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Simula Inc. Announces Redemption of Preferred Stock

9 November 2000

Simula Inc. Announces Redemption of Preferred Stock; Uncertainty of Overhang is Eliminated

    PHOENIX--Nov. 8, 2000--Simula Inc. Wednesday reported that the holder of its 6% Series A Convertible Preferred Stock has elected to convert all remaining Series A shares.
    In March 1999 the company, through a private placement, issued preferred shares with a face value of $7.5 million that could be converted into a maximum of 1,982,681 common shares. As of Sept. 30, 2000, the company had issued 1,264,332 common shares in connection with prior conversions, and preferred shares with a face value of $1.9 million remained outstanding.
    Due to the regulatory and agreement limitations on the number of common shares that could be registered and used to satisfy the conversion rights, the company will not be able to convert all of the remaining Series A into common shares.
    In accordance with a redemption formula in the Securities Purchase Agreement, the remaining preferred shares will be redeemed for $1,934,831. The redemption premium of $982,059 will be recorded as a dividend on the preferred shares in the fourth quarter.
    "The overhang of the potential dilution from the preferred issue has now been eliminated," said Brad Forst, president and CEO of Simula. "There is certainty about the effect of the Series A, and it is now behind us."
    "This transaction, although deemed necessary in 1999 due to the company's financial condition, was an unfortunate financing. But the good news is that this is one more of the company's issues that has been addressed, and it is another step in cleaning up our balance sheet."
    Following the redemption, which will be funded through the company's existing credit facility, there will be approximately 12,136,600 shares of common stock outstanding.