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RS Announces Bridge Financing and Its Election to Satisfy $25 Million Principal Amount of 8.5% Unsecured Convertible Debentures

^{Published on 2010-08-11 14:21:01 - Market Wire}
 

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISTRIBUTION IN THE UNITED STATES/

CALGARY, Aug. 11 /CNW/ - RS Technologies Inc. ("RS") (RS - TSX), a technology innovator and manufacturer of advanced composite products for infrastructure markets, today announced that it intends to complete a bridge financing by way of private placement of a unit of RS to Marjad Inc., a company wholly owned by RS's chairman, Mr. Wilmot Matthews, for total gross proceeds of $2 million. The unit of RS will consist of a $2 million principal amount of unsecured promissory note (the "Note") and 1,000,000 common shares of RS. Completion of the private placement of the common shares is subject to certain conditions including approval of the Toronto Stock Exchange. The common shares of RS issuable pursuant to the private placement will be subject to a hold period of four months and one day from the date of closing.

The Note will be due and payable on November 1, 2010 (the "Maturity Date") and will accrue interest at a rate of twelve (12%) percent per annum payable on the Maturity Date. Pursuant to the terms of the Note, RS must repay the Note, together with any accrued interest, out of the net proceeds of the first debt or equity financing completed by RS on or before the Maturity Date. RS intends to use the proceeds from the bridge financing to fund general working capital deficiencies until RS secures permanent funds for both its near term working capital needs and its anticipated manufacturing expansion. As announced on June 22, 2010, RS has engaged Macquarie Capital Markets Canada Ltd. as its financial advisor to assist RS in securing funds for both its near term working capital needs and its anticipated manufacturing expansion.

RS also announced its election to satisfy its obligation to repay all of the $25 million principal amount of 8.5% unsecured convertible debentures (the "Debentures") of RS due on October 7, 2010 by issuing and delivering to the holders of the Debentures that number of common shares of RS equal to the number obtained by dividing such principal amount of the Debentures by 95% of the weighted average trading price per common share of RS for the 20 consecutive trading days ending on September 30, 2010.

The securities offered have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the U.S. Securities Act.

About RS

RS is an ISO 9001:2008 certified technology innovator that develops advanced composite material products for infrastructure markets. The composite products manufactured using the company's proprietary resins and processes are typically lighter, more durable and longer-lasting than competing products made from the traditional building blocks of wood, steel or concrete. RS's flagship product is its award-winning RStandard(R) composite pole. The pole is used as transmission and distribution poles to carry electric grids and as communication structures for various uses including wireless networks and microwave communications systems.

For the latest on RS's developments, go to the company's website at [ www.grouprsi.com ].

"RStandard" is a registered trademark of RS.

Certain information set forth in this news release, including management's assessment of RS's future plans, operations and use of proceeds of the bridge financing, contains forward-looking statements which are based on RS's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects", "anticipates", "believes", "projects", "plans" and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause RS's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, RS not completing the bridge financing to fund general working capital deficiencies, RS not securing permanent funds for both its near term working capital needs and anticipated manufacturing expansion, RS's lack of revenues and unpredictability of future revenues; the uncertainty of the profitability of existing and contemplated products of RS; RS's ability to raise capital on acceptable terms when needed; RS's ability to attract and retain key employees; competition from established competitors with greater resources; the uncertainty of the developing markets in which RS operates; the risks associated with rapidly changing technology; RS's reliance on third parties to supply raw materials and the cost of such raw materials; intellectual property risks, foreign exchange rate fluctuations and changes in general economic, market and business conditions. Many of these risks and uncertainties are described in RS's annual information form for the year ended December 31, 2009 and other documents RS files with the Canadian securities authorities. The forward-looking statements are made as of the date hereof and RS assumes no obligation to update or revise such statements to reflect new events or circumstances except as required by applicable securities laws.