GVI Security Solutions, Inc., a provider of integrated security solutions incorporating a complete line of video surveillance, access control and detection systems to the homeland security, professional, business-to-business and retail security markets, today announced that is has successfully completed a private placement of approximately 22,620,000 shares of common stock for $33.9 million at a purchase price of $1.50 per share, for net proceeds of $31.5 million. C.E. Unterberg, Towbin LLC acted as the financial advisor for the Company in the private placement. The financing was led by The Pinnacle Fund, L.P.
"We are delighted to have received such a warm welcome and support from new and existing investors," said Nazzareno Paciotti, GVI's CEO. He continued, "This financing provides the necessary resources to improve our balance sheet, complete the repurchase of shares pursuant to a Settlement Agreement, and most importantly, position GVI for our next stage of growth."
Approximately $4.7 million of the proceeds will be used to repay borrowings from Laurus Master Fund under a revolving promissory note, and $1.15 million of the proceeds were used to repay notes sold to affiliates of the Company in a bridge financing completed in October 2004, which became due upon the closing of the private placement. The holders of $600,000 in principal amount of these notes reinvested such amount in the private placement. The Company is obligated to use an additional $10 million of the net proceeds to repurchase 6,666,667 shares of common stock from William A. Teitelbaum, a stockholder of the Company, pursuant to a Settlement Agreement between the Company and Mr. Teitelbaum entered into in October 2004. Upon repurchase, these shares will be retired. The balance of the net proceeds will be used primarily for acquisitions, working capital and general corporate purposes.
The securities sold in the private placement have not yet been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from registration requirements. As part of the transaction, the Company agreed to file a registration statement with the Securities and Exchange Commission within thirty days for purposes of registering the resale of the common stock issued in the private placement. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.