Innovative Composites International Inc.

TSX VENTURE : IC
OTCQX : ICIZF


Innovative Composites International Inc.

March 14, 2013 09:02 ET

Innovative Composites International Inc. Announces Offering of Senior Secured Convertible Debentures

TORONTO, ONTARIO--(Marketwire - March 14, 2013) - Innovative Composites International Inc. (TSX VENTURE:IC)(OTCQX:ICIZF) (the "Company" or "ICI") is pleased to announce that it has entered into an agreement with Difference Capital Funding Inc. ("DCF"), as purchaser, for the private placement of a minimum of $2 million and a maximum of $2.5 million aggregate principal amount (the "Offering") of senior secured convertible debentures (the "Debentures"), which will mature five months following the date of issuance (the "Maturity Date"). The Maturity Date may be extended by the Company on a month-to-month basis up to December 31, 2013.

The Debentures will be priced at $1,000 per Debenture and will be convertible into units of the Company at any time prior to the Maturity Date. Each unit will be exercisable into one common share and one common share purchase warrant. The Company will seek exemptive relief on the conversion price for $500,000 of the aggregate principal amount of the Offering (the "Exempt Amount") such that the conversion price for the Debentures and exercise price for the warrants will be equal to $0.05 per unit and $0.05 per common share, respectively (but for the warrants, only for the first 12 months of their term, after which the exercise price shall be $0.10). Excluding the Exempt Amount, the conversion price of each Debenture shall be $0.10 per unit, and each warrant will be exercisable into one common share at an exercise price which is not less than $0.10 per common share. The warrants shall have a term of three years. The Debentures will bear an interest rate of 14% per annum and will be secured by a general security agreement and a perfected first-priority security interest in all of the property of the Company.

Upon closing of the Offering, DCF will have the right to appoint two directors to the board of ICI.

Insiders of the Company intend to purchase between approximately $250,000 and $500,000 of the Offering. The Offering is considered to be a related party transaction as defined under Multilateral Instrument 61-101 ("MI 61-101"). The Offering is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of securities being issued to insiders nor the consideration being paid by insiders will exceed 25% of the Company's market capitalization, and the shares of ICI are listed on the TSX Venture Exchange (the "Exchange"). Insiders will not be permitted to purchase any Debentures constituting the Exempt Amount.

The Company has applied for an exemption from shareholder approval for the pricing of the Exempt Amount, given the immediacy of its need to repay KS Centoco, the holder of a $2 million secured convertible debenture that demanded repayment on March 4, 2013 (the "KS Centoco Loan"). The demand made by KS Centoco does not permit adequate time to hold a meeting of shareholders.

In the event that the Offering will create a new "Control Person", as defined by the policies of the Exchange, Debentures issued to any such party will contain restrictions on exercise such that the holder will not be able to hold 20% or greater of the Company's issued and outstanding securities prior to the Company obtaining shareholder approval for the new Control Person.

Proceeds from the Offering will be used to repay KS Centoco Loan, and for working capital and general corporate purposes. The Offering is expected to close on or about March 26, 2013, and is subject to the satisfaction of customary conditions (including due diligence), and approval by the Exchange.

About Innovative Composites International Inc.

Headquartered in Toronto, Canada, Innovative Composites International Inc. (TSX VENTURE:IC)(OTCQX:ICIZF) is a high-tech engineering and manufacturing company whose goal is to utilize its proprietary "green" composite materials and building systems to provide innovative, engineered product solutions to markets that include prefabricated modular housing, shelters and containers, and industrial applications.

To find out more about ICI please visit our website at: www.innovativecompositesinc.com.

Statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in its target markets, the demand for ICI's products and the availability of funding. These forward-looking statements are made as of the date hereof and ICI does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from ICI's expectations and projections.

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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