PSP subsidiary garners US$2M order for body armour

Elizabeth Howell
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In what appears to be the first publicly disclosed product sale in months, a subsidiary of Pacific Safety Products (TSX-V:PSP) received a $2 million order for tactical body armour.

Pacific Safety Products makes body armour similar to what this soldier, working in Afghanistan, is wearing. (Photo courtesy DND)

Shares of the soft-body maker, which is undergoing merger talks to deal with a massive debt, jumped more than eight per cent on the Toronto Stock Exchange late Friday afternoon. Shares gained five-tenths of a cent to 6.5 cents each.

"This order is indicative of Pacific Safety Product's growth strategy for the U.S. market and reflects customer confidence in our ability to deliver a large volume of quality product over a tight time frame," stated chief executive officer Doug Lucky.

The subsidiary, Sentry Armor Systems Inc., made the sale under its GH Armor Systems brand to an undisclosed customer.

Friday's news capped a troublesome year for the Kanata parent firm, which saw a 43 per cent sales plunge in the last quarter as it lost $400,000.

In past months, the company saw its chief financial officer leave and five board members resign amid several rebuffed offers, including a takeover proposal, from Revision Eyewear Inc.

Now, the company is asking for shareholder approval to merge with Zuni Holdings Inc.

Zuni and PSP signed an arrangement agreement on Nov. 17 and subsequently got the approval of both companies' board of directors. Shareholders will vote on the matter in late December. 

If approved, PSP will be 45.8 per cent owned by its current shareholders, and 54.2 per cent owned by Zuni shareholders.

To attack its growing debt, last quarter PSP brokered a $1-million private placement and sold the helmet liner portion of its headborne system to Revision for $275,000 and a four-per-cent royalty on gross sales. Revision subsequently bought the entire system for an additional $100,000.

In May, Revision offered $4.6 million to buy PSP. When that was turned down by shareholders, it offered more than $1 million for the entire headborne system, which was also refused.

The company used to operate on the west coast, but met financial troubles once it chose to move to Ottawa to stay closer to its competitors.

Organizations: Toronto Stock Exchange, Revision Eyewear, Zuni Holdings

Geographic location: U.S., Kanata

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