Espial Announces Private Placement of Units

OTTAWA, Nov. 8, 2013 /CNW/ - Espial® Group Inc. ("Espial" or the "Company"), (TSX: ESP), a leader in the delivery of on-demand TV software and services, announced today that it intends to complete a brokered private placement (the "Offering") of up to 5,714,286 units for gross proceeds of up to $4,000,000.  Each unit (a "Unit") will be issued at a price of $0.70 per Unit and consist of one common share of the Corporation (the "Common Shares") and one half of one common share purchase warrant (the "Warrants"). Each whole Warrant will entitle the holder thereof to acquire one common share of the Company at a price of $0.72 per share for a period of twelve months from the date of issuance. The Warrants contain customary anti-dilution provisions, including adjustments upon the payment of a dividend in Common Shares; subdivision or combination of the Common Shares; or the issuance of rights, options or warrants to all or substantially all holders of the Common Shares.  The current number outstanding Common Shares of the Company, without giving effect to the Offering, is 14,106,829 (the "Undiluted Issued and Outstanding").  Global Maxfin Capital Inc. will act as exclusive agent (the "Agent") in connection with the Offering.

Closing of the Offering is anticipated to occur on or before November 15, 2013 and is subject to receipt of applicable regulatory approvals, including approval of the Toronto Stock Exchange (the "TSX"). The issue price of the Units represents approximately a 2.7% discount on the market price of the Common Shares on the date of a binding agreement, as defined by the TSX. Securities issued will be subject to a hold period, which will expire four months plus one day from the date of closing.

Under Subsection 607(g)(i) of the TSX Company Manual, the Company is required to obtain majority shareholder approval to private placements involving the issuance of greater than 25% of the Company's issued and outstanding Common Shares. In obtaining the written consent of shareholders holding a majority of the Company's common shares, the Company is relying on the TSX exemption set forth in Subsection 604(d) of the TSX Company Manual from the requirement to hold a shareholder meeting.

It is anticipated that the net proceeds of the Offering will be used by the Company for general working capital purposes.

The Offering has been negotiated at arm's length and will not affect control of the Company. In connection with the Offering, it is expected that:

  • PenderFund Capital Management ("Pender"), which to the knowledge of the Company does not currently hold any Common Shares, will purchase up to 1,797,143 Units, comprised of 1,797,143 Common Shares (which represents up to approximately 12.7% of the Undiluted Issued and Outstanding) and 898,571 Share Purchase Warrants (which, upon exercise, would represent up to approximately 6.4% of the Undiluted Issued and Outstanding).  Pender will become a new insider of the Company, as that term is defined in applicable securities laws;
  • JL Albright Group of Funds, a control person who collectively currently own 2,800,000 Common Shares (which represent 19.9% of the Undiluted Issued and Outstanding) and 823,529 warrants (which, upon exercise, would represent 5.8% of the Undiluted Issued and Outstanding), will purchase up to 571,429 Units, comprised of up to 571,429 Common Shares (which represents up to approximately 4.1% of the Undiluted Issued and Outstanding) and 285,714 Warrants (which, upon exercise, would represent up to 2.0% of the Undiluted Issued and Outstanding);

  • Difference Capital Funding Inc., who together with its associates, currently own 18.6% of the Undiluted Issued and Outstanding, will purchase up to 142,857 Units, comprised of up to 142,857 Common Shares (which represents up to approximately 1.0% of the Undiluted Issued and Outstanding) and 71,429 Warrants (which, upon exercise, would represent up to 0.5% of the Undiluted Issued and Outstanding); and

  • Carl Smith, Espial's Chief Financial Officer, will purchase up to 71,429 Units, comprised of up to 71,429 Common Shares (which represents up to approximately 0.5% of the Undiluted Issued and Outstanding) and 35,714 Warrants (which, upon exercise, would represent up to 0.3% of the Undiluted Issued and Outstanding).

Such participation by current Espial insiders may be considered a "related party transaction", as defined under Multilateral Instrument 61-101 ("MI 61-101"). The transaction will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of any units issued to or the consideration paid by such persons will exceed 25% of the Company's market capitalization.  A material change report in respect of the transaction was not filed 21 days in advance of the expected closing of the Offering. The shorter period was necessary in order to permit the Company to close the Offering in a timeframe consistent with usual market practice for transactions of this nature.

In connection with the Offering, the Agent will receive cash compensation equalling 7.0% of the gross proceeds raised under the Offering, as well as compensation options entitling the Agent to subscribe for that number of Common Shares that is equal to 7.0% of the total number of Units sold pursuant to the Offering.  Subject to regulatory approval, each compensation option will be exercisable for a period of 18 months following the closing of the Offering at an exercise price of $0.72 per Common Share.

The maximum number of Common Shares issuable in connection with the Offering is 8,971,429 (which represents 63.6% of the Undiluted Issued and Outstanding), comprised of 5,714,286 Common Shares (which represents 40.5% of the Undiluted Issued and Outstanding), 2,857,143 whole Warrants (which, upon exercise, would represent 20.3% of the Undiluted Issued and Outstanding) and broker options to purchase up to 400,000 Common Shares (which, upon exercise, would represent to 2.8% of the Undiluted Issued and Outstanding).

About Espial (

Espial is a leading supplier of digital TV and IPTV software and solutions to service providers as well as consumer electronics manufacturers. Espial's middleware, video-on-demand, and browser products power a diverse range of pay-TV and Internet TV business models. Over 35 million licenses of its patented software are in use across the world. Espial is headquartered in Ottawa, Canada and has offices in the United States, Europe, and Asia. Visit or contact us via phone at +1 613 230 4770.

Forward Looking Statement

This press release contains information that is forward looking information with respect to Espial within the meaning of Section 138.4(9) of the Ontario Securities Act (forward looking statements) and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements or assumptions about the size, timing and completion of the proposed private placement, regulatory approvals, anticipated use of proceeds and any other statements regarding Espial's objectives (and strategies to achieve such objectives), future expectations, beliefs, goals or prospects are or involve forward-looking information.

Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those in the forward-looking statements or could cause our current objectives and strategies to change, including but not limited to: that one or more of the definitive agreements for the proposed transactions is terminated in accordance with its terms or otherwise; that the conditions precedent to the completion of the transactions are not satisfied or waived by the applicable party; that the necessary approvals by regulatory bodies are not obtained; that Espial will be required to obtain shareholder approval prior to the completion of the private placement; that a material adverse change occurs in respect of Espial; that the private placement is not completed in the contemplated time period; changing conditions and other risks associated with the on-demand TV software industry and the market segments in which Espial operates, competition; Espial's ability to effectively develop its distribution channels and generate increased demand for its products; adverse economic conditions; adverse technological change;  unanticipated changes in our costs; regulatory changes; litigation; the emergence of new opportunities, many of which are beyond our control and current expectation or knowledge.

Additional risks and uncertainties affecting Espial can be found in Management's Discussion and Analysis of Results of Operations and Financial Condition for the fiscal year ended December 31, 2012 filed on SEDAR at If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein and our current objectives or strategies may change. Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.


For further information:

For inquiries from the financial press or analysts, contact:

Carl Smith
Chief Financial Officer
Espial Group Inc.
Phone: +1 613-230-4770

Kirk Edwardson
Director, Marketing
Espial Group Inc.
Phone: +1-613-230-4770 x1145

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