Turbo Power Systems Inc.
TSX : TPS
AIM : TPS

Turbo Power Systems Inc.

June 19, 2008 02:00 ET

Turbo Power Systems Inc.: Issue of Loan Note and Related Party Transaction

CALGARY, ALBERTA--(Marketwire - June 19, 2008) - Turbo Power Systems, (TSX:TPS) (AIM:TPS) the innovative electrical machines and electronic systems provider, is pleased to announce that it has today completed a Pounds Sterling 3 million fundraising through the issue of a Loan Note to institutional and other investors. The fundraising provides funds for general working capital purposes, adds additional strength to the Company's balance sheet and will assist the Company in the financing of new and existing product developments.

Commenting on the Loan Note, the Company's Chairman, Graham Thornton said "I am delighted that we have secured this additional funding, which will bring added stability and working capital to TPS and support the development of our products and marketing activities. The Board remains confident for the future prospects of the Company and looks forward to providing a further update to shareholders at the time the Q2 results are released in August 2008."

The Company has obtained the conditional approval of the Toronto Stock Exchange (the "TSX") for the private placement.

Key terms of the Loan Note

The key terms of the loan note are as follows:

- Amount: Pounds Sterling 3 million

- Term: 36 months with the first repayment due 9 months after the initial drawdown of the Loan Note and to be fully repaid by 30th June 2011

- Drawdown: Initial drawdown of Pounds Sterling 1,500,000 with further tranches of Pounds Sterling 750,000 at the Company's discretion

- Annual interest rate: Calculated monthly at 1.17%, an annualised rate of 15%, of the outstanding amount of the Loan Note

- Conversion rate: The Loan Note is convertible at any time at the discretion of the Loan Note holders either to common shares of Turbo Power Systems or to A shares of Turbo Power Systems Limited, a wholly owned subsidiary of the Company at Pounds Sterling 0.04 per share

- Warrant: The Loan Note holders have been granted a warrant to acquire, in either common shares of Turbo Power Systems or A shares of Turbo Power Systems Limited, up to 15% of the value of the Loan Note at Pounds Sterling 0.035 per share. The warrant is exercisable at any time until 10 years after the date of drawdown of the Loan Note

- Early repayment: If the Loan Note is repaid early there will be an early repayment fee of 12.5% of the amount of the Loan Note that is repaid early

Related Party Transaction

Impax Asset Management Limited ("Impax"), which currently holds 14.35% of the issued share capital of the Company, is a related party for the purposes of the AIM rules. The issue of Pounds Sterling 1 million of the Loan Note to Impax constitutes a related party transaction for the purpose of the AIM rules for companies ("Aim Rules"). Impax is considered to be an insider pursuant to Canadian securities law.

Gartmore Investment Limited ("Gartmore"), which currently holds 11.85% of the issued share capital of the Company, is a related party for the purposes of the AIM rules. The issue of Pounds Sterling 1 million of the Loan Note to Gartmore constitutes a related party transaction for the purpose of the AIM Rules. Gartmore is considered to be an insider pursuant to Canadian securities law.

The Company's directors consider, having consulted with KBC Peel Hunt Ltd, the Company's nominated adviser, that the terms of the transactions being entered into by Turbo Power Systems with Impax and Gartmore are fair and reasonable insofar as its shareholders are concerned.

Subsequent tranches are conditional on approval of the Company's shareholders.

About Turbo Power Systems

Turbo Power Systems Inc (TSX:TPS) (AIM:TPS) is a leading UK based designer and manufacturer of innovative power solutions. The Group's products are all based on its core technologies of power electronics and high speed motors and generators and are sold into a number of market sectors including aerospace, rail, and various industrial sectors. The Company's products provide improved efficiency and reduced energy consumption compared to existing technologies.

Turbo Power System's existing customers include bluechip companies such as Hamilton Sundstrand, Bombardier, The National Rail Equipment Company, Eaton Aerospace and Lotus.

Except as otherwise permitted from the dealer registration and prospectus filing requirements of applicable Canadian securities laws, prior to the date that is four months and one day from the closing of the placing, the common shares of TPI issuable upon conversion of the Loan Notes or exercise of the warrants cannot be resold or transferred into Canada or to a resident of Canada through the facilities of the TSX or otherwise.

This communication to Shareholders and the public contains certain forward-looking statements. Actual results may differ from those indicated by such statements. All statements, other than statements of historical fact, included herein, are forward-looking statements that involve risks and uncertainties. There can be no assurance such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Contact Information

  • Turbo Power Systems
    Graham Thornton
    +44 (0)20 8564 4460
    or
    Turbo Power Systems
    Richard Bayliss
    +44 (0)20 8564 4460
    Website: www.turbopowersystems.com
    or
    Gavin Anderson & Company (PR)
    Ken Cronin
    +44 (0) 207 554 1400
    or
    Gavin Anderson & Company (PR)
    Michael Turner
    +44 (0) 207 554 1400
    or
    KBC Peel Hunt
    Oliver Scott
    +44 (0) 207 418 8900
    or
    KBC Peel Hunt
    Nicholas Marren
    +44 (0) 207 418 8900