International Datacasting Corporation
TSX : IDC

International Datacasting Corporation

July 06, 2015 08:30 ET

International Datacasting Corporation Announces Completion of Private Placement, New Leadership Team and Changes to the Board

OTTAWA, ONTARIO--(Marketwired - July 6, 2015) - International Datacasting Corporation ("IDC") (TSX:IDC), a technology provider for the world's premiere broadcasters, announced today that it has completed a $0.9 million private placement, streamlined the leadership team, and made some changes to its Board.

Private Placement

IDC has successfully completed a non-brokered private placement (the "Private Placement") of $906,000 aggregate principal amount of secured notes (each, a "Note" and together, the "Notes"). A group of senior executives has agreed to fund 40% of the Notes, with the remaining 60% provided by subscribers who are not insiders.

The Notes mature on November 4, 2015 (the "Maturity Date") and bear simple interest at a rate of 10% per annum, payable upon the Maturity Date. Each Note is secured by a security interest on the assets of IDC by way of a general security agreement, and ranks pari passu with all other Notes.

Subscribers of the Notes received 18,165 common share purchase warrants (the "Warrants") per $1,000 principal amount of Notes. Each Warrant entitles the holder to purchase one common share of IDC (a "Common Share"), at any time, up to and including the Maturity Date, at a price of $0.055 per Common Share, subject to customary anti-dilution adjustments. The Warrants expire on the Maturity Date.

The proceeds from the Private Placement will be used for general working capital purposes. Refer to Exhibit "A" for further details.

This Private Placement provides interim financial support as part of a revised business plan for IDC which includes a leaner organizational structure, and focusing on leveraging market potential for IDC's LASER product line. Prior to the closing of the Private Placement, the amounts owing under the promissory note issued to Pico Digital Inc. were repaid.

Mr. Chris Van Staveren, Chairman of the board of directors of IDC (the "Board"), said "This Private Placement demonstrates a strong vote of confidence from a group of senior executives in regards to IDC's future prospects. As previously stated, IDC intends to proceed with another offering in the near term to provide existing shareholders an opportunity to make a further investment in IDC at attractive market valuation. This will also provide IDC with a more sustainable capital level to fund its anticipated business growth."

New Leadership Team

The Board has promoted Chris Barrett and Steeve Huin as Co-CEOs of IDC. Mr. Barrett was formerly the Vice President of Engineering and Operations and Mr. Huin was the Vice President of Products and Services. Both have been on the leadership team during the past two years and made significant contributions to the new LASER MPS product line.

Mr. Barrett commented "This is a key time in IDC's history, and we are very excited and honored to lead the company, together with the entire IDC team into the future"; and Mr. Huin added "IDC has a tremendous potential thanks to its legacy of technological leadership. We thank the Board members for their confidence in this new structure, and look forward to working with our present and future customers, and IDC employees, to significantly grow its business in the coming years based on this technological leadership."

Additionally, Steven Archambault (currently CFO of IDC) was promoted to Executive Vice President and CFO. In addition to his current responsibilities, Mr. Archambault will be responsible for investor/shareholder relations and human resources going forward.

As a result of the three promotions, IDC has streamlined the leadership team to the Co-CEOs and the CFO. This leaner executive structure will reduce cost and enable a more agile execution of IDC's new business plan for sustainable growth and profitability. Following the Board's approval, the leadership team is in the process of implementing a plan that is expected to result in breakeven results at a much lower revenue base. Management will provide a further update during IDC's Q2 Fiscal 2016 investor quarterly call to be scheduled in September 2015.

Changes to the Board

The Board of Directors also announces that it has appointed Steven Archambault, as a non-independent director and Glenn McDougall as an independent director. Mr. Archambault and Mr. McDougall fill the vacancies left on the Board as a result of the previously announced resignation of David Charron and the resignation of Doug Lowther effective July 2, 2015. Mr. Lowther has also resigned as CEO and President of the company and will be available to assist the Board and management team as required with the transition.

Mr. Van Staveren, Chairman of the Board commented, "On behalf of the whole Board, I would like to express our gratitude to Doug for his significant contribution to IDC."

Since 2001, Glenn McDougall has been Managing Partner with Doyletech Corporation, an Ottawa based management consulting firm focused on public and private technology-based organizations across Canada. He is also the President of Green Avenue Ventures Inc., a firm that invests in early-stage technology companies. Mr. McDougall is also a founding partner in Class 5 Holdings Limited, a private equity company that uses leveraged buyouts to facilitate small businesses ownership succession. During his career Mr. McDougall has participated on numerous Economic Development Committees and New Venture Advisory Boards. Mr. McDougall participated in the Private Placement.

"We are thrilled to have both Steve and Glenn join the board. Glenn has been a long-term shareholder of IDC and brings significant experience in public technology-based companies." said Mr. Van Staveren.

About International Datacasting Corporation:

International Datacasting Corporation (TSX:IDC) is a technology provider for the world's premiere broadcasters in radio, television, data and digital cinema. IDC's products and solutions are in demand for radio and television networks, targeted ad insertion, digital cinema, 3D live events, satellite news gathering, sports contribution, VOD, and IPTV. IDC is headquartered in Ottawa, Canada, with regional offices in Arnhem, the Netherlands and in San Diego, California. For more information visit: www.datacast.com.

Forward-Looking Statements:

This press release contains certain information that may constitute "forward-looking information" and/or "forward-looking statements" within the meaning of applicable Canadian securities laws, including statements with respect to the use of proceeds of the Private Placement, IDC's plans for further financings, the outlook for IDC and its LASER MPS business, and management's expectations with respect to achieving breakeven results. All forward-looking information and forward-looking statements are necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies. All statements other than statements which are reporting results as well as statements of historical fact are forward-looking statements that may involve a number of known and unknown risks, uncertainties and other factors; many of which are beyond the ability of IDC to control or predict.

Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan or "project" or the negative of these words or other variations on these words or comparable terminology. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Risks and uncertainties that might cause actual results to differ materially include, but are not limited to, IDC's ability to continue as a going concern, the ability of management to achieve LASER MPS sales, the ability of management to successfully implement the revised business plan.

More detailed information about potential factors that could affect IDC's financial and business results is included in the public documents IDC files from time to time with Canadian securities regulatory authorities and which are available on SEDAR at www.sedar.com, including, without limitation, IDC's Annual Information Form and MD&A for the year ended January 31, 2015, each dated April 29, 2015.

Except as expressly required by applicable law, we undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements are provided to assist external stakeholders in understanding IDC's expectations as at the date of this release and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on such statements.

Exhibit "A"

Private Placement of Notes and Warrants

The Notes and the Warrants are subject to a four-month hold period under applicable securities laws.

Any repaid portion of the principal amount of the Notes may be applied to the exercise price of the Warrants, in which case the amount of such payment shall be applied against the principal amount of the Notes and any interest calculations shall be adjusted accordingly. The Notes and Warrants will not be listed on any stock exchange.

The Notes and the Warrants were offered in the Province of Ontario pursuant to an exemption from applicable prospectus requirements. The Private Placement is subject to the final approval of the Toronto Stock Exchange.

IDC currently has 65,820,287 Common Shares outstanding, and has issued 16,457,490 Warrants pursuant to the Private Placement, resulting in up to 16,457,490 Common Shares being issuable upon exercise of the Warrants.

A portion of the Private Placement was taken up by insiders of IDC. These subscribers are Steven Archambault (Chief Financial Officer), Steeve Huin (Vice-President, Products and Services), and Chris Barrett (Vice-President, Engineering and Operations), and who have subscribed for $362,400 aggregate principal amount of the Notes and 6,582,996 Warrants. The 6,582,996 Common Shares issuable upon exercise of the Warrants issued to the insiders represent less than 10% of the issued and outstanding Common Shares. The remaining $543,600 principal amount of the Notes and 9,874,494 Warrants issued pursuant to the Private Placement were issued to subscribers who are not insiders. The exercise price of any Warrants exercised by insiders will reduce the principal amount of Notes held by such insiders, and any interest calculations shall be adjusted accordingly.

Each of Messrs. Archambault, Huin, and Barrett are "related parties" of IDC for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). IDC is relying on the exemptions from the formal valuation and minority shareholder approval requirements set out in subsection 5.5(a) and paragraph 5.7(1)(a) of MI 61-101 as neither the fair market value of, nor the fair market value of the consideration for, the Private Placement to "related parties" exceeds 25% of IDC's market capitalization of $1.65 million (being the market capitalization of IDC at the time the insiders agreed to participate in the Private Placement).

Prior to the completion of the Private Placement, the "related parties" of IDC participating in the Private Placement owned an aggregate of 2.3% of IDC's 65,830,287 issued and outstanding Common Shares on a non-diluted basis. Assuming exercise of all of the Warrants, these "related parties" will own an aggregate of 9.84% of IDC's issued and outstanding Common Shares on a non-diluted basis as of the date of this news release.

In consideration for their participation in the Private Placement, the Board agreed to allow the "related parties" investing to nominate a director to the Board, and to allow the non-related party subscribers to also nominate a director to the Board. Other than improving IDC's working capital position, allowing for two nominations of possible board members, and increasing the number of securities held by certain officers and employees, the Private Placement is not expected to materially change the nature of IDC's business or affect its business and affairs.

The Board recommended proceeding with the Private Placement based on the following factors: (i) the fact that IDC is in serious financial difficulty, which makes it challenging to secure financing; (ii) the time frame and cost relating to the implementation of the Private Placement as compared to other possible forms of financing; (iii) the fact that the exercise price of the Warrants will be above the current market price of the Common Shares; (iv) IDC's need for working capital to fund on-going operations and strengthen its financial position; and (v) the participation in the Private Placement of management and employees who are an important part of IDC's new business plan. The Board approved the Private Placement, and there was no contrary view by any director on the resolution approving the Private Placement.

A material change report has been filed today in connection with the closing of the Private Placement but was not filed 21 days prior to the date of the closing as it was not practicable to do so given the timing of the application to the Toronto Stock Exchange for approval of the Private Placement, the date of the conditional approval of the Toronto Stock Exchange for the Private Placement, and due to IDC's need to raise capital in the short term.

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