Press Releases 2015

Automodular Reports Second Quarter 2015 Results and Announces Its Intention to Repurchase up to $15 Million of Its Shares Pursuant to a Substantial Issuer Bid

PICKERING: August 6, 2015:

Automodular Corporation (“Automodular” or the “Company”) (TSX:AM) reports a net loss of $(0.1) million or $(0.00) per share for the quarter ended June 30, 2015 compared to net earnings of $1.6 million or $0.08 per share in the same period in 2014. For the six months ended June 30, 2015 and 2014, Automodular reports a net loss of $(1.7) million and net earnings of $4.7 million or $(0.09) and $0.22 per share, respectively.

As previously noted, Automodular ceased operations at its Oakville facilities in December 2014 and no longer has active operations.

The results for the first half of the year are summarized below (all figures in ‘000s except per share amounts):

Three months ended June 30 Six months ended June 30
Sales 18,772 38,321
Net earnings (loss) (76) 1,571 (1,719) 4,731
Per share (basic) (0.00) 0.08 (0.09) 0.24

Automodular’s interim consolidated financial statements and Management Discussion and Analysis for the period ended June 30, 2015 will be filed on SEDAR on or about August 7, 2015.

Automodular also announces that it intends to make a substantial issuer bid (the “Offer”) pursuant to which the Corporation will offer to repurchase for cancellation up to Cdn$15 million in value of its outstanding common shares (the “Shares”) from shareholders. The Offer will proceed by way of a modified “Dutch auction” and the range of Offer prices will be Cdn$2.55 to Cdn$2.65 per Share. The maximum purchase price under the Offer represents a premium of approximately 12.29% over the volume weighted average trading price of the Shares on the TSX for the last 30 trading days preceding the date of this announcement.

The modified Dutch auction tender process allows shareholders to individually select the price, within the specified range, at which they are willing to sell all or a portion of their Shares. When the Offer expires, Automodular will select the lowest tendered price from within the range of prices (the “Purchase Price”) allowing it to buy up to Cdn$15 million of the Shares validly tendered to the Offer. All Shares tendered at or below the selected price level will be bought at the Purchase Price, subject to, among other things, pro-ration in the event that the aggregate cost to purchase all of such Shares exceeds Cdn$15 million. All Shares not purchased under the Offer, including Shares tendered at prices higher than the Purchase Price or not purchased due to pro-ration, will be returned to shareholders. The Corporation will fund any purchases of Shares pursuant to the Offer from available cash on hand.

The Offer will be for up to approximately 30.53% of the total number of issued and outstanding Shares (based on a Purchase Price equal to the minimum purchase price per Share of Cdn$2.55 and 19,268,304 Shares outstanding on August 6, 2015).

The Offer will not be conditional on any minimum number of Shares being tendered to the Offer, but will be subject to other conditions customary for transactions of this nature. It is anticipated that the formal offer to purchase and issuer bid circular and other related documents (the “Offer Documents”), containing the terms and conditions of the Offer and instructions for tendering Shares will be mailed to shareholders and filed with the applicable securities regulators and available on SEDAR at on or around August 11, 2015. The Offer will remain open for acceptance for 35 days after the date of commencement, unless withdrawn or extended by the Corporation.

The Board of Directors of Automodular has authorized the making of the Offer. KPMG LLP (“KPMG”) was engaged by Automodular as the independent valuator to prepare a formal valuation of the Shares (the “Valuation”) for the Board. The Valuation contains KPMG’s opinion that, based on the scope of its review and subject to the assumptions, restrictions and limitations provided therein, as of July 31, 2015, the fair market value per Share falls within the range of Cdn$2.36 to Cdn$3.45. A copy of the Valuation will be filed separately on SEDAR.

After reviewing the Valuation and considering the assumptions underlying the valuation methodology used therein, the Board has determined to set the maximum and minimum price of the Offer within a range that is narrower than the range ascribed to the Shares in the Valuation on the following bases: (a) as the outcome, and therefore the value, of the Corporation’s litigation with GM is inherently uncertain, any Shares taken up under the Offer will not be entitled to a recovery, if any, under the GM litigation, such that, for the purpose of establishing the maximum and minimum price of the Offer, no value should be ascribed to the GM litigation nor should any prospective legal costs or legal cost recoveries be included; and (b) the Board believed it would be appropriate to establish the maximum and minimum price of the Offer assuming an orderly six-month wind down of the Corporation on the basis that, if one excludes prospective costs and potential recoveries associated with the GM litigation, it would be consistent to assume that, from the perspective of a shareholder whose Shares are taken up under the Offer, the GM litigation would not be pursued and, absent an intervening event, including but not limited to a transaction arising out of the Corporation’s diversification initiatives, the Corporation would likely proceed to an orderly wind-down.

Neither the Corporation nor its Board of Directors makes any recommendation to shareholders as to whether to tender or refrain from tendering their Shares to the Offer.

Shareholders are strongly urged to consult their own financial, tax and legal advisors and to make their own decisions whether to tender or refrain from tendering their Shares to the Offer and, if so, how many Shares to tender and at what price or prices.

The Board of Directors considers the Offer to be an effective use of the Corporation’s cash resources and an equitable and efficient means of distributing capital of up to Cdn$15 million in the aggregate to shareholders. At the present time, Automodular does not have ongoing operations and is focused on pursuing its litigation with GM and seeking opportunities to leverage its public company structure and cash reserves to enhance shareholder value through its diversification initiative. Automodular is making the Offer to provide a liquidity opportunity for shareholders who may not wish to retain Shares through the GM litigation process or await opportunities that could arise out of Automodular’s diversification initiative. In addition, given that the Shares are relatively thinly traded, the Offer enables shareholders to sell their Shares at a set price that might not otherwise be available in the market.

Further information concerning the factors considered by the Board of Directors, including the method by which the Board of Directors determined the maximum and minimum price of the Offer, together with the terms and conditions of the Offer, will be contained in the Offer Documents that will be mailed to shareholders and available on SEDAR when the Offer is formally launched.

As previously disclosed, the TSX has advised Automodular that the Corporation does not meet the continued listing requirements of the TSX and therefore the Shares will be de-listed from the TSX effective at the close of market on August 14, 2015. The Corporation has applied for and satisfied all conditions to listing on NEX. The Shares are expected to commence trading on NEX on August 17, 2015 under the symbol “AM.H”.

This press release is for information purposes only and is not an offer to buy or the solicitation of an offer to sell any Shares.

For further information, contact:

Christopher Nutt
President and CEO
Automodular Corporation
(905) 420-0200

This press release contains forward-looking statements that involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are market and general economic conditions and the risk factors detailed from time to time in the Corporation’s periodic reports filed with the Canadian securities regulatory authorities and on SEDAR at Readers are cautioned not to rely on forward-looking statements. Except as required under continuous disclosure obligations, the Corporation undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.