SR Telecom Announces Proposed Recapitalization Plan
2005年4月19日 - 6:19AM
PRニュース・ワイアー (英語)
SR Telecom Announces Proposed Recapitalization Plan Reaches
Agreement in Principle with Debenture Holders Outstanding 8.15%
Debentures to be Exchanged for Approximately 47.3 Million Common
Shares and $63.9 Million of New Convertible Secured Debentures Plan
Includes New Credit Facility for up to $50 Million and $40 Million
Rights Offering to Shareholders MONTREAL, April 18
/PRNewswire-FirstCall/ -- SR Telecom Inc. (TSX: SRX; Nasdaq: SRXA)
announced today that it has entered into an agreement in principle
with a group representing the required majority of its outstanding
8.15% Debentures due April 22, 2005, regarding its proposed
recapitalization plan. "This proposed recapitalization will provide
the basis for the strengthening of our operations going forward,
and will ensure that we have the capacity to continue to fully
satisfy the needs of our global customer base," said Pierre
St-Arnaud, SR Telecom's President and Chief Executive Officer.
Pursuant to the terms of the agreement in principle, SR Telecom
will exchange the outstanding $71 million in principal amount of
its 8.15% Debentures, due April 22, 2005 and all accrued interest
of approximately $2.9 million into 47,266,512 common shares and
approximately $63.9 million new 10% Convertible Redeemable Secured
Debentures, due 2010. Interest on the new Convertible Debentures is
payable in cash or in kind at the option of the Corporation. The
common shares issued to the Debenture holders will represent
approximately 73% of the issued and outstanding common shares of SR
Telecom. In addition, each $1,000 in principal amount of new
Convertible Debentures will be convertible into 4,727 (the
"Conversion Rate") common shares, representing a conversion price
at closing of approximately $0.21 per common share. The Conversion
Rate may be adjusted to account for interest accrued pending
closing such that the aggregate equity holding represented by the
common shares issued together with the new Convertible Debentures
will not exceed 95.2% of the issued and outstanding common shares
of the Corporation on a fully diluted basis before giving effect to
the Rights Offering described below. The restricted group of
Debenture holders has also agreed, subject to execution of final
documentation, to provide a five-year $50 million secured Credit
Facility to the Corporation of which $20 million will be available
as soon as loan documentation and registrations are in place, with
the balance to be available over the next three quarters, subject
to certain conditions. Based on the current agreement in principle,
the financial terms include the following: a 2% up-front facility
fee (based on the full $50 million facility amount) and interest
paid partly in cash at a rate equal to the greater of 6.5% and the
three-month Canadian Dollar LIBOR rate plus 3.85% and partly paid
in kind at a rate equal to the greater of 7.5% and three-month
Canadian Dollar LIBOR plus 4.85%. In addition the facility
contemplates a payout fee of 5% (based on $50 million facility
amount) or 2% of distributable value at maturity. The Debenture
exchange and the Credit Facility are subject to numerous
conditions, including the execution of definitive documentation
satisfactory to the lenders under the Credit Facility, the approval
by the holders of at least 66 2/3 % of the outstanding Debentures,
and regulatory approval. Debenture holders representing
approximately 75% of the outstanding Debentures have indicated in
writing their support for the Debenture exchange. The Credit
Facility is expected to close as soon as loan documentation and
registrations are in place and the Debenture exchange is expected
to close on or about May 9, 2005 although there can be no assurance
that such conditions will be satisfied by such date. Additionally,
it is a condition of the recapitalization that the lenders to the
Corporation's Chilean subsidiary, CTR, will restructure CTR's
outstanding debt and amortization schedule and provide an extended
waiver of at least three years, subject to final negotiations and
the receipt of credit approvals. CTR's lenders had previously
waived compliance with certain financial and operational covenants
of CTR until April 22, 2005. The Corporation is free to accept an
alternative transaction, which must provide for the payment of all
amounts due to the Debenture holders plus expenses, unless
otherwise agreed to by the Debenture holders. However, if the
Corporation accepts an alternative transaction after the later of
two weeks from today or the date on which the Credit Facility
becomes binding, such acceptance would result in the payment of $1
million to the lenders providing the Credit Facility. The maximum
number of common shares that may be issued, assuming all of the new
Convertible Debentures are converted into common shares at the
Conversion Rate, is approximately 302,001,106 common shares, which,
together with the issuance of 47,266,512 common shares in exchange
for a portion of the outstanding 8.15% Debentures, represents a
total potential dilution of 1,983% over the currently outstanding
common shares, without taking into account the Rights Offering. As
the aggregate number of common shares issuable in connection with
the Debenture exchange will exceed the maximum number of securities
issuable without security holder approval under the rules of the
Toronto Stock Exchange (the "TSX"), SR Telecom intends to rely on
an exemption from the security holder approval requirements
provided for under Section 604(e) of the TSX Company Manual on the
basis of its serious financial difficulty. Upon the recommendation
of a special committee of independent directors of SR Telecom, who
are free from any interest in the transactions and are unrelated to
any of the parties involved in the transactions, the Board of
Directors of SR Telecom has determined that SR Telecom is in
serious financial difficulty, that the transactions are designed to
improve its financial situation and are reasonable in the
circumstances, and has authorized SR Telecom to make the
application to the TSX. Rights Offering In addition, as soon as
practicable following the closing of the Debenture exchange, the
Corporation intends to file a preliminary prospectus relating to a
Rights Offering to its shareholders. Pursuant to the Rights
Offering, the Corporation will offer to shareholders holding its
currently outstanding common shares, the right to subscribe to up
to $40 million of new common shares at a price to be determined,
but no less than $0.254 per share. The Rights Offering will be
structured to result in a proportionate reduction of the
participation of the new Convertible Debentures which will vary
with the price and amount of the rights exercised. For example,
assuming a subscription price of $0.254 and that the full amount of
$40 million is subscribed for, the shareholders holding the
Corporation's currently outstanding common shares would own
approximately 36% of the Corporation's common shares on a fully
diluted basis. The first $25 million raised under the Rights
Offering will be used for working capital and general corporate
purposes and all amounts raised in excess of $25 million will be
applied 50% to working capital and general corporate purposes and
50% to a pro rata redemption of the new Convertible Debentures at
95% of their face value. Executive Appointment SR Telecom also
announced today that is has engaged Mr. William Aziz, Managing
Partner of Blue Tree Advisors, as Chief Restructuring Officer on a
contract basis to assist senior management in identifying and
implementing strategies to capitalize on opportunities for the
enhancement of operating performance. He will report to the CEO and
the Board of Directors. Financial Advisor Genuity Capital Markets
advised SR Telecom on the recapitalization plan and led
negotiations with the Debenture holders. About SR Telecom SR
TELECOM (TSX: SRX, Nasdaq: SRXA) designs, manufactures and deploys
versatile, Broadband Fixed Wireless Access solutions. For over two
decades, carriers have used SR Telecom's products to provide
field-proven data and carrier-class voice services to end-users in
both urban and remote areas around the globe. SR Telecom's products
have helped to connect millions of people throughout the world. A
pioneer in the industry, SR Telecom works closely with carriers to
ensure that its broadband wireless access solutions directly
respond to evolving customer needs. Its turnkey solutions include
equipment, network planning, project management, installation and
maintenance. SR Telecom is a principal member of WiMAX Forum, a
cooperative industry initiative which promotes the deployment of
broadband wireless access networks by using a global standard and
certifying interoperability of products and technologies.
FORWARD-LOOKING STATEMENTS Except for historical information
provided herein, this press release may contain information and
statements of a forward-looking nature concerning the future
performance, financial condition and financing plans of the
Corporation. These statements are based on suppositions and
uncertainties as well as on management's best possible evaluation
of future events. Such factors may include, without excluding other
considerations, fluctuations in quarterly results, evolution in
customer demand for the Corporation's products and services, the
impact of price pressures exerted by competitors, and general
market trends or economic changes. As a result, readers are advised
that all of the forward-looking statements in this news release are
qualified by these cautionary statements and actual results or
developments may differ from expected results or developments and
that such differences may be significant. The Corporation expressly
disclaims any obligation to update any forward-looking information.
SR TELECOM is a trademark of SR Telecom Inc. All rights reserved
2005. All other trademarks are property of their owners.
DATASOURCE: SR TELECOM INC. CONTACT: David Adams, (Senior
Vice-President, Finance and CFO); Scott Lawrence, (Maison Brison);
(514) 335-4035; (514) 731-0000, ; http://www.srtelecom.com/
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