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The Versatech Group Announces $24 Million Gain on Sale of PaintPlas

5 April 2000

The Versatech Group Inc. (TSE: VGI) Announces $24 Million Gain on Sale of PaintPlas and Reduction of $43 Million of Financial Debt

    TORONTO, April 5 /CNW-PRN/ - The Versatech Group Inc. ("Versatech")
announced today that it has sold its entire interest in PaintPlas, Inc., a
painter of exterior automotive plastic parts, to the former owners for a
purchase consideration comprising the assumption of approximately $ 22,000,000
of interest bearing bank debt, $8,500,000 of interest bearing vendor notes,
$12,100,000 of preference share obligations (including accrued and unpaid
dividends of $ 1,350,000) and the assumption of net working capital. As part
of the transaction, "Versatech" agreed to forgive a $1,000,000 note due from
PaintPlas and to forego management fees owing.
    Concurrent with the PaintPlas sale, Versatech has settled existing
disputes with the group of former owners. It has also repurchased the rights
to acquire shares in the Common Stock of "Versatech" under a Share Exchange
Agreement issued at the time of the PaintPlas acquisition for $500,000 in cash
and a $500,000 debenture repayable at $25,000 per quarter over 5 years.
    The effective date of the PaintPlas closing has been contractually set as
December 31, 1999, and the company expects to record a net after tax gain on
sale of approximately $24,000,000. The 1999 PaintPlas Operating results are to
be accounted for in 1999 as discontinued operations.
    Ian Macdonald, Chairman and Chief Executive Officer commented, "The "sale
of PaintPlas" will enable Versatech to reduce its debt obligations by
$43,000,000 resulting in a significant strengthening of its balance sheet. In
addition, the buy-in of the Exchange Rights will eliminate the potential for
significant dilution associated with the Share Exchange Agreement."
    Rob Lee, President and Chief Operating Officer, added "the sale of
PaintPlas enables "Versatech" to concentrate its resources in the growth areas
of injection moulding, packaging, under the hood sealing systems and small
value added metal stampings."
    The Versatech Group Inc.'s headquarters are in Mississauga Ontario and it
carries on the design, prototype, validation and manufacture of components and
assemblies in the automotive industry. Versatech, through its six operating
subsidiaries and a joint venture, manufactures automotive sealing systems,
custom moulded elastomer products, soft trim interior automotive parts, small
part stampings and assemblies and manufactures and paints injection moulded
components.