May 2, 2012 - Groen Brothers Aviation (GBA) announced that it has reached an agreement with its creditors for a major financial reorganization of the Company. The restructuring will result in the elimination of all of the Company's debt obligations, which currently exceed $170 million. 

GBA is a U.S. corporation that designs vertical takeoff and landing (VTOL) rotorwing gyroplanes and gyrodynes. GBA's vertical lift rotorcraft technologies enable aircraft to be runway-independent and not constrained by physics-imposed speed, range, and payload limitations of a helicopter. 

In this transaction, GBA will transfer substantially all of its assets, notably all of its technologies, know-how, and associated patents into a new private entity to be formed by GBA, which is expected to be called "Groen Brothers Aviation Corporation" (GBAC).  

Complementing this action by GBA, these creditors have agreed to exchange essentially all of their debt instruments for a majority ownership of common stock in GBAC which permits ownership of 4% of GBAC common stock to remain with GBA. As a result of this transaction, GBAC will become the operating company engaged in the exploitation of gyroplane and gyrodyne technology developed by GBA, unconstrained by the debt burden that limited GBA's ability to do so. GBA itself will become a "non-operating" entity that will derive its revenue and value from its interest in GBAC, enabling GBA's common shareholders to retain a stake in the continued development of GBA technology. 

Robin Wilson, Company Director for the past four years, stated, "We are very fortunate to have creditors who believe in moving GBA technology development forward, instead of requiring a liquidation of assets as has been commonly witnessed in the aviation industry over the past five years." 

David Groen, the Company's Founder and CEO for the past twenty-two years, stated, "The worldwide economic contraction over the past five years has been devastating for countless companies. These events caused us to lose our coveted position as lead contractor in a significant DARPA contract, which negatively impacted interest in GBA from the equity markets. Despite the difficult financial challenges we faced during this period, we have been fortunate to have creditors who understand and believe in the GBA vision: worldwide use of GBA's sustained autorotative flight technologies. 

?The Company does not have, nor has it had, the hundreds of millions of dollars which our vision requires in order to be achieved. Through our creditors, the GBA vision and products may now be realized, and our common shareholders will have an interest in GBAC. With the substantial investment that is anticipated to be applied to advanced technology development, we believe GBA could still achieve considerable asset appreciation in the future." 

The Company today filed an SEC Form 8-K Significant Events Statement and an SEC Form 14C Information Statement with the U.S. Government that describes the transaction, noting that approval for the transaction has already been received from the holders of a majority of its voting shares. 

Groen Brothers Aviation, Inc. has been developing gyroplane technology since 1986 and is recognized as the world's leading authority on sustained autorotative flight. Powered by a Rolls-Royce gas turbine engine, GBA developed the world's first commercially viable modern gyroplane -- the first "autogiro" to utilize a jet engine -- the Hawk 4 Gyroplane. The Hawk 4 was used extensively for security aerial patrol missions during the 2002 Winter Olympics in Salt Lake City. 

GBA announced in October 2005 that DARPA, an arm of the United States Department of Defense, awarded a contract to GBA to form and lead a team to design a proof of concept high-speed, long-range, vertical takeoff and landing (VTOL) aircraft designed for use in combat Search and Rescue roles. 

This modern rotorcraft, named by DARPA as the "Heliplane," was designed to exploit GBA's gyrodyne technology; offering the VTOL capability of a helicopter, the fast forward flight of an airplane, and the safety, simplicity, and reliability of a GBA gyroplane.