DragonWave Inc.

DragonWave Inc.

December 01, 2008 10:42 ET

DragonWave Implements Cost Reduction Measures Including Cancellation of Dual Listing on AIM

OTTAWA, CANADA--(Marketwire - Dec. 1, 2008) - DragonWave Inc. ("DragonWave" or the "Company") (TSX:DWI)(AIM:DWI), a leading global supplier of next-generation wireless networks, today announced that in light of uncertainty in some of its markets arising from global financial conditions, it will implement a number of measures aimed at reducing its operating expenses. These measures include:

- eliminating 20 positions from the Company's workforce (reducing the Company's total headcount by approximately 13%);

- reducing other spending in all areas; and

- rationalizing expenses associated with being a public company by cancelling DragonWave's dual listing on AIM (DragonWave's common shares will continue to be listed on the Toronto Stock Exchange (the "TSX")).

DragonWave Chief Executive Officer Peter Allen said, "Whilst we are excited by the deployment plans of our existing customers, we have visibility into the postponement of some projects in prospective customers that we have been working with and there remains uncertainty in other opportunities that we are pursuing. The measures that we have taken today are designed to make DragonWave more resilient to this market uncertainty whilst firmly retaining the ability to fully meet the needs of existing customers and scale upon success with those new customers that are able to move forward."

Consistent with these financial market conditions, DragonWave's strategic relationship with NextWave Broadband Inc. ("NextWave") has been impacted. This relationship, which was originally announced in September 2007, has been terminated following NextWave's recent announcement that it is restructuring its business and as a part of this restructuring it is working to divest its infrastructure business units. The Company is working with NextWave on closure items.

DragonWave expects to save Cdn.$4.0M in total annualized cost and operating expenses as a result of its cost reduction efforts.

Immediate cost saving measures include the elimination of 20 positions across all parts of the Company. DragonWave anticipates restructuring charges in the third fiscal quarter as a result of the elimination of these positions to be approximately Cdn.$0.5M, initially offsetting some of the expected savings from the Company's cost reduction program.

Finally, DragonWave will cancel the admission of its common shares to trading on AIM with effect from 7.00 a.m. GMT on Monday 5 January, 2009 (the "Cancellation Date"). The last trading on AIM will be Friday 2 January 2009. The decision to proceed with the AIM delisting was based on a review of the Company's AIM listing by DragonWave's board of directors ("Board"). The Board concluded that the additional costs associated with maintaining a second listing on AIM were not justifiable given the Company's North American focussed shareholder base. This decision was based on several factors, including low trading volumes in the UK and the cost and management resources involved in maintaining the AIM listing. DragonWave will maintain its listing on the TSX and UK shareholders wishing to trade DragonWave's common shares after the Cancellation Date will be able to do so through the TSX. DragonWave does not expect the liquidity or marketability of DragonWave's common shares to be materially affected by the AIM delisting.

Special Advisory for UK Shareholders:

Prior to the Cancellation Date, UK shareholders may continue to trade their common shares on AIM. On or after the Cancellation Date, if UK shareholders wish to trade their common shares immediately, they should direct their broker to complete a CREST Stock Withdrawal, upon which their holding will be transferred onto the Canadian share register of DragonWave and UK shareholders can trade in Canada. CREST Depositary Interest ("CDI") holders will not be required to move their holdings from CREST until such time as they wish to trade their CDIs or transfer them to the Canadian depository system. Shareholders wishing to do this should contact their stockbroker, bank manager, solicitor, accountant or other independent professional adviser for the procedure to follow to transmit their shares to DragonWave's Canadian share register, or contact Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS13 8AE, United Kingdom, Telephone: +44 (0) 870 702 0000, www.computershare.com web.queries@computershare.co.uk, for the procedure to follow. UK shareholders are encouraged to migrate their holdings from CREST to the Company's Canadian register as soon practical.

For those not familiar with the Canadian securities system, public information on DragonWave (including quarterly management discussion & analysis) can be accessed through www.sedar.com, an independent website on which all regulatory filings must be made.

Forward-Looking Statements

This release contains certain forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Forward-looking statements are based on DragonWave's current expectations and assumptions that are subject to a variety of risks and uncertainties that are difficult to predict and that may be beyond DragonWave's control. Risks which can also impact upon forward looking statements are identified in DragonWave's Annual Information Form which is available online at www.sedar.com. DragonWave assumes no obligation to update these forward-looking statements as a result of new information or future events.

About DragonWave

DragonWave is a leading provider of high-capacity wireless Ethernet equipment used in emerging IP networks. DragonWave designs, develops, and markets carrier-grade microwave radio frequency networking equipment that wirelessly transmit broadband voice, video and other data. DragonWave's wireless Ethernet products, which are based on a native Ethernet platform, function as a wireless extension to an existing fibre-optic core telecommunications network. The principal application for DragonWave's products is the backhaul function in a wireless communications network. Additional applications for DragonWave's products include point-to-point transport in private networks, including municipal and enterprise networks. DragonWave's corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Middle East and North America. The company's Web site is http://www.dragonwaveinc.com

Contact Information

  • DragonWave Inc.
    Russell Frederick
    Chief Financial Officer
    613-599-9991 ext. 2253
    Canaccord Adams Limited
    Neil Johnson/Andrew Chubb
    44 20 7050 6500