Frankly Announces Term Sheet for Equity Investment and up to US$16 Million Loan Facility from Raycom Media

Leading U.S. Broadcaster Raycom Media to Convert US$1 Million of its Promissory Note into Frankly Common Shares and Provide up to US$16 Million Loan Facility

SAN FRANCISCO, Aug. 18, 2016 /CNW/ -- Frankly Inc. (TSX VENTURE: TLK) ("Frankly"), a leading content, engagement and monetization platform for brands and media companies, has agreed to a term sheet with Raycom Media, Inc. ("Raycom"), under which Raycom will provide Frankly with a non-revolving term line of credit in the principal amount of US$14.5 million and an additional available US$1.5 million non-revolving line of credit (collectively, the "Loan"). Raycom will also convert US$1.0 million of its existing US$4.0 million promissory note to shares of Frankly common shares and Raycom's 6,751,132 Class A restricted voting shares of Frankly will be converted on or prior to the closing date into common shares of Frankly (collectively, the "Conversion"). 

"This substantial financial investment by one of the nation's largest broadcasters demonstrates Raycom's confidence in our unique business model and long-term commitment to Frankly's continued success," said Steve Chung, company Chairman and CEO. "The financing will allow us to accelerate our growth and long-term strategic plan to be a dominant technology platform for media companies globally."

The Loan will have a five-year term and will be secured by the grant of a security interest in Frankly's assets, a pledge of shares of Frankly's subsidiaries and a guarantee by Frankly's subsidiaries secured by their assets. Simultaneously, Frankly and Raycom will also enter into a software code escrow agreement.

Interest on outstanding balances of the Loan will accrue at a rate of 10% per annum, with a default interest rate of 12% per annum. The Loan is subject to certain scheduled mandatory principal repayments, with additional mandatory repayments occurring upon Frankly's raising of additional financing, sales of assets and excess cash flow.

In connection with the Loan and subject to TSX Venture Exchange approval, shareholder approval and the negotiation and execution of definitive agreements, Frankly will grant Raycom warrants to acquire Frankly common shares in an amount equal to 40% of the outstanding principal balance of the Loan up to US$6,400,000. Each warrant will be exercisable to acquire one Frankly common share with an exercise price of C$0.50 per share. The warrants will expire on the earlier of: (i) the repayment of the Loan in accordance with its terms; and (ii) 5 years. To the extent that there is a mandatory repayment of any portion of the principal balance of the Loan within the first year of its term, a proportionate number of the warrants will have their term reduced to the later of one year from issuance and 30 days from the date of such repayment. 

The proceeds of the Loan will be used to pay off the outstanding US$15.0 million of promissory notes issued by Frankly in connection with the 2015 acquisition of its Frankly Media subsidiary, including US$3.0 million of the US$4.0 million of such notes issued to Raycom, with the remaining US$1.0 million promissory note balance owed to Raycom to be converted to Frankly common shares, based on the closing price of Frankly shares on August 18, 2016. These common shares, as well as the warrants granted in connection with the Loan, will be subject to a regulatory hold period of four months from the date of issuance.

Raycom currently holds 6,751,132 Class A restricted voting shares of Frankly, which represent approximately 21% of the issued and outstanding shares of Frankly. Upon conclusion of the Loan and Conversion transactions, Raycom would hold 9,304,532 common shares of Frankly and 16,341,760 warrants (if the size of the loan is increased by US$1.5 million to US$16 million), which collectively represents approximately 27% of the issued and outstanding voting shares of Frankly on a non-diluted basis.

Pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the transactions with Raycom will be "related party transactions." The Loan and Conversion transactions will not be subject to the valuation and minority shareholder approval provisions of MI 61-101 based on the exceptions contained in Sections 5.5(e) and 5.7(1)(c) thereof for transactions that are supported by arms-length control persons.

The Loan and Conversion remain subject to TSX Venture Exchange approval and negotiation and execution of definitive agreements. In addition, the creation of a new Control Person (as such term is defined in the policies of the TSX Venture Exchange) requires the approval of disinterested shareholders holding more than 50% of the issued and outstanding shares of Frankly. The Loan and Conversion transactions are expected to close by the end of August 2016.

About Frankly

Frankly (TSX VENTURE: TLK) builds an integrated software platform for brands and media companies to create, distribute, analyze and monetize their content across all of their digital properties on web, mobile and TV. Its customers include NBC, ABC, CBS and FOX affiliates, as well as top fashion brands, professional sports franchises and global organizations. Collectively, Frankly reaches nearly 80 million monthly users in the United States. The company is headquartered in San Francisco with major offices in New York. To learn more, visit

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Notice Regarding Forward-Looking Statements

This release includes forward-looking statements regarding Frankly and their respective businesses. Forward-looking events and circumstances discussed in this release, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the parties, including as a result of a definitive agreement in respect of a proposed transaction not being reached or lack of shareholder and/or regulatory approval for the proposed transaction. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Frankly undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

SOURCE Frankly Inc.

For further information: Frankly Media Press Contact:; Frankly Investor Relations Contact: Matt Glover or Najim Mostamand, Liolios Group, Inc., 949-574-3860,,

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