VIENNA, Va., Jan. 22 /PRNewswire-FirstCall/ -- The Allied Defense Group, Inc. (Amex: ADG) today announced that it has made final payment of its outstanding senior secured convertible notes.

The notes were issued in June and July 2007 when the Company refinanced $30 million in convertible notes to recapitalize the Company. The transaction resulted in the issuance of approximately $42.6 million in senior secured convertible notes, carrying an 8.95% coupon payable quarterly.

Major General (Ret) John J. Marcello, President and Chief Executive Officer of The Allied Defense Group said, "I am delighted to announce that the Company repaid all of its senior secured convertible notes. Not only does this reduce our net debt to virtually zero, but also eliminates the significant potential dilution associated with those notes.

"As ADG transforms itself to an ammunition-only business, we have now shed one of the most significant impediments to our profitability; debt and the interest charges associated with it. In 2008 interest payments on this debt amounted to approximately $2.8 million/$0.34 per share. In addition, in the fourth quarter of 2008 MECAR S.A., the Company's Belgian subsidiary, repaid its bank line of credit which will further reduce interest expense in 2009.

"The fundamentals of our Company are strong and getting stronger. Our transformation continues. Given the Company's very large funded backlog, our strong internal growth, the reduced debt and improved cash position, management remains very positive about the future of ADG. We are making sustained, solid progress and we are enthused about the future," concluded Major General Marcello.

About The Allied Defense Group, Inc.

The Allied Defense Group, Inc. is a diversified international defense and security firm which: develops and produces conventional medium caliber ammunition marketed to defense departments worldwide; designs, produces and markets sophisticated microwave security systems; and manufactures battlefield effects simulators and other training devices for the military. For more Information, please visit the Company web site: www.allieddefensegroup.com.

Certain statements contained herein are "forward looking" statements as such term is defined in the Private Securities Litigation Reform Act of 1995. Because statements include risks and uncertainties, actual results may differ materially from those expressed or implied and include, but are not limited to, those discussed in filings by the Company with the Securities and Exchange Commission.

    For More Information, Contact:
    Jim Drewitz
    Investor Relations
    830-669-2466

SOURCE The Allied Defense Group, Inc.