Avcorp Industries Inc. (TSX:AVP) has failed to gain TSX approval for an investment agreement that would infuse needed cash into the company and result in Holland's Panta Holdings BV gain a controlling interest in the Delta aircraft parts manufacturer.
Panta had agreed to provide $7.5 million in financing to keep Avcorp's business operating. Avcorp has been hit hard by the global economic downturn and has suffered a sharp decline in demand for manufactured aircraft parts from its main customers, which include Boeing, Cessna and Bombardier Aerospace.
First-quarter revenue fell 29%, and the company reported a $2 million net loss. It also breached its covenants with a number of loans from creditors that include Export Development Canada.
The Panta deal was contingent on the TSX's giving Avcorp a financial hardship exemption to a requirement that the company obtain shareholder approval for the deal. Avcorp said it's in discussions with Panta about alternatives to the original financing proposal, but noted there was no assurance that a revised restructuring proposal would emerge.
Panta, however, did advance an interim $1.6 million loan to Avcorp on June 15.
The deal would have given Panta a 61% stake in Avcorp after tripling the number of outstanding shares to 107.3 million. Under the original agreement, Panta would have provided $5 million in exchange for 50 million Avcorp shares and an additional $2.5 million from a three-year 8% convertible debenture.
Avcorp also cancelled its annual general meeting, which was originally scheduled for June 25, and said it would be rescheduled once the company's financial situation was resolved.
Avcorp's share price range during the past week: between $0.12 and $0.16; 52-week high: $1.25: 52-week low: $0.12.