Equity Exchange Offer to Bondholders Authorized
6 October 2000
Equity Exchange Offer to Bondholders Authorized
WOOD-RIDGE, N.J., Oct. 6 Rotary Power International, Inc.
(OTC Bulletin Board: RPIN) ("RPI") announced today that it has authorized its
legal counsel to prepare the necessary legal documentation which will permit
RPI to make an offer to the holders of its outstanding Bonds to exchange each
$2.00 of principal and accrued interest on the Bonds for one share of RPI's
common stock. Under the terms of the offer, the Bondholders will not be
permitted to sell or transfer the shares of common stock received in the
exchange offer for a period of two years after the closing of the exchange;
provided that, if RPI otherwise files an applicable registration statement
with the Securities and Exchange Commission during such two year period, RPI
will include the shares issued to the Bondholders in such registration
statement. The additional terms and conditions of the offer will be set forth
in the offering documents.
(Logo: http://www.newscom.com/cgi-bin/prnh/20000921/RPINLOGO )
In connection with the exchange offer, RPI will also be soliciting
consents from the holders of a majority of the outstanding principal amount of
the Bonds to amendments to the Bond indenture which will eliminate the
security interest of the Bondholders in any inventory and equipment acquired
by RPI after the closing date of the exchange offer and also eliminate the
requirement that RPI deposit an amount equal to 50% of the principal of and
accrued interest on the Bonds with the Bond trustee by no later than December
31, 2000. As of June 30, 2000, the principal of and accrued interest on the
Bonds totaled approximately $4,600,000. The Bonds mature on December 15, 2007
and accrue interest, payable at only maturity, at the rate of 10.403% per
annum. At maturity, RPI will owe a total of $10,000,000 in principal and
interest on the Bonds.
The exchange offer is subject to completion of appropriate offering
documentation complying with applicable securities laws. RPI estimates that
the offering documents will be sent to Bondholders by mid-October and that the
offer will remain open until November 30, 2000.
Douglas M. Drew, Chief Financial Officer of RPI, commented that "the
decision to undertake this exchange offer was made after lengthy consultation
with the placement agent who assisted RPI with the sale and placement of the
Bonds back in December 1997. We believe that this offer will be attractive to
the Bondholders because it will give them an opportunity to participate in the
early stages of the growth of RPI and at the same time give them a degree of
liquidity sooner than contemplated under the terms of the Bonds".
Mr. Drew further commented that "RPI has ongoing debt restructuring
discussions with other major creditors that are expected to be finalized
before the end of this year".
RPI is internationally recognized as the leader in the field of heavy
fueled rotary engines especially the Stratified Charge Omnivorous Rotary
Engines (SCORE (TM)).
RPI's common shares are quoted on the Nasdaq Over-the-Counter Bulletin
Board under the symbol RPIN.
Visit their Web Sites at: http://www.pegasuspower.com and
http://www.rotarypowerinternational.com
In order to communicate company progress and improve information to
shareholders, RPI has retained Londonderry Capital Structuring Ltd. to provide
full spectrum investor relation services.
This press release contains "forward-looking statements" based on current
expectations, forecasts and assumptions that involve risks and uncertainties
that could cause actual outcomes and results to differ materially. These
risks and uncertainties include price and product competition, dependence on
new product development, reliance on major customers, customer demand for our
products, control of costs and expenses, general industry conditions and
interest rate and currency exchange rate fluctuations. For a further list and
description of such risks and uncertainties, see the reports filed by RPI with
the Securities and Exchange Commission. RPI disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.