Cygnal Technologies Corporation, today announced the completion of two debt financings. The net proceeds from the financings will be used to pay out Cygnal’s current credit facilities with The Toronto-Dominion Bank and for general working capital purposes.
The Corporation entered into financing arrangement with Laurus Master Fund Ltd. for up to US$8.5 million secured by the assets of the Corporation’s
Network Solutions business. The maximum amount available to the Corporation at any one time is based on a borrowing base calculation determined by Laurus. The security agreement provides for the issuance of secured notes bearing interest at 0.5% above prime, convertible into common shares of the
Corporation and the issuance of warrants to purchase up to 1,971,819 common shares of the Corporation. The facility matures three years from the date of
the initial closing. Under the security agreement, conversion rates and exercise prices are quoted in U.S. dollars. Applying today’s conversion rate
of C$1.16 equals US$1 against the US$ conversion prices, these notes are convertible as to the first third of the aggregate principal amount of all
notes at a conversion price of C$1.35, as to the second third of the principal amount at a conversion price of C$1.47 and as to the final third at a
conversion price of C$1.65, in each case subject to adjustment. The warrants each have a term of five years and are exercisable as to 1,869,819 common
shares at an exercise price of C$1.53, and as to the remaining 102,000 common shares, at an exercise price of C$1.19. Should conversion of the notes and
exercise of the warrants exceed 6,725,469 common shares, Cygnal will need to obtain shareholder approval. Laurus also provided an additional short term loan of approximately US$0.7 million.
In addition, White Radio L.P., which operates the Corporation’s Communications Services business, entered into a credit facility with LaSalle
Business Credit, a division of ABN AMRO Bank, N.V., Canada Branch, consisting of a revolving loan up to a maximum of C$15 million maturing in three years
and a two-year term loan in the amount of C$2 million. The maximum amount available to White Radio at any one time is based on a borrowing base
calculation determined by LaSalle. The LaSalle facility is secured by the assets of the Corporation’s Communications Services business
“We appreciate the flexibility TD Bank has shown in recent quarters, but we feel these new facilities provide Cygnal with a more appropriate financing
arrangement ” said Gerry Hurlow, Chairman and CEO of Cygnal.
Have your say: