Allen-Vanguard reaches deal with Philadelphia investment company to go private

By The Canadian Press

OTTAWA - A financially troubled Ottawa company that makes high-tech equipment like bomb disposal devices has found a white knight. Allen-Vanguard (TSX: VRS.TO) says it has reached a deal that will see it become a 100 per cent-owned affiliate of investment partnerships managed by Versa Capital Management Inc, a Philadelphia-based private equity investment firm. Versa will provide both equity and debt capital to Allen-Vanguard, which has been struggling to recapitalize as it copes with a massive debt load.

The company says there are no plans to move the Company's head office from Ottawa or its operations in Canada, the United States or the United Kingdom.

Allen-Vanguard products are used in more than 120 countries. Its products include Electronic Counter-Measures ("ECM") equipment for jamming remote detonation of terrorist devices, specialty for bomb disposal, remote intervention robots for hazardous applications, and personal protective wear to deal with explosive and bio-chemical agents.

In a news release issued Saturday announcing the deal with Versa, Allen-Vanguard stated "all shares, options, restricted stock, warrants and other securities in Allen-Vanguard and any related rights will be cancelled on closing of the transaction, with no consideration paid to holders. "Last month, Allen Vanguard reported a net loss of $99.2 million or 91 cents per share for the quarter ended June 30, almost tripling year-earlier losses of $36. million or 34 cents per share.

Allen-Vanguard said revenue surged 64 per cent during the quarter, but said top line performance fell short of expectations as U.S. -based clients deferred spending plans.

Quarterly revenue totalled $51.3 million compared to $31.2 million recorded during the corresponding quarter of 2008.

The company reported net debt of $229.7 million for the quarter.