Pan Terra Industries Inc.

Pan Terra Industries Inc.

March 01, 2005 19:29 ET

Pan Terra Industries Inc. Announces Brokered Private Placement of Unsecured Convertible Debentures & Third Quarter Results




MARCH 1, 2005 - 19:29 ET

Pan Terra Industries Inc. Announces Brokered Private
Placement of Unsecured Convertible Debentures & Third
Quarter Results

CALGARY, ALBERTA--(CCNMatthews - March 1, 2005) - Pan Terra Industries
Inc. (TSX VENTURE:PNT) (the "Company" or "Pan Terra") is pleased to
announce that it has signed of Letter of Engagement with Wolverton
Securities Inc. (the "Agent") effective March 1, 2005 to conduct a best
efforts brokered private placement of Unsecured Convertible Debentures
(the "Debentures") for gross proceeds of up to $5,000,000 (the
"Offering"). Each Debenture will have a maturity date of three years
from the closing date of the Offering (the "Maturity Date") and bear
interest at a rate of 10.0% per annum payable semi-annually on June 30th
and December 31st in each year. Each Debenture shall be convertible at
the option of the holder at any time prior to the Maturity Date at a
conversion price of $0.50 per share. At the Maturity Date, the Company
will repay the Debentures in full plus accrued and unpaid interest
("Maturity Value"). Alternatively, the Company may at its option on the
election date (60 days prior to the Maturity Date) give notice that it
will satisfy all or part of the Maturity Value by delivering to holders
of the Debentures freely trading common shares of the Company obtained
by dividing the Maturity Value (or part thereof) by 95% of the weighted
average trading price of the common shares on the TSX Venture Exchange
or the Company's then principal trading market for the 20 consecutive
trading days ending five trading days preceding the Maturity Date.

If at any time after two years from the date of issuance of the
Debentures, the closing bid price of Company's common shares, as
reported by the TSX Venture Exchange or the Company's then principal
trading market, exceeds $0.75 for 20 consecutive trading days, the
Company shall have the right, on at least 20 days prior written notice,
to require the holders of the Debentures to convert all or a pro rata
portion of the Debentures at $0.50.

The Debentures will be unsecured obligations of the Company and will
rank junior to the Company's senior secured indebtedness.

The use of the above brokered private placement proceeds will be used to
fund potential acquisitions of technical specialty demolition companies,
hazmat abatement companies, trenchless technology companies and
contractors, and working capital.

Third Quarter Results

The Company recorded a net loss of $1,233,526 ($0.07 per share) for the
three months ended December 31, 2004, compared to a gain of $1,909,398
($0.14 per share), which included the sale of P&NG properties of
$3,057,623, for the three month period ended December 31, 2003.

For the nine months ended December 31, 2004 the net loss was $3,702,028,
($0.21 per share) compared to a net gain of $1,357,536 ($0.10 per share)
for the nine-month period ended December 31, 2003. The year-over-year
increase in net loss is due to significant one time expenses incurred in
the last quarter, inefficiencies associated with rapid growth and
entering new business lines. In the quarter ended September 30, 2004,
the Company incurred a total of $2,201,551 in one time expenses related
to restructuring, goodwill impairment, and a provision to reduce a
previously booked future tax asset. No comparable expense was booked in
the three month period ended September 30, 2003. In addition,
significant non-cash expenses are included in the net income for the

In the quarter ended December 31, 2004, the Company incurred a negative
gross margin of $488,851 primarily related to an unanticipated cost
overrun regarding one of its major projects. Management has made the
appropriate changes in project supervision and is currently evaluating
the extent to which a portion of these unanticipated costs can be
repatriated in Q4.

Management is of the belief that this is not a systemic problem but
rather an isolated occurrence related to the complexity and management
of the project. However, the Company is currently upgrading its cost
control processes and procedures, including increasing supervisory site
oversight, and has recently acquired appropriate project estimating and
costing software in order to provide real time project costing and
management reporting to mitigate any further occurrences. Management
anticipates beginning the implementation of the new project estimating
and costing software, followed by appropriate training to field and
office personnel staff, in Q4.

Bluebird is the core operating company around which the Company is
building its integrated site redevelopment packaged services. Throughout
2004 the Company has experienced rapid growth in market demand for its
services, revenue growth, and increase in the size of projects and
contracts awarded to Bluebird. The demand is forecast to remain strong
throughout FY 2006.

In Q3 the Company focused on and achieved reductions in corporate
overheads of more than $800,000 per year. These reductions will
contribute to improved performance in fiscal year 2006. While the
Company has experienced rapid revenue growth and very strong demand for
its services, infrastructure building has not kept pace in the Company
resulting in gross margin shortfalls on several key projects.

In Q4 management is primarily focused on rapidly improving both
infrastructure and gross margins. The Company has purchased, and is
installing HCSS, an enhanced estimating, and project costing and project
management software. The Company is also upgrading its business
processes, accounting software and business reporting to enable the
Company to scale the business on a consistently profitable basis. In
addition the Company is aggressively implementing executive,
superintendent and project management level project oversight practices
on key projects.

The Company has also advanced the acquisition of two easily integrated
acquisitions with complementary services. Targeted acquisitions are
accretive, synergistic with the Company's site redevelopment services
offering and provide incremental gross margin and earnings growth. The
Company remains committed to seeking and closing acquisitions related to
the application of trenchless technologies for installing shallow and
deep services and rehabilitation of existing underground services.

The unaudited consolidated financial statements, accompanying notes, and
management's discussion and analysis are available on SEDAR website at

About Pan Terra

Pan Terra is an innovative construction solutions contractor that
develops new sites and redevelops existing sites to the point where an
owner, developer, or general contractor can proceed with building
construction. The focus of the Company is site preparation and
underground utility installations and rehabilitation. The Company offers
packaged services in industrial, commercial, retail and residential
markets. Pan Terra's major clients include leading General Contractors,
Owners and Developers. The Company has extensive relationships with
architects, engineers, and consultants. Pan Terra's growth plan
includes: acquisition of successful companies, leveraging of
environmental and trenchless technology solutions and total dedication
to exceptional operational performance and achievement.

FORWARD LOOKING STATEMENTS: This news release may contain
forward-looking statements. All statements, other than statements of
historical fact, are forward looking statements that involve various
risks and uncertainties. There can be no assurance that such statements
will prove to be accurate and actual results and future events could
differ materially from those anticipated in such statements. Important
factors that could cause results to differ materially from the Company's
expectations are disclosed elsewhere in documents that are available to
the public.



Contact Information

    Pan Terra Industries Inc.
    Don Sandford
    (403) 279-9094
    Pan Terra Industries Inc.
    Kaan Camlioglu
    (403) 279-9094
    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.