CON-SPACE Communications Ltd. (the “Company” or “CON-SPACE”) (TSX-V: CCB), today announced that it is proceeding with a private placement of 22,000,000 common shares at $0.05 each, for gross proceeds of $1,100,000, to Turret Oy Ab (“Turret”), its largest shareholder and secured lender. Completion of the private placement is subject to regulatory approval and is subject to completion of a proposed restructuring to address the Company’s current serious financial difficulties. The restructuring is to include certain agreements with its bank to maintain its current credit facilities and, settlement and payout of security held by the vendors of Search Systems Inc. (the “SSI Vendors”).
The Company has a secured loan agreement with Turret (the “Turret Agreement”), securing a principal balance of CDN$4,900,000, which is currently in default including with respect to the failure to pay the quarterly interest payment due March 31, 2009. Turret has made a second $50,000 interim loan to the Company as a further advance under the Turret Agreement, pending completion of the private placement. Proceeds of the private placement are to be utilized to pay out the SSI Vendors, repay Turret the two $50,000 bridge loans and pay the overdue interest, with the balance for general working capital and costs associated with the financing and restructuring.
Turret currently holds 11,528,609 shares of the Company, representing 46.5% of the outstanding shares, and on completion of the private placement will hold 33,528,609 shares, representing 71.6% of the outstanding shares. As well, Turret holds warrants exercisable for 675,000 shares and holds conversion rights with respect to $4,800,000 of the principal amount owing under the Turret Agreement, as more particularly described in the Company’s news release of November 6, 2008. The conversion rights would be exercisable for a maximum of 13,750,000 common shares and if default conversion rates are applicable, the conversion rights would be exercisable for a maximum of 32,000,000 common shares.
Gordon Cook, the Company’s President and CEO, said, “This transaction is a necessary step toward resolving the burden of a debt load and capital structure that has been negatively affecting the Company for the past year. Operationally, we have made and continue to make progress toward completing our turnaround plan, even in the current economic downturn. This transaction is expected to put the Company on firmer financial ground and assist us in our endeavours to meet our stakeholders’ needs and allow for our operations to continue uninterrupted. We are fortunate that Turret has responded favourably to our request for additional financing during these difficult financial times.”
About CON-SPACE
CON-SPACE Communications Ltd. and its four principal product lines have been the eyes, ears and voice of first responders around the world for almost two decades. CON-SPACE Hardline, the SearchCam line, Delsar Life Detectors and CON-SPACE Radio Accessories — now all manufactured by CON-SPACE Communications — are the “originals’ in the field of technical rescue. They’re time-proven, reliable, field tested and easy to use. First responders rely on the “originals” to save lives.
DISCLAIMER
This news release contains forward-looking statements which reflect management's current expectations regarding the Company's objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities. These forward-looking statements are not guarantees, but only predictions. Although the Company believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a number of factors that could cause actual results to vary significantly from current expectations. These factors and other risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, as identified in the Company's disclosure record on www.sedar.com. The forward-looking statements included in this news release are made only as of the date of this news release and the Company does not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise.
TSX-Venture: Tier 1
SEC Exemption #82-3378
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
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MEDIA CONTACT:
Julie Nelson
604-244-9323
800-546-3405
Email. jnelson@con-space.com