WebTech Wireless Inc.

WebTech Wireless Inc.

April 28, 2008 04:00 ET

RETRANSMISSION: WebTech Wireless Provides Further Details on ABCP Exposure

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 28, 2008) - WebTech Wireless Inc. (TSX:WEW), a leading provider of location-based and fleet Telematics services has previously announced that it is holding $6 million of Asset Backed Commercial Paper ("ABCP") in SIT Trust III, Series A Notes. As a result of the Montreal Accord and the result of certain court proceedings recently decided in the Ontario Superior Court, the Company expects to receive new notes ("Settlement Notes") in exchange for its existing SIT III Series A Notes.

For maximum clarity, the Company wishes to note that the $6 million in question represents excess invested cash which the Company had no intention, and currently has no intention to deploy for operational or strategic purposes. The lack of an immediately available liquid market for the Settlement Notes which the Company is meant to receive under the Montreal Accord is not expected to have an impact on the Company's near term or long term operational plans or capabilities.

The Company anticipates that the Settlement Notes will include three classes of notes having the following par values of the SIT III, Series A Notes.

Class of Note Par Value % Par Value $
Class A1 and A2 93.7% $ 5,619,600
Class B 3.3% 200,400
Class C 3.0% 180,000
Total 100.0% $ 6,000,000

The extent to which the Company may suffer a loss on the Settlement Notes is difficult to quantify. The Company estimates, based on the figures above that it will suffer a loss of at least $180,000 being the par value the Class C Notes (which are projected to have little or no market value), as well as a loss of previously accrued interest on the SIT III Series A Notes of approximately $140,000.

In addition to the above, the Company will likely book a yet to be determined "Mark to Market" loss upon issuance of the Settlement Notes. As the immediate trading value of the Settlement Notes is unknown, the Company is unable to estimate the amount of this Mark to Market loss at this time. Based however on information in the press and from its advisors the Company believes the Mark to Market loss on the Settlement Notes could be from 30% to 40% of the par value of the Class A1, A2 and B Settlement Notes. A Mark to Market adjustment of this size would result in a reduction in book value of approximately $1.75 to $2.3 million and would include a reclassification of cash to long term investments.

It is the Company's understanding that any Class A1 and A2 Settlement Notes, (to be rated "AA" by DBRS), which it receives will qualify for certain financing facilities made available under the Montreal Accord at a rate of 90% of their Mark to Market value. The Company could take advantage of this financing facility, at its choice, in order to generate cash if it determined such action was necessary or desirable. Based on the assumptions noted above, the Company estimates that it could borrow up to approximately $3.25 million in cash from its Settlement Notes under such a facility with recourse and security for such borrowing limited exclusively to the Settlement Notes.

As the Company has sufficient cash and working capital balances to meet both its short term operational as well as its long term strategic needs for the foreseeable future, it does not expect to have a need to, nor is it the Company's current intention to take advantage of the Montreal Accord financing alternative if it is made available. The Company has previously announced that it has certain very large new customer contracts in its pipeline and believes it has more than sufficient cash to meet the demand for inventory purchases and operational expansion which these customer opportunities may require.

As at January 31, 2008, the Company's most recently reported quarter end, the Company reported working capital of $29 million and cash and equivalents of $19.2 million (including the to be reclassified ABCP). The Company has been consuming an average of $1.6 million in cash and working capital for each of the last two quarters and expects to be able to fund ongoing operations from its existing resources (other than the amounts invested in ABCP) and income from ongoing activities.

"As previously reported, until now, we have relied on written and verbal representations from the brokerage firm which sold us this paper that we would be safe from any loss on this investment. These very strong representations, which have now proven unreliable, were the basis of decisions on how to treat this ABCP investment," said Scott B. Edmonds, CFO of WebTech Wireless. "We will provide additional information regarding the value of our ABCP and our litigation strategy as we are able and as we continue our conversations with our advisors. For the time being however, we have more than sufficient liquid assets to meet our short and long term needs."

About WebTech Wireless Inc.

WebTech Wireless Inc. (TSX:WEW) is a global Telematics, location-based services provider that develops, manufactures, and delivers turnkey wireless solutions designed to improve productivity and profitability. WebTech Wireless products include wireless hardware and software services running on cellular and satellite networks, and include Automatic Vehicle Location, Mapping, Reporting, Vehicle Diagnostics, Driver Status, In-vehicle Telemetry, Messaging, In-vehicle Navigation, and wireless application and Internet connectivity. WebTech Wireless is currently providing devices and services worldwide in eight languages to over forty-one countries covering five continents. WebTech Wireless' scalable solutions are used by a broad range of small, medium and Fortune 500 companies and by governments. For more information, please visit www.webtechwireless.com.

Forward Looking Statements

This press release contains forward-looking statements involving risks and uncertainties pertaining to, but not limited to product plans, timing, content, and pricing of products, market and industry expectations, the wireless communications industry, the mobile fleet industry, and general economic and political conditions. Given the risks and uncertainties inherent in the markets and industries referred to in this press release, WebTech Wireless cannot guarantee that any forward looking statements will be realized.

The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information