Radiant Communications Corp.

Radiant Communications Corp.

August 30, 2005 19:00 ET

Radiant Communications Announces $7.9 Million Private Placement and Debenture Conversion

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 30, 2005) - Radiant Communications Corp. (TSX VENTURE:RCX) -

Worthy Capital leads financing from existing shareholders and debenture holders to eliminate debt and raise $1.8 million of new working capital

Radiant Communications Corp. ("Radiant" or the "Company"), the largest organization in Canada focused exclusively on providing IP-based data communications and Internet services to the business market, today announced that it is proceeding with a private placement of approximately 30,519,229 units at a price of $0.26 per unit for aggregate gross proceeds of approximately $7,935,000. Each unit will consist of one common share and one-half of one common share purchase warrant, and each full warrant will be exercisable to acquire one common share for a period of 36 months at an exercise price of $0.32 per share for the first 24 months and $0.40 for the final 12 months.

"This investment is a very significant step forward for our business," said Jim Grey, President and CEO for Radiant Communications. "With 30% annual growth in recurring connectivity revenue, the Company requires increased working capital. This private placement will enable Radiant to eliminate substantially all of its debt as well as increase its cash reserves. A balance sheet free of debt, the elimination of the related interest cost and the injection of $1.8 million of new cash, positions the Company to be far more competitive in a vibrant market. I would emphasize that this re-structuring is aimed at eliminating the overhang of debentures and the cash drain of interest expense. We intend to continue to drive quality revenue growth leveraged off of our existing operating base in what has proven to be a very scalable and competitive offering. I would like to thank Worthy Capital, Pender Growth Fund, GrowthWorks(i) managed funds Working Opportunity Fund and Pacific Venture Fund, and the other investors for sharing our vision and confidence in Radiant."

"I am pleased to have successfully coordinated what we believe is a significant contribution to the growth strategy of an exciting and well run company in a high growth market," said Chris Worthy, President and CEO of Worthy Capital Ltd. and Chairman of Radiant. "As investors, we all have great confidence in the Radiant team and product. The tremendous opportunity in the national business IP market and Radiant's positioning required a realignment of the capital structure and we believe this investment creates a path forward for growth, profitability and enhanced shareholder value."

The private placement will involve both the issuance of units for cash and the conversion of outstanding debentures of the Company. In particular, certain holders of Radiant's $3,000,000 principal amount of senior secured debentures have agreed to convert $1,914,000 principal amount of the debentures (together with bonus payment amount payable on maturity) at the issue price into 7,361,538 units. In addition, the holders of Radiant's $2,750,000 principal amount of unsecured convertible debentures have agreed to convert the full $2,750,000 principal amount of the debentures at the issue price into 10,576,923 units. The purchase price for the balance of the units to be issued will be satisfied in cash for aggregate cash proceeds to the Company of $3,271,000. The holders of the senior debentures have also agreed, as part of the private placement, to surrender for cancellation 4,250,000 common share purchase warrants of the Company issued to them in connection with the purchase of their debentures. Upon completion of the private placement, $1,386,000 principal amount of the Company's senior debentures (and related bonus payment amount) will remain outstanding. $1,386,000 of the cash proceeds from the private placement will be used for repayment of the remaining senior debentures, while the balance of $1,885,000 will be used for working capital. Radiant will also issue approximately 346,154 common shares in satisfaction of certain payments required to be made to the holders of the senior debentures on early redemption of the debentures.

The private placement and debenture conversion will constitute a related party transaction. Working Opportunity Fund (EVCC) Ltd. and Pender Growth Fund (VCC) Inc. are currently insiders of the Corporation, hold a significant majority of the senior debentures and convertible debentures and will be participating in the private placement, both through the conversion of their debentures and the purchase of additional units for cash. The Company does not intend to obtain a valuation or majority of minority shareholder approval for the transactions but will instead rely on the exemption from such requirements available in cases of financial hardship. In this regard, since Radiant is currently unable to pay the senior debentures at maturity on December 23, 2005, which would constitute a default under the terms of the senior debentures, the Company's board of directors, and its independent directors, acting in good faith, have determined that Radiant faces serious financial difficulty and the proposed transaction has been designed to improve the financial position of the Company.

The completion of the transaction is subject to the approval of the TSX Venture Exchange and all other necessary regulatory approval. The securities issuable pursuant to the private placement and debenture conversion will be subject to applicable regulatory hold periods. Radiant currently has 28,259,724 common shares issued and outstanding.


Radiant Communications Corp. (www.radiant.net) provides a total, integrated solution for businesses requiring national IP data communications services including, broadband and managed network services, Internet access, web hosting, web development and marketing services.

The Company offers a complete range of coast-to-coast broadband services including DSL, T1, Fibre, and Cable. Radiant also provides specialized IP services for the Canadian retail industry, namely, RetailCONNECT™ IP network services and TurboSwitch IP payment gateway services. Radiant has offices in Toronto, Montreal, Calgary, Edmonton and Vancouver.


Worthy Capital Ltd. is a private investment firm based in Vancouver, Canada.


GrowthWorks(i) (www.growthworks.ca) is a recognized leader in venture capital fund management with proven experience in the raising and managing of capital. GrowthWorks™ managed funds have $800 million in combined assets and include the Working Opportunity Fund, GrowthWorks Canadian Fund, GrowthWorks Commercialization Fund and GrowthWorks Atlantic Venture Fund. GrowthWorks has a team of skilled and knowledgeable investment professionals with a combined 200 years of experience. The Investment team has a proven track record of identifying, analyzing, and structuring investments in emerging sectors. GrowthWorks is a registered trademark of GrowthWorks Capital Ltd.

(i)GrowthWorks means the affiliates of GrowthWorks Ltd. and includes: GrowthWorks Capital Ltd., manager of the Working Opportunity Fund (EVCC) Ltd.; GrowthWorks WV Management Ltd., the manager of GrowthWorks Canadian Fund Ltd. and GrowthWorks Commercialization Fund Ltd.; GrowthWorks Atlantic Ltd., manager of GrowthWorks Atlantic Venture Fund Ltd.; and GrowthWorks General Partner Ltd, manager of the Pacific Venture Fund Limited Partnership.


Pender Growth Fund (VCC) Inc. is an established, diversified venture capital fund that invests in technology companies within the province of British Columbia with the objective of long-term capital appreciation. Pender Growth Fund is the first fund of its kind in British Columbia to focus specifically on expansion and restructuring opportunities within the technology sector that offer investors the potential for liquidity through either existing public listings or near term liquidity events. Pender Growth Fund has approximately $16 million of assets under management.

This press release may contain forward-looking statements, including statements regarding the business and anticipated financial performance of Radiant, which involve risks and uncertainties. These risks and uncertainties may cause Radiant's actual results to differ materially from those contemplated by the forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures, the growth rate of the Internet and telecommunications concerns, constantly changing technology and market acceptance of the company's products and services. Investors are also directed to consider the other risks and uncertainties discussed in Radiant's required financial statements and filings. All other companies and products listed herein may be trademarks or registered trademarks of their respective holders.

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

Contact Information