OTTAWA, Dec. 30 /CNW/ - Espial® Group Inc. ("Espial" or the "Company"), (TSX:ESP), a leader in the delivery of on-demand TV software and solutions, today announced that it has closed the previously announced $3.5 million secured term loan facility agreement with J.L. Albright Ventures group of funds. The participating funds are J.L. Albright IV Venture Fund L.P., J.L. Albright IV Venture Parallel Fund L.P. and J.L. Albright IV Venture Parallel II Fund L.P. (collectively, "JLA Ventures").
The loan has a term of 42 months and will bear interest at the annual rate of 10%. Interest-only monthly payments are required during the term of the loan and the principal is pre-payable without bonus or penalty.
In conjunction with the loan, Espial granted JLA Ventures five-year warrants to purchase up to 823,529 common shares of the Company. The warrants have an exercise price of $0.70 per share. The common shares issuable upon the exercise of the warrants will be subject to a four-month hold period that expires on the date that is four months after the date of issue of the warrants.
The transaction is a related party transaction under Multilateral Instrument 61-101- Protection of Minority Security Holders in Special Transactions ("MI 61-101"), which requires minority shareholder approval. Such approval was obtained at a meeting of the Company's shareholders held in Ottawa on December 29, 2010.
Pierre Donaldson, a director of Espial, is a Partner of the general partner of JLA Ventures. JLA Ventures holds 2.8 million common shares of the Company (representing approximately 19.9% of the outstanding shares of Espial, 17.2% fully diluted). The warrants granted in the transaction, if exercised in full, would increase JLA Ventures' interest in Espial to a total of 3,623,529 common shares, which would represent 24.3% of Espial's outstanding voting shares, assuming no intervening share issuances through the exercise of outstanding options or otherwise (21.2% fully diluted). As the warrants may result in JLA Ventures' ownership interest exceeding 20% of the issued and outstanding shares of Espial, the shareholders of the Company specifically approved the warrants and the formula used to determine their exercise price, as required by the Toronto Stock Exchange. Under MI-61-101, the transaction is exempt from formal valuation requirements to which related party transactions are subject because the warrants represent less than 25% of the Company's capitalization.
About Espial (www.espial.com)
Espial is a leading supplier of high performance and open digital and IP TV software and solutions to service providers in the cable, telecommunications, hospitality and consumer electronics industries. Its middleware, video-on-demand and browser solutions provide superior service delivery, advanced service innovation tools and the flexibility to implement diverse pay-TV business models. Over 7 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. For more information please call +1.613.230.4770 or visit www.espial.com.
About JLA Ventures
JLA Ventures, a venture capital firm with offices in Toronto and Montreal, is a leading investor in technology companies at all stages of growth. In addition, JLA Ventures is also the co-manager of the BlackBerry Partners Fund. JLA Ventures' past and current portfolio companies include: Q9 Networks (acquired by Abry Partners), Nstein (acquired by Open Text), Triple G Systems (acquired by General Electric), Pixstream (acquired by Cisco), Basis100 (acquired by First American Corporation), Fun Technologies (acquired by Liberty Media Corporation), Servicesoft Technologies (acquired by Broadbase), Isolation Systems (acquired by Shiva), Descartes Systems Group (NASDAQ:DSGX), Bioscrypt (acquired by L-1 Identity Solutions), VFM Leonardo, Quickplay Media, HealthUnity, b5media, Paymentus, ecobee, I Love Rewards, and Netshelter. For more information please visit www.jlaventures.com.
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