VANCOUVER, June 2 /CNW/ - Ignition Point Technologies Corp. (TSX-V:IPN)
(the "Company") announces that it has agreed in principle to a proposal to
finance and financially restructure its subsidiary TeraSpan Networks Inc.
("TeraSpan") (the "TeraSpan Refinancing").
The Company's interest in TeraSpan, consisting of equity and debt, is its
main asset and TeraSpan requires additional financing in order to continue to
carry on business. If the TeraSpan Refinancing does not complete promptly,
TeraSpan may be forced to cease operations.
The financing and the related conversion of approximately $6.5 million of
TeraSpan's debt to equity will significantly improve TeraSpan's balance sheet
and will put TeraSpan in a stronger position to capitalize on its business
opportunities. The financing proceeds will be used to supplement TeraSpan's
working capital and are expected to provide TeraSpan with the time required to
restructure and secure additional financing to support long-term sustainable
The TeraSpan Refinancing contemplates that a group of investors (the
"Investors"), the majority of whom are holders of the Company's Debentures,
will lend up to $612,500 in aggregate to TeraSpan under debentures (the "New
Debentures") bearing interest at 15% and maturing two years from the date of
issue. The New Debentures will be convertible into common shares of TeraSpan
at the option of the holders at any time and in certain circumstances, at the
option of TeraSpan.
In accordance with the conditions of the TeraSpan Refinancing, prior to
closing, all of TeraSpan's existing debt, including its debt owing to the
Company, will be converted into TeraSpan common shares. The Company will hold
85.7% of TeraSpan's common shares after the conversion. After giving effect to
the debt to equity conversion, if the New Debentures of $612,500 are fully
converted the Investors will hold 40.5% of TeraSpan's common shares and the
Company's interest will be reduced to 51%.
The TeraSpan Refinancing contemplates that upon closing the Company will
be given the right to only one nominee on the Board of Directors of TeraSpan
and will accordingly no longer control TeraSpan.
The TeraSpan Refinancing is subject to the parties negotiating, settling
and entering into definitive agreements.
Currently, the Company is indebted in the aggregate principal amount of
$2,500,000, with interest at 15% (the "Company's Debentures"), is in default
of its interest payment obligations under this debt and lacks the liquidity
required to make any further interest payments. The TeraSpan refinancing will
not rectify this default nor address the Company's inability to pay its trade
payables. The holders of the Company's Debentures have not taken action to
enforce the debentures, nor have they called a meeting of creditors to enforce
them. The Company is considering its options in relation to its debenture and
About Ignition Point
Ignition Point Technologies Corp. (TSX-V:IPN) is a Vancouver-based
broadband communications company providing innovative solutions to expand
connectivity to public and private networks. Ignition Point's 68.6% owned
operating subsidiary is TeraSpan Networks Inc. www.teraspan.com. For more
information, visit www.ignitionpoint.ca.
This news release may contain statements that are "forward-looking
statements". Forward looking statements are statements that are not historical
facts and are generally, but not always, identified by the words "expects",
"plans", "anticipates", "believes", "intends", "estimates", "projects",
"potential" and similar expressions, or that events or conditions "will",
"would", "may", "could" or "should" occur. Although Ignition Point believes
the expectations expressed in such forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of future realities
and actual realities may differ materially from those in forward looking
statements. Forward looking statements are based on the beliefs, estimates and
opinions of Ignition Point's management on the date the statements are made.
Ignition Point assumes no obligation to update these forward-looking
statements if management's beliefs, estimates or opinions, or other factors,
change, except as required by law.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this news release.
For further information:
For further information: Elena Kinakin, Chief Financial Officer,
Ignition Point Technologies Corp., Phone: (604) 638-5484