TORONTO, Feb. 7 /CNW/ - Telehop Communications Inc. (TSXV-HOP), a leader in the telecommunications services industry, announces that in light of recent events its board of directors (the "Board") believes that an update to its shareholders is appropriate. The Company will expand upon this update at an annual and special meeting of shareholders to be held on Wednesday, May 25, 2011 (the "Meeting") at which time the Company will more fully outline how it believes it can best accomplish its strategic goals of growing its business through acquisitions and internally: (i) in the HomePhone market and in its subscription services, through aggressive solicitation of prospective and existing customers and by targeting ethnic markets, and (ii)  by developing the calling card division of Telehop into a major player in the Canadian Prepaid Calling card market.

Requisition of Shareholders' Meeting

On January 27, 2011, the Company received a requisition from Mrs. E. Mignonne Spiegelman (the widow of the founder of Telehop and the reported holder of 1,677,080 common shares, or 12.52% of the issued and outstanding shares) to call a special meeting of shareholders for the purpose of removing each of the five current directors and replacing them with a new slate of seven directors. A resolution to this effect will be tabled at the Meeting.

From recent discussions with Mrs. Spiegelman, it is clear that Mrs. Spiegelman wishes to replace the current board so that, among other things, she can assume the position of Chief Executive Officer of Telehop. The Board has asked Mrs. Spiegelman on several occasions for a business plan which would allow the Board to understand what changes she and her proposed nominees intend to effect and so far none has been forthcoming. The Board is unanimously of the view that Mrs. Spiegelman is not qualified to assume the role of Chief Executive Officer of Telehop and as a result the Board is compelled to request that shareholders reject the proposal being put forward by Mrs. Spiegelman.


Further details, including the exact time and location of the Meeting and record date will be announced in due course and will be contained in a formal notice of meeting and management information circular to be mailed to shareholders and filed on SEDAR at prior to the Meeting. Shareholders are encouraged to read the documents carefully and in their entirety once available.

Status of Operations

Due to disruptions in the activities of Telehop because of the death of its founder, Hersh Spiegelman, the lack of innovation or progress for the Company in the period preceding his demise, the numerous affairs of the Company that needed attention and adjustment, and the very substantial outlays for executive salaries, benefits and the continuing payment of significant death benefits over a period of 84 weeks (which will finally be fully paid this spring), the revenues of Telehop and its cash reserves have been eroded.

In this period of disruption, Mr. Fulvio Ciano capably took the position as CEO and to his considerable credit, recently stabilized revenues and arrested the decline in EBITDA and activities and put the Company on a firm footing. Through his efforts, the Board believes that Telehop is now uniquely positioned to move forward as a dynamic and respected player in the telecommunications industry. The Board believes that the Company is now returning to a positive EBITDA and that profitability is imminent. Staff morale is excellent. Dedicated employees serve the Company well, and facilities exist for substantial expansion and forward momentum.

The Company remains debt free, the owner of the premier 10-10-100 long Distance number that is remarkably unique in the industry, one of Canada's few Equal Access Long Distance Providers, and one of the very few Class "A" telecommunications carriers, which is remarkable for Telehop's size.

Chief Executive Officer

In the period following the founder's demise, Mr. Ciano was requested to assume the position of Chief Executive Officer. At the time of Mr. Ciano's appointment as CEO, he accepted the position on the condition that it was likely that his mandate would not exceed two years. Regretfully that time period is now ending and Mr. Ciano has informed the Board that he is not prepared to remain with the Company past this two-year period. Mr. Ciano has given notice that he intends to resign in order to pursue other interests. Mr. Ciano is managing his departure date to co-ordinate with the timing of the engagement of his successor.

The Board wishes to express its sincere appreciation for the fine efforts made by Mr. Ciano under very trying circumstances and the remarkable restructuring of the affairs of the Company under his stewardship. The Board wishes Mr. Ciano well in his future endeavors.

The Compensation Committee, under the direction of the Board, has initiated a search for a suitable CEO.

Private Placement

Because of the large payout of death benefits to the estate of the Company's founder, and the operating losses in recent years before stability was re-achieved, much of the cash reserves of the Company were dissipated. In order to properly position the Company for acquisitions, for expansion, for improvements to its facilities and for increasing marketing activity and the acquisition of additional customers, the Board believes that the Company needs additional liquidity and therefore a private placement is required.

Accordingly, and subject to regulatory approval including that of the TSX Venture Exchange , Telehop intends to complete a private placement of common shares or common shares and warrants for gross proceeds of $2,000,000 to $3,000,000 (the "Offering"). Telehop expects to pay a finder's fee in respect of securities sold by qualified finders pursuant to the Offering. The Company will provide further details regarding this proposed financing within the next several weeks. The net proceeds of the Offering will be used to give effect to the Company's strategic goals, and for working capital.

Certain insiders and related parties of Telehop will be allowed to participate in the Offering in order to ensure that they are not deprived of the opportunity to maintain their current percentage ownership in the Company. The participation of such persons in the Offering may compel the Company to seek shareholder approval of such transaction. In such circumstances, shareholder approval would be sought at the Meeting and the closing of the Offering would be made subject to such shareholder approval. In determining shareholder approval, the votes held by all such related parties who participate in the Offering may be excluded in accordance with applicable securities laws.

Receipt of Expressions of Interest

In the period since the founder's demise, and over the past few months, the Board has received informal and unsolicited communications from arm's length third parties purportedly offering to acquire at least a majority of the outstanding common shares of the Company. The Board has determined that the offers are either not capable of being accepted or simply objectionable in light of the conditions and/or offer price. The Board has not and is not pursuing any such or similar transactions, but is mindful of the desire of all shareholders to enhance shareholder value.

The Board is firmly of the view that, at this moment in time, the best way to enhance shareholder value is to pursue the Company's strategic goals. The Board believes that the Company is uniquely positioned and has unique assets that are not currently recognized by the market value of its shares.

About Telehop Communications

Telehop was founded and is headquartered in Toronto, Ontario, since 1993, and has grown into an alternative telecommunications provider to both residential and business customers. Telehop originally began offering residential and business two-way monthly 'flat rate' calling services in the Greater Toronto area between communities where a call would otherwise be a long distance call. In 1994, Telehop became one of Canada's few Equal Access Long Distance Providers, allowing it to offer its customers full service long distance calling globally at significantly lower rates. The Canadian Radio-television and Telecommunications Commission (CRTC) has licensed Telehop as a Class "A" telecommunications carrier. Telehop's dedication and priority is providing homes and businesses with exceptional phone services at competitive rates without sacrificing quality or service. With Telehop, Satisfaction is Everything.

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

Forward-Looking Information

This news release contains forward-looking information and forward-looking statements (collectively "forward looking statements"), within the meaning of applicable securities laws, including with respect to the Company's intention to complete a private placement, give effect to strategic goals and initiatives and return to profitability. Such forward looking statements are based upon assumptions, and estimates made by the Board and management in light of its experience, current conditions and its expectations of future developments as well as other factors which it believes to be reasonable and relevant. Forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied in the forward looking statements and, accordingly, readers should not place undue reliance on those statements. Risks and uncertainties that may cause actual results to vary include, but are not limited to, the Company's ability to complete the aforementioned private placement including obtaining shareholder approval thereof if required, the decision by the shareholders at the Meeting with respect to which directors are elected, economic and market conditions, the ability of the Company to retain a suitable CEO on a timely basis and those more fully described in the Company's Management's Discussion and Analysis for its 2010 fiscal quarters  and in other Company filings with securities and regulatory authorities which are available at Should one or more risks and uncertainties materialize or should any assumptions prove incorrect, then actual results could vary materially from those expressed or implied in the forward looking statements and accordingly, readers should not place undue reliance on those statements. Readers are cautioned that the foregoing lists of risks, uncertainties, assumptions and other factors are not exhaustive. The forward looking statements contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements contained herein or in any other documents filed with securities regulatory authorities, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

SOURCE Telehop Communications Inc.

For further information:

Mr. Fulvio Ciano
(416) 494 4490

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