Groen Brothers Aviation, Inc. ("GBA") (PINKSHEETS: GNBA) is
announcing in contemplation of the financial restructuring of the
Company, that on July 19, 2012 an agreement was reached between its
newly formed wholly owned subsidiary, "Groen Brothers Aviation
Corporation" ("GBAC") and The General Office of Wuhai City
Government ("WCG"), Inner Mongolia Autonomous Region, P.R. China.
Under this agreement, GBAC will form a Joint Venture Company (as
described below), to establish a new Wuhai Aviation Industrial Park
within the Wuhai Economic Development Zone Low Carbon Industrial
Park. The GBAC Joint Venture Company, as the anchor tenant of the
Aviation Industrial Park, will also establish a series of modern
aircraft manufacturing facilities primarily to produce FAA Type
Certified Gyroplanes of GBA's designs and a few carefully chosen
fixed wing designs that fit within GBA's standard for highly
advanced aircraft. This will include the tandem seating SportHawk
and ShadowHawk Gyroplane series, the ArrowHawk Gyroplane series
starting at seven seats but subsequently up through 14 seats, and
eventually the GBA GyroLiner class VTOL airliner series from 19
seats up to 100 seats. Though the market for these aircraft is
expected to be extremely large within China, these aircraft will be
produced for worldwide distribution.
The Wuhai Aviation Industrial Park established by the GBAC Joint
Venture Company will include full airport facilities capable of
properly handling general aviation operations including a runway
sufficient in length and size for use by executive business jets up
to the Gulfstream sized aircraft. In addition to the manufacturing
facilities and airport terminal operations, located within the
Wuhai Aviation Industrial Park will be training facilities for
aircraft assembly personnel, aircraft "A&P" mechanics training,
and both fixed wing and rotor wing pilot training with a pilot
center and flying club; a research and development center; a not
for profit aviation technology training center; and employee and
student housing. GBAC will be responsible for leading the whole of
this effort and providing the necessary cadre to ensure its quality
and timely completion. WCG will provide up to approximately 2.6
square kilometers of land within the Low Carbon Industrial Park for
placement of the Aviation Industrial Park and its associated
facilities.
GBA is also announcing that GBAC has entered into a joint
venture agreement with ZhongXin Group Ltd. Co. registered in Hong
Kong, SAR, China ("Hong Kong ZhongXin,"), a technology investment
company. Under this agreement, GBAC and Hong Kong ZhongXin are
establishing the Joint Venture Company described above, tentatively
named "GBA Aviation Investment Limited" ("GAI-JV"). This Company
will be registered in Wuhai City, Inner Mongolia Autonomous Region,
P.R. China, with each party holding a 50% share ownership. GBAC
will license appropriate "civil" gyroplane technologies to GAI-JV.
None of GBAC's military specific technologies will be transferred
and the JV company will be restricted to civil aircraft only.
On May 1, GBA filed a Form 8-K, with a copy of its associated
Schedule 14C Preliminary Information Statement, which announced
that following months of in depth negotiations with all its
creditors, most of whom are significant equity holders as well, GBA
had reached an agreement for a plan to accomplish a major financial
restructuring. That filing also noted that the Company had received
a commitment from the holders of a significant majority of voting
shares to vote in favor of the restructuring plan; subsequently a
majority of votes has been received.
This plan will result in the elimination of substantially all of
the Company's debt obligations, which currently exceed $170
million, through the exchange of all of such debt for stock in
GBA's newly formed private entity (as mentioned above) named,
"Groen Brothers Aviation Corporation". In return, GBA will transfer
substantially all its assets, notably all of its technologies,
knowhow, and associated patents, into Groen Brothers Aviation
Corporation in exchange for this relief of debt and maintenance of
some continued ownership of Groen Brothers Aviation Corporation. In
contemplation of this financial restructuring, GBA filed in the
State of Delaware a Certificate of Incorporation for GBAC as a
wholly-owned subsidiary of GBA Inc.
GBA anticipates that its financial restructuring process will be
completed on July 31st or soon thereafter. It is expected that
based on a transaction date of July 31st, the "Secured Debt
Obligation Holders" in the aggregate will own approximately 73% of
GBAC, the "Other GBA Debt Obligation Holders" in the aggregate will
hold approximately 14%, Management combined will hold 9%, and GBA
itself will hold approximately 4% of GBAC. It is anticipated that
GBAC will also form additional subsidiaries wherein GBA developed
technologies will be utilized and significant additional funding
will be raised in those subsidiaries to complete the
commercialization of GBA's Civil and Military technologies, both
manned and unmanned.
The activities that heretofore have been undertaken by GBA and
its operating subsidiary Groen Brothers Aviation USA, Inc. will be
carried forward after the financial restructuring by the operations
of Groen Brothers Aviation Corporation. So that we may be able to
retain the 'good-will-value' of the Groen name within the aerospace
industry, the new private company has been named "Groen Brothers
Aviation Corporation." The existing public company, GBA, will
continue to be a "holding company," but whereas it now owns 100% of
its technologies and is in debt by more than $170,000,000, its
total asset after the restructuring will become its minority
interest in Groen Brothers Aviation Corporation and it will be,
essentially, debt free.
About Groen Brothers Aviation, Inc.
Groen Brothers Aviation, Inc. has been developing gyroplane
technology since 1986 and is recognized as the world's leading
authority on sustained autorotative flight. Powered by a
Rolls-Royce gas turbine engine, GBA developed the world's first
commercially viable modern gyroplane -- the first "autogiro" to
utilize a jet engine -- the Hawk 4 Gyroplane. The Hawk 4 was used
extensively for security aerial patrol missions during the 2002
Winter Olympics in Salt Lake City.
GBA announced in October 2005 that DARPA, an arm of the United
States Department of Defense, awarded a contract to GBA to form and
lead a team to design a proof of concept high-speed, long-range,
vertical takeoff and landing (VTOL) aircraft designed for use in
combat Search and Rescue roles. This modern rotorcraft, named by
DARPA as the "Heliplane," was designed to exploit GBA's gyrodyne
technology; offering the VTOL capability of a helicopter, the fast
forward flight of an airplane, and the safety, simplicity, and
reliability of a GBA gyroplane. GBA successfully completed Phase I
of the Heliplane contract and participated as a subcontractor to
the Georgia Institute of Technology for tip-jet noise reduction
work for Phase IB, which was also successful. To date, DARPA has
not announced funding for Phase II and the future involvement of
the Company in the DARPA contract is unknown. The Heliplane could
be the next generation rotor wing aircraft, meeting economy and
performance goals not considered achievable by any other type of
VTOL aircraft.
Further information about the Company, its products, and
individual members of the GBA Team is available on the Company's
web site at: www.groenbros.com.
Safe Harbor Statement/Forward-Looking
Information Disclaimer
Certain statements in the news release by Groen Brothers
Aviation are forward-looking within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
information is subject to risk and uncertainty. Certain statements
in this Press Release may contain forward-looking information that
involves risk and uncertainty, including but not limited to, the
Company's ability to fund ongoing operations and to complete its
obligations under the government contract and its other ongoing
commitments. Future results and trends depend on a variety of
factors, including the Company's successful execution of internal
performance plans and agreements; product development and
performance; risks associated with regulatory certifications of the
Company's commercial aircraft by U.S. and foreign governments;
government bid and funding availability uncertainty; other
regulatory uncertainties; performance issues with key suppliers and
subcontractors; governmental export and import policies; and the
ability to adequately finance operations including meeting its debt
obligations, fund manufacturing and delivery of products.
FOR FURTHER INFORMATION Hank Parry/Media Al Waddill/Investor
Information Groen Brothers Aviation, Inc. 801/973-0177