Royal Laser Corp.

Royal Laser Corp.

March 29, 2006 08:15 ET

Royal Laser Corp. Announces Business Combination with Venture Steel Inc. & $40,000,000 'Bought Deal' Financing

TORONTO, ONTARIO--(CCNMatthews - March 29, 2006) -


Royal Laser Corp. ("Royal Laser") (TSX:RLC) is pleased to announce today that it has entered into a binding letter agreement with Ruben Rivas, the majority shareholder of Venture Steel Inc. ("Venture Steel"), to acquire all of the shares of Venture Steel. The total purchase price is $43.5 million, of which $2.5 million is payable in shares to be escrowed for a period of 12 months and the remainder payable in cash. In connection with the acquisition, Mr. Rivas will continue as President of Venture Steel Inc.

Commenting on the combination, Ruben Rivas stated: "Combining our two solid companies will create a number of synergies for us, and our customers. Not only do our customers have an exceptional quality service centre for their steel needs, but they now have a world-class manufacturing arm to meet all of their steel needs. We are that much more enthused about providing a one-stop solution to our customers."

Bill Iannaci, CEO of Royal Laser, stated the following: "Venture Steel is known for its exceptional quality of product, customer service and an IT system that is unparalleled in the industry. The combination of Royal Laser with Venture Steel is of significant benefit to our future - both for our continued growth and enhancement of shareholder value. The business combination with Venture Steel provides Royal Laser with a competitive advantage in an industry where price pressures continue to determine where future business is sourced. Venture Steel provides Royal Laser with the ability to control the input price and therefore downstream pricing, and enhanced ability to compete with off-shore manufacturing pricing."

The share acquisition, which is expected to close on or about April 28, 2006, is conditional on Royal Laser's satisfaction with its due diligence investigation of Venture Steel, negotiation of a definitive agreement between Royal Laser and the shareholders of Venture Steel, and receipt of all necessary regulatory approvals.

In order to finance the cash portion of the purchase price, Royal Laser has entered into an agreement with Canaccord Adams on behalf of a syndicate of underwriters, pursuant to which the underwriters have agreed to purchase 32,000,000 subscription receipts of Royal Laser on an underwritten private placement basis, at a price of $1.25 per subscription receipt, for gross proceeds to Royal Laser of $40 million. The underwriters have the option to purchase an additional $10 million of subscription receipts at the issue price at any time prior to closing of the private placement. Each subscription receipt will be automatically exercised for one common share of Royal Laser immediately prior to the effective time of the acquisition. Completion of the private placement, which is expected to occur on or about April 13, 2006, is subject to requisite regulatory approvals, including approval of the Toronto Stock Exchange.

About Venture Steel

Venture Steel is a custom flat rolled steel processor specializing in all types and grades of hot rolled, cold rolled and coated steel. Venture Steel operates out of combined facilities totalling 230,000 square feet located in the Greater Toronto Area, Ontario, where it currently processes approximately 360,000 tons of steel per annum. With minimal capital expenditures, Venture Steel has the capacity to process in excess of 700,000 tons of steel annually. For the fiscal year ended January 31, 2006 (unaudited), Venture Steel had $270 million in revenue and $6.5 million in EBITDA (normalized to $9.3 million based on certain extraordinary, non-recurring expenses).

Venture Steel has approximately 150 employees and is ISO-9001:2000 registered. Its customer base ranges from automotive OEMs, Tier 1-3 stampers and building products manufacturers located in Canada, the United States and Mexico.

About Royal Laser

Royal Laser, through its wholly owned operating subsidiaries, manufactures custom metal and wood products targeted at the multi-billion dollar high-end retail in-store development industry, the OEM industrial products, automotive and construction industries, in Canada, the United States and increasingly, overseas. Royal Laser employs state-of-the-art industrial technology to fabricate custom and standardized metal and wood products, including robotic wood finishing lines, advanced laser-based computer-integrated manufacturing systems and advanced stamping presses. In addition to contract manufacturing services, Royal Laser provides value-added engineering and design services.

Forward Looking Statements

This press release contains forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. When used herein, words such as "intend" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions by and information available to Royal Laser. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include risks and factors as are detailed from time to time in the Royal Laser's periodic reports filed with the Ontario Securities Commission and other regulatory authorities. Actual results may differ materially from those currently anticipated. Royal Laser has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained herein are expressed qualified by this cautionary statement.

The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.

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