MagIndustries investor completes due diligence

2009-08-31 18:07 ET - News Release

Mr. Rich Morrow reports

MAGINDUSTRIES CORP. ANNOUNCES THE COMPLETION OF DUE DILIGENCE AND EXTENSION OF EXCLUSIVITY PERIOD

MagIndustries Corp. received confirmation today that the legal, technical and financial due diligence with respect to the investment in the company contemplated by the memorandum of understanding signed on June 12, 2009, as described in Stockwatch on June 12, 2009, June 15, 2009, and July 31, 2009, has been completed. No material issues have been raised.

The MOU provides for a proposed purchase of 400 million common shares of MagIndustries by a large, Chinese-based, multinational company at a price of 70 cents per common share. The company has granted an extension of the exclusivity period under the MOU to Sept. 25, 2009, to accommodate the subscriber's review and decision process.

The company has been advised that the subscriber has submitted the mandatory external approval request to the government of the People's Republic of China for an indication of non-objection to the investment.

In meetings in Beijing in the first week of August between the company and the subscriber, corporate governance principles for the effective management of the company for the benefit of all shareholders were presented. These principles were included in draft definitive documentation consisting of a subscription agreement and an agreement of shareholders submitted to the subscriber.

Closing of the transaction contemplated by the MOU continues to be subject to a number of conditions and approvals which include, among other conditions, approval of the transaction by the company's board of directors, approval by a majority of MagIndustries shareholders at a special meeting of shareholders, approval by the subscriber's board of directors, and the approval of all relevant regulatory and government authorities. The investment is also conditional on the arrangement of debt financing for the completion of phase I of the company's Kouilou potash project in the Republic of Congo, as a complement or alternative to debt financing that could be available to the company from other sources, on terms agreeable to MagIndustries. Given these conditions there is no assurance that the transaction will be completed.

We seek Safe Harbor.