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Allied Defense Group Announces $68M Contract

VIENNA, Va. --- The Allied Defense Group, Inc. announces its funded backlog has increased by approximately $68 million. The Company's current funded backlog exceeds $190 million. In July of 2008, its Belgian subsidiary, MECAR SA, was awarded the second tranche of $167 million ammunition contract worth $68 million. An export license for that ammunition was received in July 2008. A performance bond was approved by MECAR SA's bank pool on September 1, 2008, allowing that portion of backlog to move from the unfunded to funded backlog classification. This ammunition will be delivered in 2009. Approximately $4 million of ADG's backlog remains unfunded.

Major General (Ret) John Marcello, Chief Executive Officer of the Allied Defense Group stated, "With this announcement, ADG's consolidated, committed, funded backlog has reached an historic high. With the demonstrated support of our banking pool, we continue to ramp up production at MECAR SA in order to exploit this extraordinarily large and growing backlog. The results of these efforts are displayed in our ever-increasing top and bottom lines. As I mentioned in our most recent filing and conference call, we expect this trend to continue beyond our third and fourth quarters.

"We are making meaningful progress within ADG. We have diversified products and markets, cut costs, reduced debt, bolstered liquidity, disposed of certain non-performing subsidiaries and built new partnering and joint venture relationships. We are focused on further reducing debt and building on our strengths by growing our business in the ammunition market place. In addition to MECAR SA's manufacturing, the Company has been aggressively expanding its market presence in the ammunition services sector as described in recent public announcements.

"Business is good at ADG. I want to reiterate that the fundamentals of our business are strong as demonstrated by solid growth to both our top and bottom lines. The Company remains well-positioned to grow and to continue to increase revenue and income in the coming years."

The Allied Defense Group, Inc. is a diversified international defense and security firm which: develops and produces conventional medium caliber ammunition marketed to defense departments worldwide; designs, produces and markets sophisticated microwave security systems.


The Allied Defense Group Announces $68 Million Contract