CON-SPACE Communications Ltd.
TSX VENTURE : CCB

CON-SPACE Communications Ltd.

December 19, 2008 08:48 ET

CON-SPACE Announces Approval of Amendment to Secured Lender Agreement and Contemplated Transactions

RICHMOND, BRITISH COLUMBIA--(Marketwire - Dec. 19, 2008) - CON-SPACE Communications Ltd. (the "Company" or "CON-SPACE") (TSX VENTURE:CCB), (http://www.con-space.com), announces that, further to the news release of the Company dated November 6, 2008, the Company has received the necessary shareholder and regulatory approval of the amendment agreement (the "Amendment Agreement") among the Company, its subsidiaries and Turret Oy Ab ("Turret"), and the transactions contemplated thereby, and a satisfactory written waiver agreement with the Company's other two secured creditors. The Amendment Agreement includes provisions that, inter alia, give Turret the right to appoint two directors to the board of directors of the Company (the "Board"), and gives certain rights to convert into common shares of the Company the CDN$6,000,000 loan (the "Principal") made to the Company by Turret, pursuant to a loan agreement (the "Loan Agreement"), dated April 11, 2007, among the Company, its subsidiaries and Turret.

At the annual general meeting of the Company's shareholders (the "Meeting"), held on December 11, 2008, the shareholders re-elected James L. Swanson, Gordon E. Cook, Terence Ibbetson and Rahul Kapur to the Board. On December 18, 2008, the Company accepted the resignation of Rahul Kapur from the Board and appointed Martin Carsky and Peter Eriksson as directors of the Company. Therefore, the current members of the Board of the Company are James L. Swanson, Gordon E. Cook, Terence Ibbetson, Martin Carsky and Peter Eriksson.

Also at the Meeting, the disinterested shareholders approved the issuance by the Company of two convertible promissory notes (the "First Convertible Note" and the "Second Convertible Note") to Turret. The issuance of the First Convertible Note and the Second Convertible Note, which received conditional TSX Venture Exchange approval on December 1, 2008, was completed on December 18, 2008. Pursuant to the First Convertible Note, on December 18, 2008, Turret elected to convert CDN$1,200,000 of the Principal, plus 3% of the unpaid interest that has been accruing on the Principal since April 2008, which amount is CDN$304,291.49. Therefore, on December 18, 2008, the Company issued an aggregate of 10,028,609 common shares of the Company (the "First Conversion Shares"), representing CDN$1,200,000 converted at a rate of CDN$0.15 per share into 8,000,000 common shares of the Company and CDN$304,291.49 converted at the same rate into 2,028,609 common shares of the Company. All shares issued pursuant to this conversion have a hold period expiring on April 19, 2009.

Prior to the issuance of the First Conversion Shares, Turret owned 1,500,000 common shares of the Company and warrants exercisable for 675,000 common shares of the Company. Subsequent to the issuance of the First Conversion Shares, Turret owns approximately 11,528,609 common shares, representing 46.5% of the issued and outstanding common shares of the Company, based on 24,801,989 common shares currently outstanding. This creation of Turret as a "Control Person", as such term is defined in the TSX Venture Exchange Corporate Manual, received disinterested shareholder approval at the Meeting.

Pursuant to the Second Convertible Note, Turret acquired conversion rights with respect to CDN$4,800,000, the remainder of the Principal. The conversion rates under the Second Convertible Note are variable, and linked to the date of exercise and the existence of certain defaults under the Loan Agreement. Any shares issued pursuant to the conversion of the Second Convertible Note will have a hold period expiring on April 19, 2009.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless the securities are registered in the United States or an exemption from such registration is available.

About CON-SPACE

CON-SPACE is recognized worldwide as the leading designer and manufacturer of specialized voice communication equipment used by Police, Fire, Rescue, Government Agencies, Militaries, Municipalities and general industry. CON-SPACE has distribution throughout North America, Great Britain, Australia, parts of Asia, South America, and Europe. CON-SPACE also supplies many other manufacturers with private labeled products.

This press release is available on CON-SPACE's official on-line investor relations site for investor commentary, feedback and questions. Investors are asked to visit http://www.agoracom.com and view the CON-SPACE Investor Contact & Information Centre. Alternatively, investors are asked to e-mail all questions and correspondence to CCB@Agoracom.com.

Further information is available on the Company's website, www.con-space.com.

DISCLAIMER

This news release contains forward-looking statements which reflect management's current expectations regarding the Company's objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities. These forward-looking statements are not guarantees, but only predictions. Although the Company believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a number of factors that could cause actual results to vary significantly from current expectations. These factors and other risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, as identified in the Company's disclosure record on www.sedar.com. The forward-looking statements included in this news release are made only as of the date of this news release and the Company does not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise.

TSX-Venture: Tier 1

SEC Exemption #82-3378

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information