WINNIPEG, Thursday, January 27, 2011 – Empire Industries Ltd. (Empire or the Company) (TSX-V: EIL) announces that it has received conditional approvals from the TSX Venture Exchange with respect to its previously announced non-brokered private placement and issue of convertible debentures, subject to some minor revisions as outlined below.
Private Placement – The Company will issue up to 40 million Units at a price of $0.05 per Unit for gross proceeds of up to $2.0 million with each Unit consisting of one common share and one-half of one warrant. Each whole warrant will entitle the holder to purchase one additional common share at a price of $0.10 per share for a period of two years from the date of closing of the offering. The Company anticipates closing the Private Placement on or before February 14, 2011.
Convertible Debentures The Company also advises that it is proceeding with the issue of up to $2,500,000 of Secured Subordinated Convertible Debentures which will have an annual coupon of 10% and a term of 5 years. The Debentures will initially be convertible at $0.10 per common share, however, in the event the Company obtains shareholder approval for a share consolidation, the conversion price can be lowered to $0.065 on a pre-consolidation basis. The Company is planning to seek approval for the consolidation at the next shareholder meeting scheduled for Spring, 2011. Subject to the ability to patriate funds to Canada by February 14, 2011, Qiguang Guandong Steel Structures Ltd. (Qiguang) has agreed to purchase $450,000 of the Private Placement and up to $1.05 million of the Debentures. Qiguang is unable to convert any Debentures purchased until such time as the TSX Venture Exchange has approved Qiguang as an Insider of Empire. To the extent that Qiguang is prevented from honouring its commitment within the regulatory timelines due to Chinese or Canadian regulatory issues, Empire will use its best efforts to find alternative buyers for the Units and Debentures.