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Enablence Technologies Inc. Announces Closing of Equity Transaction

Sep 10 2013 12:00AM

Marketwire

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OTTAWA, ONTARIO -- (Marketwired) -- 09/10/13 -- Enablence Technologies Inc. ("Enablence" or the "Company") (TSX VENTURE: ENA), a leading supplier of optical components and subsystems for access, metro and long-haul markets, announced today that it has closed the $12,000,000 equity financing transaction ("Equity Transaction") resulting in the completion of the $15,000,000 financing transaction ("Financing Transaction") as previously announced on July 17, 2013, and the retirement of all the remaining secured subordinated promissory notes.

The Equity Transaction is part of a larger $15,000,000 financing transaction ("Financing Transaction") which includes the previously announced $3,000,000 convertible bridge loan ("Bridge Loan") borrowed by the Company from an affiliated entity of China Tricomm Ltd. ("China TriComm"). The $12,000,000 Equity Transaction is structured as follows: China TriComm and another investor subscribed for 45,000,000 common shares at an issue price of $0.20 per share. China TriComm is an investment company which is under common ownership with Zhejiang Chuangyi Technologies, a leading integrated infrastructure equipment and solution provider for the cable industry in China. Two insiders of Enablence subscribed for an additional 15,000,000 common shares also at $0.20 per share ("Related Party Transaction"). Each insider is a related party within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The independent directors of the Company, being all the directors of the Company, have determined that an exemption is available from the formal valuation requirements and minority shareholder approval requirements under MI 61-101 and unanimously approved the Financing Transaction, including the Related Party Transaction. This information is being filed less than 21 days prior to the expected closing of the Related Party Transaction. The shorter filing period was necessary in order to permit the Company to close the Equity Financing, including the Related Party Transaction, in a time frame consistent with the usual market practice for transactions of this nature.

At the closing of the $12,000,000 Equity Transaction, the $3,000,000 Bridge Loan was converted into 20,000,000 common shares of Enablence at $0.15 per share pursuant to the terms previously announced. A finder's fee is being paid to an arm's length party in connection with the Financing Transaction in the amount of 3,600,000 common shares of Enablence. All common shares issued as a result of the Equity Transaction, conversion of the Bridge Loan and in respect of the finder's fee, are subject to a four month restricted period.

In connection with the Financing Transaction, approximately US$11.7 million of secured subordinated promissory notes were exchanged for total cash payments of approximately US$3.8 million and the issuance of 19,865,145 common shares of Enablence at a deemed price of $0.20 per share. These payments constitute a full and final settlement of the secured subordinated promissory notes. Additionally, the Company has issued 540,000 common shares, at a deemed price of $0.37 per share, in connection with additional debts incurred as a result of the equity and debt settlement transactions described above. All shares issued in connection with the settlement of the debt arrangements are subject to a four month restricted period.

As a result of the refinancing and restructuring of the Company described above, China TriComm and an affiliated entity collectively own over 30% of the issued and outstanding shares of the Company. The board of directors of the Company has been restructured to provide for appointment of two directors nominated by China TriComm: Zhiyin Gao and Tao Zhang. Peter Dey and Dan Hilton have resigned from the Board effective as of September 10, 2013. John Roland, Chair of the Board, commented, "Peter and Dan have been important in assisting the Company through these past months and seeing this successful result. We will miss their leadership and guidance. However, we are very pleased to have Mr. Gao and Mr. Zhang on the Board. The Company is confident that their experience and expertise will continue to assist the Company in its renewed growth opportunities."

Mr. Zhiyin Gao is the founder, chairman of the board of directors and chief executive officer of Zhejiang Chuangyi Technologies. Mr. Gao has headed the business operations and investments of Zhejiang Chuangyi Technologies in China's cable television and next-generation television market since 1993. Mr. Gao has nearly 20 years of experience in broadcasting, communications and consumer electronics industries in China.

Mr. Tao Zhang is the founder, director and chief executive officer of Irixi Holding Limited. Mr. Zhang has over 18 years of experience in public accounting, corporate financing, strategy and financial advisory. Mr. Zhang started his career with PricewaterhouseCoopers LLP in 1994. Mr. Zhang is a member of American Institute of Certified Public Account and the Chinese Institute of Certified Public Accountants.

As part of the Financing Transaction, the Company and certain Company shareholders entered into a voting arrangement with China TriComm and certain other new investors. The voting arrangement provides amount other things, that subject to the shareholder approval, the board will be expanded to seven directors at the next Company shareholder meeting and China TriComm will have three nominees on the Board.

"The closing of this financing completes a restructuring process that began 18 months ago," said Louis De Jong, CEO. "Enablence has shed non-core assets, streamlined its ongoing business, and reduced total indebtedness from approximately $19,000,000 to approximately $3,000,000. The Balance Sheet restructuring and related funding position Enablence to address the increased demand it is experiencing in its 100G/s components business and to focus on its customer needs and future growth opportunities."

About Enablence Technologies Inc.

Enablence is a publicly traded company that designs, manufactures and sells optical components and subsystems to a global customer base. It utilizes its patented technologies, including planar lightwave circuit ("PLC") intellectual property, in the production of an array of photonic components and broadband subsystems that deliver a key portion of the infrastructure for current and next-generation telecommunication systems. The Company's product lines address all three segments of optical networks: access - connecting homes and businesses to the network; metro - communication rings within large cities; and long-haul - linking cities and continents. For more information, visit www.enablence.com.

Forward-looking Statements

This press release may contain forward-looking statements regarding future sales and growth, funding of ongoing operations based on current expectations, forecasts and assumptions which involve risks and uncertainties associated with our business and the economic environment in which the business operates. All such statements are made pursuant to the 'safe harbour' provisions of, and are intended to be forward-looking statements under, applicable Canadian securities legislation. Any statements contained herein that are statements of historical facts may be deemed to be forward-looking statements. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. We caution our readers of this press release not to place undue reliance on our forward looking statements as a number of factors could cause actual results or conditions to differ materially from current expectations. Please refer to the risks set forth in the Company's continuous disclosure documents that can be found on SEDAR www.sedar.com. Enablence does not intend, and disclaims any obligation, except as required by law, to update or revise any forward looking statements 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 the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.



Contacts:
Enablence Technologies Inc.
Louis De Jong
CEO
+1 613 656-2850 ext. 0
www.enablence.com





Source: Marketwire


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