Lombardi Media Corporation
TSX VENTURE : LC

August 16, 2007 08:45 ET

Lombardi Media Corporation Update: Acquisition and Going Private Transaction

TORONTO, ONTARIO--(Marketwire - Aug. 16, 2007) - Lombardi Media Corporation (TSX VENTURE:LC) -

Acquisition

The Corporation is pleased to announce it has completed the purchase of a direct marketing business located in the South Eastern United States as previously announced in its press release issued on July 24, 2007.

The business is very similar, and offers the same services as the Corporation's subsidiary, Clixx Direct Marketing Service Inc. in Scarborough, Ontario. The business operates from a facility of approximately 25,000 square feet of space and has a 24 year history of providing mail production services for direct marketers.

The business is expected to complement the operations of the Corporation's Lombardi Publishing Division whose performance over the past two years has been materially impacted by the rise in the value of the Canadian dollar versus the U.S. dollar.

The acquisition price was $1,850,000 U.S. which has been funded in its entirety by third party financing. The acquisition is expected to increase corporate revenues by approximately 18%. Earnings at the Corporation are not expected to have an immediate positive impact from the acquisition. The acquisition is considered by management as a long-term strategic plan to return Lombardi Publishing to profitability via the introduction of U.S. channels of distribution.

Going Private Transaction

On July 26, 2007, the Corporation announced its intention to complete a "going private transaction" by means of a share consolidation. The transaction was based on a valuation prepared by Klein Valuation Service Inc. effective March 31, 2007.

OSC Rule 61-501 requires that a valuation report prepared under the Rule have an effective date that is no more than 120 days before the earlier of the date that the disclosure document describing the transaction is sent to securityholders or the date that the disclosure document is filed with applicable regulatory authorities. The disclosure document was not completed and available for distribution to securityholders until August 3, 2007.

Accordingly, Klein Valuation Services Inc. was requested to prepare a new valuation report with an effective date of April 30, 3007. This date was selected because it was the end of the first interim quarter for the Corporation and consolidated financial information for that period has previously been prepared and delivered to the valuator. In addition, Klein Valuation Services Inc. was requested to amend its valuation report dated June 25, 2007 to include its opinion concerning the Proposed Acquisition and fairness opinion.

On August 3, 2007 a new valuation report (the "Valuation and Fairness Opinion") was delivered to the Corporation. The valuation report concluded that the fair market value of the Corporation at April 30, 2007 was $1,742,000 CDN or approximately $0.17 per share which represents an increase in the fair market value of the Corporation of $199,000 of $0.02 per share from the amounts previously announced as of March 31, 2007. The Corporation is proceeding with the share consolidation based on $0.22 per share as detailed in its Information Circular dated August 3, 2007.

Certain statements in the release may constitute forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors, which may cause actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statement.

Lombardi Media Corporation is a publishing and direct marketing company. The Corporation publishes consumer newsletters, books, and information databases in print and on-line format for approximately 250,000 customers in addition to providing a broad range of direct marketing services to the Canadian and U.S. direct marketing industries.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Consolidation and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Lombardi Media Corporation
    Carlo Cucullo
    Chief Financial Officer
    (905) 760-9929 x230