Loan Agreement and contract announcement

2 April 2013

Turbo Power Systems Inc.("TPS" or the "Company")

Amended Loan Agreement & Development Study Contract

TPS, the innovative electrical machines and electronic systems provider, announces an extension to its existing loan agreement with TAO Sustainable Power Solutions (UK) Limited ("Tao") (the "Existing Debt") and, separately, that it has secured a commercial contract to assist Vale Soluções em Energia ("VSE"), Tao's parent company, in a study of subsea power distribution concepts for the oil and gas market in Brazil.

Extension Loan

TPS' wholly owned UK subsidiary, Turbo Power Systems Limited ("TPSL"), has today entered into an agreement to amend its existing so as to extend the existing finance facility provided by Tao to TPS by a total of £2.10m (the "Extension Loan") to a total of £8.02m.

The Extension Loan provides working capital in support of the Company's trading whilst certain new contracts remain under negotiation. The Extension Loan represents an amendment to the agreement in respect of the Existing Debt (as previously notified and amounting to £5.92 million). Accordingly, the terms of the Extension Loan mirror those of the Existing Debt notably that it will be repayable on 1 April 2014, carries an annual interest rate of 6.0%, payable quarterly in arrears and be secured on the assets of TPSL. It is intended that the Extension Loan is to run for its full term.

The directors of the Company continue to consider a range of further options to address the Company's financing requirements.

VSE Contract

TPS is pleased to announce that it has entered into an agreement with VSE worth £0.2 million to work on the initial concept phase of a study into subsea power distribution for the oil and gas industry in Brazil, which is scheduled to run for a period of twelve months.

Carlos Neves, Chief Executive Officer of TPS commented:

"Our relationship with VSE gives TPS a very real opportunity to penetrate the Oil & Gas market in Brazil, which is a key global target market for our technology and aspirations, as set out in our recent final results announcement. Whilst this contract is by itself modest, we are optimistic that it may lead to further work as the project progresses past initial concept phase.

We are pleased that Tao continue to provide us with the financial support that our business requires as we continue to realign the Company's focus and as we work to seize upon commercial opportunities such as that announced today."

Related Party Transactions

VSE is the parent company of Tao, which holds 89.4% of the issued share capital of the Company, and both are therefore related parties for the purposes of the AIM Rules for Companies ("AIM Rules"). Accordingly, the entry into the agreements as set out above with Tao and VSE constitute related party transactions for the purpose of the AIM Rules.

The Company's independent directors consider, having consulted with finnCap Ltd, the Company's nominated adviser, that the terms of the transactions being entered are fair and reasonable insofar as the Company's shareholders are concerned.

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