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NUR Macroprinters Actively Working to Improve Its Financial Stability

Thursday, February 03, 2005

Press release from the issuing company

LOD, Israel--Feb. 2, 2005-- Enters into a definitive agreement with Inspire Investment Ltd.; Negotiating with its lending banks, two of three banks verbally approved proposal; Appeals NASDAQ delisting and is awaiting panel's ruling; Dan Purjes enters a voting agreement with the Company; Expects write-off NUR Macroprinters Ltd., a leading supplier of wide-format inkjet production printing systems for the out-of-home advertising market, today announced that it is actively working to improve its financial stability and to address its current and future compliance with the Nasdaq SmallCap Market continued listing requirements. Inspire Investment Ltd. Following NUR's announcement of December 21, 2004 regarding an agreement in principle with Inspire Investments Ltd. (TASE:INSP) to invest $10 million in NUR (the "Inspire Investment"), NUR is announcing that it has executed a definitive agreement with Inspire. The definitive agreement is subject to a number of conditions, including: completion of due diligence by Inspire; NUR's ability to enter into agreements with its lender banks regarding the restructuring of NUR's bank debt and the approval of the Inspire Investment by NUR's lender banks and by NUR's shareholders. The definitive agreement contemplates the issuance to Inspire of approximately 15.3 million ordinary shares at $0.65 per share and warrants to purchase 7.2 million ordinary shares at $0.75 per share. The definitive agreement will be adjusted to reflect the nature and terms of the restructuring of NUR's bank debt as detailed below. There can be no assurance that the Inspire Investment will be completed, that NUR will be successful in reaching an agreement with its lender banks regarding the restructuring of its bank debtor, that its lender banks or shareholders will approve the Inspire Investment. Negotiations with Lender Banks NUR has been engaged in active discussions with each of its lender banks regarding the restructuring of its outstanding bank debt. Two of its three lender banks, to whom NUR owes approximately 90% of its current bank debt ($38.8 million of a total of $43.2 million), have given preliminary verbal approval of the debt restructuring proposal submitted by NUR's management. NUR is continuing discussions with the third bank regarding the restructuring of the balance of its outstanding bank debt. The actual terms of any restructuring of NUR's outstanding bank debt remains subject to final approval by each of NUR's lender banks, the closing of the Inspire Investment and the approval of NUR's shareholders. According to the debt restructuring proposal submitted by NUR's management, NUR's three lender banks would convert an aggregate of $15 million of NUR's outstanding debt into 5.0 million ordinary shares and would be granted warrants to purchase an aggregate of 13.3 million ordinary shares, with no exercise price. These warrants to be granted to NUR's lender banks would have a five year term. If the above mentioned debt restructuring agreement is completed and approved, Inspire would be granted warrants to purchase an additional 8.2 million ordinary shares (bringing Inspire's total to 15.4 million warrants) at $0.75 per share. In addition, Inspire would be entitled to purchase the warrants to be issued to NUR's lender banks at $0.75 per warrant. If Inspire chooses not to exercise its right to purchase the warrants issued to NUR's lender Banks, NUR would be entitled but not obligated to purchase the warrants from its lender banks at $0.75 per warrant. There can be no assurance that NUR will be successful in reaching an agreement with its lender banks regarding the restructuring of its bank debt. Appeal of Nasdaq SmallCap Delisting On January 27th 2005, representatives of NUR's management appeared before an independent hearing panel to appeal the Nasdaq Staff's previously announced decision to delist NUR's securities from the Nasdaq SmallCap Market as a result of NUR's failure to comply with the minimum $2.5 million stockholders' equity requirement for continued listing set forth in Marketplace Rule 4320(e)(2)(B). In the event NUR's appeal is not successful, NUR's ordinary shares will cease to be quoted on the Nasdaq SmallCap Market and NUR will seek to have its ordinary shares made eligible for trading on the OTC Bulletin Board. Voting Agreement with Dan Purjes NUR also announced that it has entered into a voting agreement, coupled with an irrevocable proxy with Dan Purjes, a former director and former chairman of NUR's Board of Directors and owner of approximately 30% of NUR's ordinary shares. Further to conversations between representatives of NUR and Nasdaq, NUR and Mr. Purjes have also agreed to place the shares subject to the voting agreement into a voting trust. As a result, voting control of all shares owned by Mr. Purjes and his family and affiliates (collectively, the "Purjes Group") will be controlled by an independent trustee who will vote the Purjes Group's securities proportionally according to the votes cast by NUR's other shareholders on any matter submitted to a shareholder vote. In consideration of Mr. Purjes entering into the voting trust agreement, NUR will grant to Mr. Purjes five-year warrants to purchase 3.0 million ordinary shares at $0.75 per share. While the voting agreement is effective immediately, the grant of warrants to Mr. Purjes is subject to shareholder approval. In the case that the shareholders do not approve the grant, the voting trust agreement will automatically terminate and NUR's ordinary shares will cease to be quoted on the Nasdaq SmallCap Market. Write -Off Expected NUR also announced that it is considering the discontinuation of its Salsa product line due to diminished customer demand, in order to optimize its current and future product lines. The discontinuation of this product line is expected to result in a write-off of excess inventories and good-will associated with this product line. In addition, the Company is also evaluating some of its estimates regarding account receivables with respect to which the Company has pursued legal and other means of collection. While the actual amount of the write-off associated with inventory, accounts receivables and other assets has not yet been finally determined, NUR expects that the amount of the special charge related to the foregoing will be between $13- $18 million.

 

 

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