Craig Wireless announces US$2 million financing - myFOXnepa.com

Craig Wireless announces US$2 million financing

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SOURCE Craig Wireless Systems Ltd.

RANCHO MIRAGE, CA, Sept. 9, 2014 /CNW/ - Craig Wireless Systems Ltd. ("Craig Wireless" or the "Company") (TSX-V: CWG), is pleased to announce the closing of additional financing, previously announced on August 8, 2014.

Pursuant to a commitment letter dated August 8, 2014 (the "Commitment Letter") each of J. Drew Craig and S. Miles Craig (together, the "Investors") have provided a secured loan in the aggregate amount of US$2,000,000 to the Company, of which $1,200,000 has been advanced to date with the remainder expected to be advanced prior to the end of the month. Upon full advance, each of the Investors will have been issued a US$1,000,000 principal amount convertible promissory note (collectively, the "Convertible Notes"). This new US$2,000,000 loan has been combined with the existing US$3,500,000 loan from T. Boyd Craig advanced on June 6, 2014 into a single loan in the principal amount of US$5,500,000 and in furtherance thereof, the outstanding convertible promissory note held by T. Boyd Craig has been amended and restated upon the same terms as the Convertible Notes.

Interest will accrue on the principal amount of the Convertible Notes at 12% per annum, calculated daily and payable semi-annually in advance. The principal and accrued and unpaid interest on the Convertible Notes is due on December 31, 2015 (the "Term"), subject to the right of the Company to prepay in minimum increments on 30 days' notice during the Term. The outstanding principal amount of the Convertible Notes is convertible at any time, in whole or in part, until maturity, into subordinate voting shares of the Company. The conversion price per subordinate voting share is CDN$0.08 from closing until June 6, 2015 and is CDN$0.10 per subordinate voting share from June 7, 2015 until maturity. Each of the Investors and T. Boyd Craig have agreed to only exercise their conversion rights so long as the Company would continue to meet all TSX Venture Exchange listing requirements following the resulting issuance of subordinate voting shares.

Closing of the US$2,000,000 financing and the issuance of the Convertible Notes has been conditionally approved by the TSX Venture Exchange (the "TSX-V").  According to TSX-V rules and applicable securities legislation, the securities issuable pursuant to the Convertible Notes are subject to a four-month hold period, commencing on the date hereof and ending on January 5, 2015.

Each of the Investors and Mr. T. Boyd Craig is a control person of Craig Wireless and has beneficial ownership of, or control or director over, directly or indirectly, more than 10% of the issued and outstanding subordinate voting shares and multiple voting shares of the Company. Additionally, Mr. T. Boyd Craig is a director and senior officer of Craig Wireless. The entering into of the Commitment Letter, the issuance of the Convertible Notes to the Investors and the issuance of an amended and restated note to Mr. T. Boyd Craig is therefore considered a related party transaction for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Pursuant to MI 61-101, a related party transaction requires formal valuation and minority shareholder approval unless an exemption applies. This financing transaction is exempt from the formal valuation and minority approval requirements due to the applicability of the financial hardship exemption set out in section 5.5(g) and section 5.7(1)(e) of MI 61-101. Specifically, a committee of independent directors of the Company reviewed the terms and conditions of the Commitment Letter and have determined that as Craig Wireless is in serious financial difficulty, the acceptance of the Commitment Letter is designed to improve the financial position of Craig Wireless and the terms of the Commitment Letter are reasonable in the circumstances.

About Craig Wireless Systems Ltd.

Craig Wireless and its affiliates (collectively, the "CWS Group") offer a broad range of telecommunications services, including, broadband internet access, business connectivity solutions, hosting, security and telecommunications solutions. Through certain members of the CWS Group, Craig Wireless holds or leases licenses for spectrum in the 2.3 GHz, 2.5 GHz, 2.6 GHz or 3.5 GHz bands in New Zealand, Riverside County in Southern California, United States and in Greece. The CWS Group also has spectrum interests in Norway. Spectrum in these ranges is effective for delivery of point-to multipoint signals, possesses robust bandwidth capability and supports emerging 4G-based applications, including portable and mobile applications.

Notice on forward-looking statements:

This release includes forward-looking statements regarding Craig Wireless and its business. Such statements are based on management's current expectations. The forward looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of known and unknown risk factors and uncertainties affecting Craig Wireless and its business. Not to limit the generality of the foregoing, the forward-looking information set forth in this news release is subject to various risks and other factors including the following: availability of funding; the risks of conducting business in a foreign country; currency fluctuations; in addition to those risks enumerated under the heading "Risk Factors" in the Company's AIF, available on SEDAR at www.SEDAR.com. No forward-looking statement can be guaranteed. Forward-looking statements speak only as of the date on which they are made and Craig Wireless does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

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.

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