OSI Geospatial Inc. announces special shareholders' meeting and Plan of Arrangement

VANCOUVER, May 16, 2012 /CNW/ - OSI Geospatial Inc. (TSXV: OSI) ("OSI" or the "Company") announced today a share consolidation to be completed by way of a court approved Plan of Arrangement (the "Transaction").  The Transaction provides, among other things, that (i) each Class "B" Series 2 Preference Shares (a "Preferred Share") held by a preferred shareholder will be converted into common shares of the Company at a conversion rate of 156.667 Common Shares per Preferred Share; and (ii), all issued and outstanding common shares will be consolidated on a 250,000 to 1 basis and common shareholders holding less than one post-consolidation common share will be paid $0.060 in cash, representing a 33% premium on market, per pre-consolidation common share held by them.

Due to the ongoing cost of being a public company and the severe competitive disadvantage that the company faces as a result of the information it provides its much larger competitors through its disclosure record, the directors have determined that it is in the best interest of the Company to cease to be a reporting issuer. To do that, the Company must reduce the number of its shareholders to below 50 in Canada, with no more than 15 in any one jurisdiction of Canada. After considering all of its alternatives, the board of directors have determined that the Transaction is the best alternative available to the Company to achieve that goal.

Further details regarding the Transaction will be provided in a management information circular dated May 16, 2012, which will be mailed to shareholders of the Company in connection with the Company's special shareholders' meeting (the "Meeting") to approve the Transaction and filed on SEDAR. The Meeting will be held on June 21, 2012. The Transaction is expected to close shortly thereafter.

The Company's board of directors has unanimously approved the Transaction and will recommend approval to the Company's shareholders at the Meeting. The Transaction requires 66 2/3% approval by all shareholders of OSI as well as a majority approval of the common shareholders after excluding Insiders of the Company. Insiders include Directors, Officers and Shareholders owning greater than 10% of the Company. The Transaction is also subject to approval by the TSX Venture Exchange and other regulatory agencies, in addition to Court approval by the Supreme Court of British Columbia.

About OSI Geospatial Inc.

OSI Geospatial Inc. operates two distinct business units: Offshore Systems Ltd. (based in Vancouver, British Columbia), a world-leading naval fleet supplier of integrated navigation and tactical solutions; and CHI Systems, Inc. (based in Philadelphia, Pennsylvania), a leading-edge research, development, and systems integration supplier of technology solutions for defense, aerospace, health, and bioscience markets. OSI Geospatial systems and software are in use by military, government, and commercial customers around the world. The Company is publicly traded on the TSX Venture Exchange. For additional information please visit www.osigeospatial.com.

Forward-Looking Statements

Information set forth in this news release may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein including, without limitation, statements about the completion of the Transaction and regulatory and court approvals, are forward looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: the need for additional financing; operational risks associated with mineral exploration; fluctuations in commodity price and title matters or other reports and filings with the TSX Venture Exchange and applicable Canadian securities regulators. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable securities laws. Investors are cautioned against attributing undue certainty to forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.