Geometric Software Closes Acquisition Transaction of Modern Engineering's Engineering Services Division

Geometric Software Solutions Company Ltd on October 11, 2006 had announced that the Company has entered into a definitive agreement to acquire the engineering services division of Modern Engineering, Inc.

The Company has now announced as under:

Geometric Software Solutions, Inc. (GSS Inc.) a wholly owned subsidiary of the Company has bought 95% shares of Modern Engineering, Inc. (Modern) for US$ 23.75 million. The balance 5% shares of Modern are held by MMG Group LLC, comprising of management group of Modern. The acquisition of Modern by GSS Inc. was financed as under:

1. Equity investment of US$ 14.00 million and loan of US$ 1.75 million by the Company.

2. Term Loan of US$ 8.00 million from Citibank N.A.

The Company financed its investment and loan to GSS Inc. by:

1. Issue of equity shares on preferential basis to The Western India Executor and Trustee Co. Ltd., a fund managed by ICICI Venture Capital Fund Management Ltd for approx. US$ 10.00 million.

2. Internal accruals.

Furthermore, Modern has a working capital line of credit of approx. US$ 7.00 million which is being refinanced by ICICI Bank UK Ltd and the Company has taken a working capital loan of US$ 4.5 million.

Thus, the Company and its subsidiaries will have a term loan of approx. US$ 8.00 million and working capital loans of approx. US$ 11.5 million on its balance sheet. The financials of Modern Engineering, Inc. will be consolidated with that of the Company with effect from November 01, 2006.

With the above transactions and fulfillment of conditions precedent, the transaction of acquiring the engineering services division of Modern is closed.

Source : Equity Bulls

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