DynaMotive Technologies Reports Status of CD Negotiations
21 January 1999
DynaMotive Technologies Reports Status of CD Negotiations, Makes an Offer For a Negotiated Settlement and Responds to Writs Received From CD Holders
VANCOUVER, British Columbia, Jan. 21 -- DynaMotive
Technologies Corporation announced today that it has made a
final offer of settlement to holders of Convertible Debentures issued in April
of 1998 which matured on December 31, 1998. The Company has offered the
CD holders a combination of cash and securities in satisfaction of the
outstanding principal and interest obligations under the Convertible
Debentures. In the event the Company is unable to reach agreement with the
CD holders, it intends to vigorously defend all claims advanced by CD holders.
To date, 11 of the remaining 23 CD holders have commenced enforcement
proceedings in British Columbia.
As announced on October 5, 1998, the Company suspended conversions of its
Convertible Debentures in light of the significant decline in trading price of
the Company's common stock and the concern that this decline may have been the
result of market manipulation. The Company engaged the services of special
counsel and a consultant specializing in securities trading violations and
appointed an interim CFO with experience in the area of debt refinancing to
assist in its investigation of the market price decline and provide advice as
to how to deal with the outstanding Convertible Debentures.
In addition, the decline in trading price resulted in the issuance of a
significantly larger number of common shares of the Company to satisfy
conversions of Convertible Debentures necessitating the NASD requirement for
shareholder approval for the issuance of any further shares in satisfaction of
conversions. In response to a poll of shareholders conducted in November,
representatives of over 51% of the total issued and outstanding shares
indicated they would not vote in favour of a resolution authorizing the
issuance of additional shares to satisfy conversions of the Convertible
Debentures.
Based on the advice received from its advisors and the position of its
shareholders, the Company determined that no further shares would be issued to
satisfy conversions of the Convertible Debentures and set about negotiating a
restructuring of the principal and interest obligations under the Convertible
Debentures. The company notified all CD holders of its position in early
December and invited them and their representatives to a meeting on
December 18, 1998 which was attended by a majority of CD holders. At that
meeting it was agreed that the Company would submit a proposal to the
CD holders by January 7, 1999. The initial proposal was rejected by the
CD holders.
On January 15, 1999 the Company submitted a further and final proposal to
CD holders which reflects investment returns based on the market price for the
Company's common shares in effect at the time the Convertible Debenture
financing was entered into. This proposal offers an equitable settlement for
the CD holders while providing protection for existing shareholders and
maintaining the Company's long term viability.
DynaMotive remains committed to achieving an equitable negotiated
settlement that represents the best interests of all shareholders. However,
should this process prove unsuccessful, the Company will challenge the
enforcement of the Convertible Debentures on the grounds it has been advised
are available, including criminal interest and frustration of contract due to
stock manipulation by certain CD holders.
Forward Looking
Statements in this news release concerning the company's business outlook
or future economic performance; anticipated profitability,
revenues, expenses, or other financial items; and statements concerning
assumptions made or expectations as to any future events, conditions,
performance or other matters, are "forward-looking statements" as that term
is defined under the Federal Securities Laws.
Forward-looking statements are subject to risks, uncertainties and other
factors which could cause actual results to differ materially from those
stored in such statements. Such risks, uncertainties and factors include, but
are not limited to, changes and delays in product development plans and
schedules, customer acceptance of new products, changes in pricing or other
actions by competitors, patents owned by the Company and its competitors, and
general economic conditions, as well as other risks detailed in the Company's
filings with the Securities and Exchange Commission.