RS and Werklund Capital Announce Debenture Syndication with Melbye Skandinavia

CALGARY, Sept. 4, 2012 /CNW/ - RS Technologies Inc. ("RS" or the "Company"), an ISO 9001:2008 certified company that designs, engineers and manufactures composite utility poles, together with Werklund Capital Corporation ("WCC"), today announced that Melbye Skandinavia AS ("Melbye") has executed a Debenture Syndication and Agency Agreement (the "Agreement") with WCC pursuant to which Melbye has acquired a 50% interest in WCC's existing $6 million secured convertible debenture in RS (the "Convertible Debenture"). Melbye will also acquire a 50% interest in the security provided in the Convertible Debenture, which is a charge on all the property of RS, including the intellectual property of RS (the "Security"). RS is not a party to the Agreement.

Pursuant to the Agreement and based on a deposit by Melbye to WCC in the amount of $0.50 million in June 2012 (such funds already having been advanced by WCC to RS), Melbye has paid a total of $2.39 million to WCC in consideration for the 50% interest in the Convertible Debenture and the Security. On the basis that RS has received a total of $4.78 million of the $6 million authorized amount of the Convertible Debenture prior to this transaction, it was the intention of Melbye and WCC to jointly fund, in equal amounts, the $1.22 million remaining in the Convertible Debenture based on the requirements of the Company, subject to the terms of the Convertible Debenture. An additional advance of $0.55 million has now been made jointly by WCC and Melbye, leaving $0.67 million subject to being advanced under the Convertible Debenture. As previously disclosed by RS, any and all additional disbursements may be made at the sole discretion of WCC and Melbye as participants in the Convertible Debenture.

Under the Agreement, WCC has been appointed as an agent of Melbye and has certain obligations relating to such agency relationship, including the appointment of a representative of Melbye as one of WCC's three nominees to the board of directors of RS. The parties intend that such appointment shall occur following RS's annual meeting of shareholders set for September 20, 2012. The Agreement also contemplates that with the approval of the board of directors of the Company, it is intended that Melbye shall be entitled to appoint a non-voting board participant to RS's board of directors. On a day to day basis, and based upon WCC acting as agent for Melbye, RS shall continue to interface with WCC in relation to Convertible Debenture matters.

With respect to the rights under the Convertible Debenture for either of WCC or Melbye to convert all or any part of any indebtedness outstanding at any time at the $0.33 per share conversion price contemplated in the Convertible Debenture, any such conversion shall occur only upon the mutual agreement of WCC and Melbye. Regarding the Security, each of WCC and Melbye rank equally and pari passu with one another and are secured equally and pro rata based on their respective amounts of funds advanced to the Company. As between Melbye and WCC, there is a restriction on transfer of either party's interest in the Convertible Debenture. At or after maturity of the Convertible Debenture, which is January 5, 2014, the Agreement permits a sale subject to a right of first refusal to a party where the other party has proposed to sell its interest, or any part of its interest, to a third party.

Regarding termination of the Agreement:

• it may terminate upon the consent of WCC and Melbye;
• it may terminate, at the option of Melbye, in the event that WCC sells some or all of its interest in the Convertible Debenture; and
• it shall terminate automatically: (i) in the event that either WCC or Melbye converts the entire amount of their respective debt into common shares of RS; (ii) upon the repayment in full by RS of all obligations under the Convertible Debenture; or (iii) upon one party acquiring the interest of the other party in the Convertible Debenture and in certain related documents.

The foregoing discussion with respect to matters provided for in the Agreement is not intended to be complete or exhaustive. As indicated, the Agreement is between WCC and Melbye (and RS is not a party) and provides for their mutual rights and obligations as owners of the Convertible Debenture and the Security.

Historical Relationship of RS and Melbye
RS and Melbye have a well-developed working relationship dating back more than half a decade. Since 2009, Melbye has been the exclusive distributor of RS's poles in Scandinavia, with the most recent commercial success being the completion of a 50 km, single circuit, 132kV transmission line with Norwegian utility NTE, which was built over two years and involved approximately 380 RS poles in a variety of H-frame and 3-pole structures.

"Melbye saw promise in RS's poles years ago and has invested considerably in bringing the modular composite pole to the Scandinavian market," stated Christian Aasheim, CEO of Melbye. "For many projects, the lightweight, modular pole system delivers a lower total cost of installation and for Melbye, this founds the basis for our confidence to invest in RS, contribute towards the growth of the company and help ensure the continued availability of RS poles for our market."

"We are very pleased that Melbye has joined with Werkund Capital in executing the Debenture Syndication agreement today. Both of these organizations have assisted RS in moving forward, and they have both contributed to RS's improving performance," stated Howard Elliott, President and CEO of RS. "We are appreciative of Melbye's expression of confidence in our composite utility poles and in our business plan, and of course the many ways in which WCC and our board of directors have assisted RS since the closing of the convertible debenture transaction in July 2011. We look forward to working with WCC and Melbye as we continue our focus on market development and operational excellence, and to further strengthening RS's financial position with their continued assistance and valuable guidance."

About Werklund Capital Corporation
As one of Canada's largest family-owned investment companies, Werklund Capital Corporation ("WCC") is a sophisticated wealth management group with an innovative, entrepreneurial, and flexible approach to deploying capital and growing it with measured risk. WCC manages its business based on distinct, yet complementary and mutually beneficial divisions: public securities, private and affiliate investments and strategic advisory group. WCC's existing portfolio consists of investments in a variety of industries including oil and gas service and production, residential real estate, media, telecommunications, hospitality food & beverage, aviation, clean technology, niche and broad venture capital, financial services and manufacturing. For more information, visit http://www.werklund.com/capital/index-capital.cfm.

About Melbye Skandinavia AS
Melbye Skandinavia is a technical marketing and sales organization which provides infrastructure network solutions to the energy and telecom markets. The head office is situated in Oslo, Norway, and the group consists of three subsidiaries in Norway, Sweden and Denmark. Melbye Skandinavia has a total of ten direct sales offices in Norway, Sweden and Denmark. Annual group turnover is around US$50 million and the company has 75 employees. For more information, visit http://www.melbye.com.

About RS
RS is an ISO 9001:2008 certified company that designs, engineers and manufactures composite utility poles. The poles are used in transmission, distribution and communication applications and offer a lighter, more durable and longer-lasting solution over wood, steel and concrete alternatives. In many instances, the environmentally friendly poles deliver the lowest total installed and lifecycle cost solution of any pole on the market. With installations dating back to 2003, RS has over 270 customers globally.

For the latest on RS's developments, go to the company's website at www.RSpoles.com.

SOURCE: RS Technologies Inc.

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