Ms. Carrie Boutcher reports

ARMTEC INFRASTRUCTURE INC. ANNOUNCES EXTENSION OF COVENANT RELIEF AND SHORT-TERM CREDIT FACILITY

Armtec Infrastructure Inc. has entered into an agreement with Brookfield Capital Partners Fund III LP to amend its term facility with Brookfield in order to extend the previously disclosed covenant relief and enter into a new short-term credit facility.

As previously disclosed, the company was selected to supply and install $70-million of sound-wall barriers and fencing for a rail infrastructure project in Central Ontario. In order to accommodate the company's working capital requirement, including working capital for the ramp-up of the Soundwall project, the company has replaced the $7.5-million short-term credit facility (which was not drawn and expired Sept. 19, 2014), pursuant to the previous amendment of the term facility dated June 26, 2014. Pursuant to the October amendment, Brookfield has agreed to provide, subject to certain conditions, a new short-term facility of $10-million, bearing interest at the 30-day banker's acceptance rate plus 12 per cent. The short-term facility will mature on Feb. 27, 2015.

Pursuant to the June amendment, the senior-secured-debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) covenant under the term facility was waived to Sept. 30, 2014. The covenant required that Armtec maintain a senior-secured-debt-to EBITDA ratio (measured at the end of each month) of no greater than 5.25 to 1 until Dec. 21, 2014, and 5.00 to 1 thereafter. Pursuant to the October amendment, the company will be provided with an extension of the waiver of the covenant until Feb. 27, 2015. The covenant calculations would recommence on Feb. 28, 2015, and would require Armtec to maintain a senior-secured-debt-to-EBITDA ratio of no greater than 5.0 to 1.

The extension of the short-term facility and the covenant waiver are both contained within the October amendment. In consideration of the October amendment, Armtec will pay Brookfield a fee of $4-million. In addition, a draw fee of $500,000 will be payable by Armtec should it use the short-term facility. Armtec has the option to defer payment of the fee and draw fee, in which case such amounts will be added to the principal of the term facility; however, these fees will be excluded from further covenant calculations.

As previously disclosed, performance during the first half of 2014 in both of Armtec's business units was affected by lower volumes and higher operating costs related to the extreme weather and unfavourable installation conditions. In addition, increased raw material input costs and increased competition have negatively affected the industry, leading to compressed margins in the drainage solution business unit. These business unit effects have affected Armtec's EBITDA on a trailing 12-month basis. The Soundwall project is expected to contribute to the company's financial performance, favourably affecting revenue and EBITDA, largely in the first half of 2015, and the long-term outlook for the company's markets remains favourable.

The company continues to review its liquidity, financial covenants, leverage and capital structure. A broad range of alternatives will also be reviewed and may involve the issuance of secured or unsecured debt, equity, or other securities, or other transactions.

We seek Safe Harbor.