WINNIPEG, July 14 /CNW/ - Craig Wireless Systems Ltd. ("Craig Wireless"
or the "Company") (TSX: CWG), released its third quarter unaudited financial
statements for Fiscal 2008, for the three months ended May 31, 2008.
Revenue for the third quarter ended May 31, 2008, was $461,368 with a
loss per share of $0.05. The Company is transitioning its focus away from its
current services of fixed-wireless digital television distribution business to
a new suite of services that are focused on portable and mobile applications
utilizing WiMAX-enabled technology.
SUBSEQUENT EVENTS TO THE THIRD QUARTER
The Company is pleased to announce that it has executed a commitment
letter with T. Boyd Craig and J. Drew Craig (the "Lenders") to replace the
Company's only existing loan, in the amount of approximately $6.6 million,
previously provided by T. Boyd Craig to a wholly owned subsidiary of the
Company which was set to expire on July 18, 2008. The new financing will be
made pursuant to a new non-assignable $11.6 million facility (the "Loan"). The
incremental $5 million will be funded as follows: (i) $2.5 million to be
funded on or about July 21, 2008 or such earlier or later date that the
parties may agree to; and (ii) $2.5 million to be funded on September 1, 2008.
The Loan matures in one year and bears interest at a rate equal to 15% per
annum, payable quarterly in arrears. The Loan provides that 80 percent of the
interest payable shall be paid in cash and the other 20 percent of the
interest shall be paid by issuing and delivering subordinate voting shares of
the Company to the Lenders in lieu of cash. In addition, subject to all
necessary regulatory approvals, upon maturity of the Loan, the Loan provides
that the Lenders have the right to convert all or part of the Loan into
subordinate voting shares of the Company at a price equal to the
weighted-average trading price of the subordinate voting shares of the Company
on the Toronto Stock Exchange for the five trading days preceding the date of
maturity. Craig Wireless and its subsidiaries have agreed to execute and
deliver general security agreements and guarantees of any amounts owing by
Craig Wireless to the Lenders pursuant to the Loan.
The Loan remains subject to certain conditions, including Toronto Stock
As the Lenders are each a related party to the Company, the Loan is
considered a related party transaction under Multilateral Instrument 61-101
("MI 61-101"). The independent directors of the Company, upon considering the
terms of the Loan, have approved entering into the Loan. The valuation and
minority approval requirements set out in MI 61-101 do not apply to the loan
since the value of the transaction is below certain financial thresholds set
out in MI 61-101.
The Company is pleased that it has obtained the new financing and will
continue to explore additional financing opportunities.
Cambodian Spectrum Option Agreement
The Company had been considering an opportunity to purchase rights to use
spectrum in Cambodia. The Company has decided that it would not be an
appropriate use of the Company's cash resources at this point in time.
Instead, in order to preserve a right of the Company to complete the
acquisition of the spectrum rights at a later date, the Company has consented
to Mr. B. Craig, or his nominee Company, acquiring the rights to use the
spectrum and in connection therewith, the Company and Mr. B. Craig have
entered into an option agreement that provides the Company with rights of
first refusal as well as the option to purchase the rights to use spectrum for
a period of one year. Mr. B. Craig acquired the right to use an aggregate of
40 MHz of spectrum in Cambodia, in two separate transactions, for aggregate
consideration, inclusive of all consultant/success fees paid, under USD
$1.3 million. This arrangement has been approved by the independent directors
of the Company.
Status of Party to Wholesale Agreement in Greece
The Company had reported that Lannet Communications S.A. ("Lannet") had
requested a temporary suspension of trading of its shares with the Athens
Stock Exchange citing liquidity problems arising from the non-continuation of
its financing program. The Company's operating subsidiary in Greece has a
wholesale contract with Lannet for the use of the WiMAX-enabled network that
the Company's subsidiary is building in that country. The Company is
continuing to monitor Lannet's situation, and is uncertain what, if any,
effect this will have on the Company's ongoing commercial relationship with
Lannet. While Lannet is the Company's initial customer in Greece, the Company
intends to continue with its business plan, that includes the diversification
of its customer base and the possibility of its own retail service offering.
Going forward, the Company will make any necessary modifications to the plan
that may arise from the outcome of Lannet's present situation.
The third quarter unaudited financial statements of Craig Wireless, along
with the management discussion and analysis of financial condition and results
of operations, are available for viewing on the SEDAR website at
About Craig Wireless Systems Ltd.
Craig Wireless Systems Ltd. and its affiliates (collectively, the "CWS
Group") offer a broad range of telecommunications services, including,
broadband Internet access, television programming delivery, business
connectivity solutions, hosting, security and telecommunications solutions.
Through certain members of the CWS Group, Craig Wireless holds or leases
licenses for spectrum in the 2.5 GHz, 2.6 GHz or 3.5 GHz bands in Manitoba,
British Columbia, the Coachella Valley region, California, United States,
Greece, Norway and New Zealand. Spectrum in these ranges is effective for
delivery of point-to-multipoint signals, possesses robust bandwidth capability
and supports emerging WiMAX-based applications, including portable and mobile
The Toronto Stock Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Notice on forward-looking statements
This release includes forward-looking statements regarding Craig Wireless
and its business. Such statements are based on management's current
expectations. The forward-looking events and circumstances discussed in this
release may not occur and actual results could differ materially as a result
of known and unknown risk factors and uncertainties affecting Craig Wireless
and its business. No forward-looking statement can be guaranteed.
Forward-looking statements speak only as of the date on which they are made
and Craig Wireless does not undertake any obligation to publicly update or
revise any forward-looking statement, whether as a result of new information,
future events, or otherwise.
For further information:
For further information: David Lazzarato, Chief Executive Officer, Craig
Wireless Systems Ltd., Tel: (416) 515-2222 ext. 1, email: