RANCHO MIRAGE, CA, June 6, 2014 /CNW/ - Craig Wireless Systems Ltd. ("Craig Wireless" or the "Company") (TSX-V: CWG), is pleased to announce the closing of additional financing, previously announced on April 29, 2013.
This additional financing replaces the US$2,000,000 note issued by Craig Wireless to T. Boyd Craig in connection with the loan announced on November 29, 2013 (the "Prior Note"). Pursuant to a commitment letter dated April 29, 2014 (the "Commitment Letter"), Mr. Craig has advanced the further sum of US$1,500,000 (the "Additional Sum") to the Company and has been issued a convertible promissory note (the "Convertible Note") in replacement of the Prior Note and in respect of the Additional Sum. Accordingly, the Convertible Note provides for a loan for the principal sum of US$3,500,000. Pursuant to the terms of the Commitment Letter, the Prior Note and the 3,700,000 detachable warrants issued by Craig Wireless to Mr. Craig in connection with the Prior Note have been cancelled upon issuance of the Convertible Note.
Interest will accrue on the principal amount of the Convertible Note at 12% per annum, calculated daily and payable semi-annually in advance. The principal and accrued and unpaid interest on the Convertible Note is due two years from the date of issue (the "Term"), subject to the right of the Company to prepay in minimum increments on 30 days' notice during the Term. The outstanding principal amount of the Convertible Note is convertible at any time, in whole or in part, until maturity, into subordinate voting shares of the Company. The conversion price in respect of the first year of the Term is CDN$0.08, and the conversion price in respect of the second year of the Term is CDN$0.10.
Final approval from the TSX Venture Exchange (the "TSX-V") in respect of the issuance of the Convertible Note was received on the date hereof. According to TSX-V rules and applicable securities legislation, the securities issuable pursuant to the Convertible Note are subject to a four-month hold period, commencing on the date hereof and ending on October 6, 2014.
Mr. T. Boyd Craig is a director, senior officer and control person of Craig Wireless and has beneficial ownership of, or control or direction over, directly or indirectly, more than 10% of the issued and outstanding subordinate voting shares and multiple voting shares of the Company. The entering into of the Commitment Letter and the issuance of the Convertible Note is considered a related party transaction for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Pursuant to MI 61-101, a related party transaction requires formal valuation and minority shareholder approval unless an exemption applies. The Convertible Note offering pursuant to the Commitment Letter is exempt from the formal valuation and minority approval requirements due to the applicability of the financial hardship exemption set out in section 5.5(g) and section 5.7(1)(e) of MI 61-101. Specifically, a committee of independent directors of the Company reviewed the terms and conditions of the Commitment Letter and the Convertible Note offering and have determined that as Craig Wireless is in serious financial difficulty, the acceptance of the Commitment Letter and the Convertible Note offering pursuant thereto is designed to improve the financial position of Craig Wireless and the terms of the Commitment Letter and the Convertible Note issued pursuant thereto are reasonable in the circumstances of the Company.
About Craig Wireless Systems Ltd.
Craig Wireless and its affiliates (collectively, the "CWS Group") offer a broad range of telecommunications services, including, broadband internet access, 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 2.3 GHz, 2.5 GHz, 2.6 GHz or 3.5 GHz bands in New Zealand, Riverside County in Southern California, United States and in Greece. The CWS Group also has spectrum interests in Norway. Spectrum in these ranges is effective for delivery of point-to-multipoint signals, possesses robust bandwidth capability and supports emerging 4G-based applications, including portable and mobile applications.
The TSX Venture 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. Not to limit the generality of the foregoing, the forward-looking information set forth in this news release is subject to various risks and other factors including the following: availability of funding; the risks of conducting business in a foreign country; currency fluctuations; in addition to those risks enumerated under the heading "Risk Factors" in the Company's AIF, available on SEDAR at www.SEDAR.com. 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.
SOURCE: Craig Wireless Systems Ltd.
For further information: T. Boyd Craig, Chief Executive Officer, Craig Wireless Systems Ltd., email: email@example.com.