake City.

GBA announced in October 2005 that DARPA, an arm of the United States Department of Defense, awarded a contract to GBA to form and lead a team to design a proof of concept high-speed, long-range, vertical takeoff and landing (VTOL) aircraft designed for use in combat Search and Rescue roles. This modern rotorcraft, named by DARPA as the "Heliplane," was designed to exploit GBA's gyrodyne technology; offering the VTOL capability of a helicopter, the fast forward flight of an airplane, and the safety, simplicity, and reliability of a GBA gyroplane. GBA successfully completed Phase I of the Heliplane contract and participated as a subcontractor to the Georgia Institute of Technology for tip-jet noise reduction work for Phase IB, which was also successful. To date, DARPA has not announced funding for Phase II and the future involvement of the Company in the DARPA contract is unknown. The Heliplane could be the next generation rotor wing aircraft, meeting economy and performance goals not considered achievable by any other type of VTOL aircraft.

Further information about the Company, its products, and individual members of the GBA Team is available on the Company's web site at:

Safe Harbor Statement/Forward-Looking Information Disclaimer

Certain statements in the news release by Groen Brothers Aviation are forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking information is subject to risk and uncertainty. Certain statements in this Press Release may contain forward-looking information that involves risk and uncertainty, including but not limited to, the Company's ability to fund ongoing operations and to complete its obligations under the government contract and its other ongoing commitments. Future results and trends depend on a variety of factors, including the Company's successful execution of internal performance plans and agreements; product development and performance; risks associated with regulatory certifications of the Company's commercial aircraft by U.S. and foreign governments; government bid and funding availability uncertainty; other regulatory uncertainties; performance issues with key suppliers and subcontractors; governmental export and import policies; and the ability to adequately finance operations including meeting its debt obligations, fund manufacturing and delivery of products.

Contact Information

    Hank Parry
    Al Waddill
    Investor Information
    Groen Brothers Aviation, Inc.