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Prism Medical Announces Sale of UK Operations

Company Focused on Maximizing Shareholder Value

TORONTO, ONTARIO -- (Marketwired) -- 04/11/14 -- Prism Medical Ltd. ("Prism Medical" or the "Company") (TSX VENTURE:PM), a leading provider of durable medical equipment and related services to the mobility challenged, today announced that it has completed the sale of its UK operations for cash consideration of GBP 30.0 million, or C$54.9 million at current exchange rates. The sale occurred pursuant to a Sale and Purchase Agreement (the "Purchase Agreement") entered into and completed today with a new company (the "Purchaser") backed by LDC (Managers) Limited, a UK mid-market private equity firm that is a subsidiary of Lloyds Banking Group. Pursuant to the Purchase Agreement, the Purchaser acquired all of the shares of the Company's UK holding company, Prism UK Medical Limited. Local management of Prism UK Medical Limited, led by Stuart Meldrum, will continue to run the UK operations. The UK operations manufacture and supply safe patient handling products and related services directly to the UK healthcare market as well as to dealers throughout Europe and the Middle East.

The C$54.9 million all cash consideration paid today at closing is expected to result in C$49.5 million in net cash proceeds after deducting transaction expenses, related taxes and head office restructuring costs. The net cash consideration represents approximately C$5.35 per share on a fully diluted basis.

"We are very pleased to have unlocked significant shareholder value as a result of this transaction," said Andy McIntyre, Executive Chairman and CEO of Prism Medical. "This allows us to focus on our growing North American business that in fiscal 2013 generated revenues in excess of C$35.3 million and an Adjusted EBITDA in excess of C$6.4 million exclusive of corporate administrative costs." Andy McIntyre further stated, "As a result of the sale of the UK operations we expect to considerably reduce our administrative expenses and focus our human and financial capital on the growing North American market for our products and services. We believe this renewed focus in familiar and adjacent markets offers more attractive prospects than what we can achieve in the more mature European markets."

The Purchase Agreement contains customary representations, warranties and indemnities given by the Company. In addition to the cash consideration, GBP 314,000, or C$575,000, is to be placed in escrow for two years as security for the Company's indemnity and warranty obligations. The Company is entitled to certain additional "earn out" payments. If the sold UK operations achieve certain target earnings and turnover in the current fiscal year the Company will be entitled to receive up to an additional GBP 500,000. The Company will also be entitled to additional consideration based on future sales by Prism UK into North America, Central and South America and Japan for the 3 years following closing of the transaction. The Company has also agreed not to compete with Prism UK in the UK, Europe and the Middle East for a period of 3 years from closing of the transaction.

As required pursuant to the rules of the TSX Venture Exchange (the "TSXV"), the sale has been approved by the holders of a majority of the Company's outstanding shares pursuant to written consents. The Company has received consent from holders of approximately 67% of its outstanding shares. The TSXV has confirmed its final acceptance of the transaction. The Company retained Clearwater Corporate Finance LLP to assist with the sale process. Clearwater is entitled to a success fee equal to 1.0% of the gross purchase consideration.

In conjunction with this transaction, the Company has renegotiated its senior credit facilities. The key terms such as covenants, interest rates and margin ratios have remained unchanged. However, the overall credit limits decreased due to the lower asset base going forward. The Company's operating line has decreased from C$17.5 million to C$10 million and its acquisition line has decreased from C$27.5 million to C$10 million.

During the past year the Company's North American operations have materially improved. Management believes that there are significant growth opportunities within the expanding North American health care industry both through organic growth and acquisitions that offer the potential to significantly increase shareholder value, while remaining consistent with Prism Medical's key growth strategies of vertical integration, product diversification and the application of relevant knowledge by its service oriented personnel.

The Company will use its reasonable commercial efforts to complete a share buy back through a substantial issuer bid ("SIB") within the next four months to return to shareholders C$35M to C$40M of the net cash proceeds of the sale. The completion of the SIB will be subject to customary conditions and the satisfaction of all necessary legal and regulatory requirements. The Company intends to retain the remainder of the proceeds to reduce debt levels to be well within approved bank credit limits and to fund growth opportunities.

About Prism Medical Ltd.

Prism Medical is a vertically integrated manufacturer and leading provider of equipment and services used to move and handle mobility challenged individuals in a safe and dignified manner. Prism Medical's products are marketed under the brand names of Prism Medical, ErgoSafe, Waverly Glen and Nightingale in the home care, acute care and long-term care markets throughout North America. The Company offers solutions that encourage improved care, quality of life and mobility, while seeking to lower the overall cost of the caregiving function in a number of ways, including reducing the incidence of handling-related injuries among caregivers. In addition, the Company through its network of Nightingale dealers provides an integrated suite of products and services that make home care a viable option for many people. For further information visit Prism Medical's website at www.prismmedicalltd.com or www.sedar.com.

Non-IFRS Financial Measures

Prism Medical's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The Company also uses non-IFRS measures such as Adjusted EBITDA to measure its financial performance. Adjusted EBITDA consists of earnings before interest, income taxes, depreciation, amortization, stock-based compensation expense and equity gains or losses from investments in associates accounted on an equity basis. Adjusted EBITDA is a financial metric used by many investors to compare companies on the basis of operating results, asset value and the ability to incur and service debt. Management believes that Adjusted EBITDA is a useful measure for evaluating the performance of the Company. Adjusted EBITDA is not a recognized measure under IFRS and does not have a standardized meaning prescribed by IFRS and may not be comparable to similarly titled financial metrics reported by other companies.

Forward-Looking Information

This document contains forward-looking statements relating to our operations and to the environment in which we operate, our strategy, action plans and investments, changes to our credit facility and the use of proceeds from the sale of our UK operations, which may involve estimates, forecasts and projections. These statements are not guarantees of future performance, events or results and involve risks and uncertainties that are difficult to predict and/or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in this press release and our other public filings. Consequently, readers should not place any undue reliance on such forward-looking statements. These forward-looking statements are made as of the date of this press release. Prism Medical is under no obligation to update any forward-looking statements contained herein due to new information, future events or other factors, except as required by applicable law. All forward-looking statements contained herein are expressly qualified by these cautionary statements.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contacts:
Prism Medical Ltd.
George Chiarucci
Chief Financial Officer
416-260-2145 ext. 229
[email protected]

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