Dynamic Technologies Group Inc. announced that we closed a debt refinancing transaction with new strategic lender, Promising Expert Limited from Hong Kong. Pursuant to the terms of an assignment and assumption agreement: (i) the Company's prior senior lender agreed to exchange USD 4.15 million of the outstanding debt for unsecured vendor credits and discounts applicable to unpaid invoices from prior sales and from future sales from the Company to the Prior Lender; (ii) the Prior Lender agreed to apply certain contract holdbacks in the amount of USD 0.65 million against the outstanding debt; and (iii) PEL purchased the balance of the outstanding debt in the amount of USD 13.55 million and the related security from the Prior Lender for USD 10.4 million representing a discount of USD 3.15 million. Immediately after completion of the Debt Refinancing, PEL agreed to forgive USD 3.15 million of the debt which matches the Discount.

The Company currently owes PEL USD 11.3 million subject the terms of the new Term Facility (defined below). Subject to PEL's ability to transfer funds to Canada, the Company will have access to an aggregate amount of USD 16 million of senior credit facilities from PEL that bear a more manageable 6.0% per annum interest rate. The PEL credit facilities include: (i) the outstanding demand term loan facility in the amount of USD$11.3 million repayable in 60 months; (ii) undrawn demand non-revolving term loan in the amount of USD 2.9 million repayable in 12 months; and (iii) undrawn demand subordinated revolving term loan in the amount of USD$1.8 million repayable in 12 months.

The interest on the PEL Facilities is payable monthly in arrears. The PEL Facilities may be prepaid without penalty on one business days' prior notice to PEL. The Term Facility and Revolving Facility are secured by a first charge on the Company's assets, pledges of the shares of the direct subsidiaries of the Company and an assignment of insurance of the Company and subsidiaries to PEL.

In addition, PEL has the right, upon written notice at any time while the PEL Facilities are outstanding, to appoint one individual selected by PEL as a non-voting observer entitled to attend meetings of the Board of Directors of the Company. No additional securities will be issued pursuant to the terms of the PEL Facilities. Although PEL currently owns 16,000,000 common shares of the Company that were purchased by investing CAD$5.0 million at $0.3125 per common share, representing 8.91% of the issued and outstanding common shares of Dynamic and has the right to appoint a Director to the Board of Directors of the Company so long as it owns at least 5% of the issued and outstanding common shares of the Company, the Debt Refinancing is not a “related party transaction” within the meaning of TSXV Policy 5.9 or Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.

The Debt Refinancing is not a “related party transaction” because the Company and PEL entered into a Term Sheet with respect to the Debt Refinancing and PEL's equity subscription when PEL was an arm's length third party.