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LAB Research Enters into Non-Binding Letter of Intent

LAB Research Enters into Non-Binding Letter of Intent

LAB Research Enters into Non-Binding Letter of Intent

LAB Research Enters into Non-Binding Letter of Intent

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The Company's main Canadian lender has agreed to extend its financial support to LAB Research until February 23, 2011 to enable the Buyer to complete the transaction.

In October 2010, the Company initiated, with the assistance of its financial advisors, a process to review all strategic alternatives available to the Company (the "Strategic Review Process"). After careful consideration of all available alternatives, and upon recommendation from its financial advisors, the Company has opted to enter into the LOI with the Buyer. The transaction will be structured as a sale of all of the assets of the Company to a newly created entity controlled by the Buyer.

In the context of the transaction, the Buyer would disburse a total amount of $13 million in order to acquire the assets and to finance the operations of the new entity after closing. All proceeds to be received by the Company from the sale of the assets will be used to repay a portion of the Company's existing indebtedness with its main Canadian lender. Accordingly, if the transaction is completed, the shareholders will not receive any proceeds from the transaction.

The transaction is subject to several conditions including the negotiation of definitive agreements with the main Canadian lender of the Company with regards to the financing of the operations after closing, the satisfactory renegotiation of the Company's European debt, a satisfactory due diligence by the Buyer and the execution of all required definitive agreements. Although the LOI is non-binding, the Company has agreed to negotiate exclusively with the Buyer until February 23, 2011.

"While we are disappointed that the Strategic Review Process did not result in a transaction that provides value to the shareholders, we take great comfort in the fact that the transaction, once completed, will result in the continuation and growth of the activities of the Company within the new entity and therefore be beneficial to our employees, key suppliers and customers" said Mr. Mainville, Chef Executive Officer and President of the Company.

As part of the Strategic Review Process, the Company had disclosed an agreement with its main Canadian lender, whereby the Company's operating credit facility was increased from $2,000,000 to $4,000,000 and capital instalments on its long term debt were postponed to facilitate the Strategic Review Process. The agreement has been extended to February 23, 2011.

In the event that the transaction is not completed, the Company will have to conclude further arrangements with its main Canadian lender with respect to the funding of its operations and the payment of the postponed instalments. The Company also announced that its marketed public offering announced in October 2010 has been withdrawn.