August 17, 2009 / 11:06 AM / 9 years ago

UPDATE 2-Defense firm Allen-Vanguard loss deepens on charges

* Q3 shr loss C$0.91 vs loss of C$0.34 yr ago

* Loss includes C$130.3 mln impairment charges

* Still pursuing investment by U.S. investor

* Shares up more than 4 pct

(Adds details and updates stock movement)

BANGALORE, Aug 17 (Reuters) - Allen-Vanguard Corp VRS.TO posted a bigger third-quarter loss dented by impairment charges and said it is in talks with lenders to amend certain covenants in conjunction with the proposed takeover offer from an American investor.

The Ottawa-based company, which has cut jobs and closed offices to battle mounting debt, lost C$99.2 million ($89.94 million), or 91 Canadian cents a share for the three months ended June 30.

That compares with a loss of C$36.6 million, or 34 Canadian cents a share in the same period last year.

Quarterly revenue was C$51.3 million, up from C$31.2 million last year.

“Although revenue was up 64% this quarter over the same period last year, it fell short of our expectations due mainly to continued delays in major U.S. government programs and spending reductions or deferrals in certain international markets,” CEO David Luxton said in a statement.

The company, which specializes in jamming systems that prevent detonation of remote-controlled bombs, said net loss for the quarter includes impairment of goodwill and intangible assets of C$130.3 million.

Allen-Vanguard’s net debt was C$229.7 million at June 30, 2009.

The company has struggled since its C$600-million acquisition of rival Med-Eng systems in 2007 which burdened it with a large debt load and was forced to defer repayments as demand for its products slowed.

The company said in April this year it will pursue a takeover proposal from an undisclosed U.S. investor. The announcement came close on the heels of its termination of a merger agreement with a special purpose acquisition company, Tailwind Financial.

While the initial agreement with the U.S.-based investor was for a period of three weeks ending April 24, the talks have extended till date to facilitate ongoing discussions between Allen-Vanguard and its lenders.

Shares of Allen-Vanguard, which have lost 45 percent of their value so far this year, were trading up more than 4 percent at C$0.125 in morning trade on the Toronto Stock Exchange. The shares were worth as much as C$11.95 in 2007.

$1=1.103 Canadian Dollar Reporting by Chakradhar Adusumilli in Bangalore; Editing by Vikram S Subhedar

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