ARNPRIOR, ONTARIO--(Marketwired - June 29, 2016) - Pacific Safety Products Inc. (TSX VENTURE:PSP) ("PSP" or the "Company"), is pleased to announce today that the Company was awarded a significant long-term contract from the Government of Canada for the supply of fragmentation vests to the Canadian Armed Forces. The contract has an estimated total value of up to $33 million, assuming all additional optional orders are fully exercised.
The contract provides for the delivery of an initial order of 12,500 fragmentation vests and additional carriers, valued at approximately $11,171,000, as well as options for the Government to subsequently order additional fragmentation vests in minimum orders of 1,500. PSP will negotiate a delivery schedule for the contract but currently expects that the initial order will be delivered within two years, while optional additional orders would be delivered during the subsequent eight-year period.
Production of the fragmentation vests is expected to begin later this summer at the Company's plant in Arnprior, Ontario. PSP has the scalable resources to manufacture these goods with minimal-to-no investment required, which PSP expects will have a positive impact on gross margin due to superior efficiencies in the business.
The contract is beneficial to PSP as it allows the Company to deliver products to the Canadian Armed Forces over an 8-10 year period without the requirement to re-tender its business. The built-in option to order additional vests will allow the Government of Canada to order larger quantities of vests from the Company should they be required. Although additional optional orders are at the discretion of the Government, PSP expects that some or all of the options will be exercised. If all options are exercised, the total value of the contract would be approximately $33 million.
PSP pursued this contract for some time and believes that the Company's efforts to strengthen its quality system and ballistic performance aided in securing the contract. PSP continues to pursue additional tender opportunities with the Government of Canada with a view to increasing and protecting shareholder value.
About PSP: The mission statement of PSP is ... "we bring everyday heroes home safely"®. PSP is an established industry leader in the production, distribution and sale of high-performance and high-quality safety products for the defence and security market. These products include body armour to protect against ballistic, stab and fragmentation threats, ballistic blankets to reduce blast effects, tactical clothing, and protective products against chemical and biological hazards. PSP is the largest body armour manufacturer in Canada, directly supplying the Canadian Department of National Defence, Federal Government Agencies and major Canadian law enforcement organizations. The Company, through its U.S. subsidiary Sentry Armor Systems Inc., provides body armour products under the GH Armor Systems® brand to U.S. based law enforcement and private security firms. The Company also produces tactical clothing. Pacific Safety Products is a reporting issuer in British Columbia, Alberta and Ontario, Canada and publicly trades under the symbol PSP on the TSX Venture Exchange.
Forward-Looking Information: This news release contains certain statements which may constitute "forward-looking information" within the meaning of applicable securities laws. These statements relate to anticipated or assumed events with respect to the Company's business, including the production and delivery schedule in respect of the contract, future Government of Canada orders under the contract and future tenders the Company expects to participate in. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Although the Company believes that the expectations conveyed by the forward-looking information are reasonable based on information currently available to it, these statements are based on management's expectations, estimates and projections and involve a number of risks, uncertainties and assumptions, both known and unknown. As a result, the results or events depicted in these forward-looking statements may differ materially from actual results or events. Many factors could cause results to differ materially from those stated including, but not limited to the impact of price and product competition, changes in general industry and market conditions, various operational matters, ability to retain key staff, restrictions and covenants contained in credit agreements, fluctuations in currency, exchange and interest rates and commodity prices, ability to retain existing customer contracts, reliance on key customers, as well as various other factors which are discussed in the Company's filings with applicable securities regulatory authorities at www.sedar.com. Any forward-looking statement speaks only as of the date of this news release and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.