FTG Announces C$6,000,000 Bought Deal Private Placement Offering in Support of a Planned Acquisition

Potential acquisition adds new products, new equipment and new revenue to FTG’s US based facilities.

3:30 PM EDT Tuesday, April 19, 2016
TORONTO, ONTARIO–(Marketwired – April 19, 2016)

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Firan Technology Group Corporation (TSX:FTG) (“FTG” or the “Company”) is pleased to announce that it has entered into a non-binding letter of intent and an exclusivity period to acquire (the “Acquisition”) substantially all of the assets of an aeronautics equipment manufacturing division (the “Business”) of a large US-based technology company (the “Vendor”). The purchase price of approximately US$9.3 million in cash is subject to customary working capital and other adjustments.

In conjunction with the potential Acquisition, the Company also announces that it has entered into an agreement with Acumen Capital Finance Partners Limited, as lead underwriter, on behalf of a syndicate of underwriters, to issue, on a bought deal private placement basis, C$6,000,000 of special warrants of the Company (the ” Special Warrants “) to partially finance the Acquisition (the “Offering”).

“We are very excited about the potential Acquisition which we expect would add significant scale to FTG’s US operations, accelerate their capacity utilization and generate significant contribution margin” said Brad Bourne, President and Chief Executive Officer of the Company. “The planned Acquisition is aligned with our focus on the aerospace and defense markets and with both our Circuits and Aerospace product offerings.”

Completion of the Acquisition, which is expected to occur in June, 2016, is subject to final due diligence, the negotiation and entering into of a definitive acquisition agreement with the Vendor and the satisfaction or waiver of certain closing conditions, including, among other things, third party consents and regulatory approvals.

Acquisition Highlights

– Accelerates the Company’s growth strategy, while increasing throughput and utilization at FTG Circuits and FTG Aerospace facilities in the US, providing new products and customers to FTG without significantly increasing fixed costs.
– Significantly increases the Company’s revenue and asset base. For each of the last three years, the Business has generated between US$15-20 million of annual revenue, and had assets of between US$10-15 million.
– Provides additional products FTG will produce for the Company’s current customers while also providing an opportunity to sell current FTG products to the Business’ customer base going forward.
– Adds products manufactured for aircraft FTG currently doesn’t service as well as new customers and/or plants currently not serviced with FTG products.
– Integration is expected to be completed by December, 2016.
– FTG management believes that the revenues from the Acquisition, when transitioned to existing FTG sites, should fall into the Company’s stated EBITDA contribution margin range of approximately 30% for Fiscal 2017.

Special Warrant Offering

The Company has reached an agreement with Acumen Capital Finance Partners Limited, as lead underwriter on behalf of a syndicate of underwriters (the “Underwriters”), to issue 3,000,000 Special Warrants at a price of C$2.00 per Special Warrant, on a bought deal private placement basis, for gross proceeds of C$6,000,000. The Company has also granted the Underwriters an option to purchase up to an additional 450,000 Special Warrants on the same terms and conditions, exercisable at any time, in whole or in part at any time on or prior to the Closing Date (as defined herein) (the “Underwriters’ Option”).

The Special Warrants will be distributed in Canada on a private placement basis pursuant to exemptions from the prospectus requirements in all of the provinces of Canada.

Each Special Warrant shall be exercisable into one subscription receipt of the Company (each a “Subscription Receipt”) to be issued pursuant to the terms of a Subscription Receipt indenture (the “Subscription Receipt Indenture”) on the date that is two (2) business days following the date a receipt has been issued for the Company’s (final) short form prospectus (the “Final Prospectus”) qualifying the distribution of the Subscription Receipts issuable upon the deemed exercise of the Special Warrants and qualifying the Underlying Shares (as defined herein). If the receipt for a Final Prospectus has not been obtained at or prior to the Qualification Deadline (as defined herein) or if satisfaction or waiver of each of the conditions precedent to the closing of the Acquisition (other than the payment of the consideration for the Acquisition) does not occur on or prior to July 15, 2016, an amount equal to the full purchase price of a Special Warrants plus the holder’s pro rata entitlement to the interest earned or income generated, if any, on such amount, will be paid to holders of the Special Warrants and the Special Warrants will be cancelled. The Company has agreed to use its best efforts to obtain a receipt for the Final Prospectus on or before July 15, 2016 (the “Qualification Deadline”) and to have the Subscription Receipts listed on the Toronto Stock Exchange (the “TSX”).

Provided that the Company has obtained a receipt for the Final Prospectus on or prior to the Qualification Deadline, upon the satisfaction or waiver of each of the conditions precedent to the closing of the Acquisition (other than the payment of the consideration for the Acquisition): (a) one common share of the Company (each an “Underlying Share”) will be automatically issued in exchange for each Subscription Receipt (subject to customary anti-dilution protection), without payment of additional consideration or further action by the holder thereof; and (b) the net proceeds from the sale of the Special Warrants (less 50% of the Underwriters’ commission) will be released from escrow to the Company for the purposes of completing the Acquisition. If: (i) the Acquisition is not completed on or before July 15, 2016; (ii) the purchase and sale agreement in respect of the Acquisition is terminated in accordance with its terms at any earlier time; or (iii) the Subscription Receipt indenture is terminated at any earlier time, or (iv) the Company has advised the Underwriters or announced to the public that it does not intend to proceed with the Acquisition (the time and date of occurrence of any such event being the “Termination Time”), an amount equal to the full purchase price of a Special Warrant plus the holder’s pro rata entitlement to the interest earned or income generated, if any, on such amount will be paid to holders of the Subscription Receipts and the Subscription Receipts will be cancelled.

The gross proceeds from the sale of the Special Warrants will be held by an escrow agent pending the fulfillment or waiver of all outstanding conditions precedent to closing of the Acquisition (other than the payment of the consideration for the Acquisition) and the Company obtaining a receipt for the Final

Prospectus on or prior to the Qualification Deadline. There can be no assurance that a definitive acquisition agreement with the Vendor will be entered into, that the applicable consents and regulatory approvals will be obtained, that the other closing conditions will be met, that the Acquisition will be consummated or that the Company will obtain a receipt for the Final Prospectus.

The Offering is expected to close on or about May 10, 2016 (the “Closing Date”) and is subject to certain conditions including, but not limited to, the receipt of all regulatory approvals including the approval of the TSX.

The securities offered pursuant to the Offering have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the ” 1933 Act “) and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States or to, or for the account or benefit of, U.S. persons.

ABOUT FIRAN TECHNOLOGY GROUP CORPORATION

FTG is an aerospace and defense electronics product and subsystem supplier to customers around the globe. FTG has two operating units:

FTG Circuits is a manufacturer of high technology, high reliability printed circuit boards. Our customers are leaders in the aviation, defense, and high technology industries. FTG Circuits has operations in Toronto, Ontario, Chatsworth, California and a joint venture in Tianjin, China.

FTG Aerospace manufactures illuminated cockpit panels, keyboards and sub-assemblies for original equipment manufacturers of aerospace and defense equipment. FTG Aerospace has operations in Toronto, Ontario, Chatsworth, California, Fort Worth, Texas and Tianjin, China.

The Company’s shares are traded on the Toronto Stock Exchange under the symbol FTG.

FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements. These forward-looking statements are related to, but not limited to, the completion of the Acquisition, the anticipated financial performance, business prospectus and strategies of the Business and its impact on the Company and the Company’s anticipated financial performance, business prospects and strategies, the expected integration of the Business and the anticipated closing dates of the Offering and of the Acquisition. Forward-looking information typically contains words such as “anticipate”, “believe”, “expect”, “plan” or similar words suggesting future outcomes. Such statements are based on the current expectations of management of the Company and inherently involve numerous risks and uncertainties, known and unknown, including economic factors and the Company’s industry, generally. The preceding list is not exhaustive of all possible factors. Please refer to the Company’s Annual Information Form on www.SEDAR.com for a list of additional factors. Such forward-looking statements are not guarantees of future performance and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Company. The reader is cautioned to consider these and other factors carefully when making decisions with respect to the Company and not place undue reliance on forward-looking statements. Other than as required by law, the Company disclaims any intention or obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.

NON-IFRS-MEASURES

This news release presents certain non-IFRS financial measures to assist readers in understanding the Company’s performance. Non-IFRS financial measures are measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with Generally Accepted Accounting Principles. In this news release, reference is made to EBITDA contribution margin which represents earnings before interest, taxes, depreciation and amortization. EBITDA contribution margin is not a generally accepted earnings measure and should not be considered as an alternative to earnings as determined in accordance with IFRS. As there is no standardized method of calculating this measure, the Company’s EBITDA contribution margin may not be directly comparable with similarly titled measures used by other companies. Management believes the EBITDA measure is important to many of the Company’s shareholders, creditors and other stakeholders.

For further information, please contact:

Bradley C. Bourne, President and CEO
Tel: (416) 299-4000, ext. 314
Firan Technology Group Corporation
bradbourne@ftgcorp.com

Joseph R. Ricci, Vice President and CFO
Tel: (416) 299-4000, ext. 309
Firan Technology Group Corporation
joericci@ftgcorp.com

Additional information can be found at the Corporation’s website www.ftgcorp.com.