Radiant Communications Corp.
TSX VENTURE : RCX

Radiant Communications Corp.

September 28, 2005 08:55 ET

Radiant Communications Completes $7.9 Million Private Placement and Debenture Conversion; $4.7 Million of Debt Eliminated and Working Capital Increased by $3.2 Million

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Sept. 28, 2005) - Radiant Communications Corp. ("Radiant" or the "Company") (TSX VENTURE:RCX), the largest organization in Canada focused exclusively on providing IP-based data communications and Internet services to the business market, today announced that it has completed a private placement of 30,463,455 units at a price of $0.26 per unit for aggregate gross proceeds of $7,920,498. Each unit consists of one common share and one-half of one common share purchase warrant, and each full warrant is 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. The securities are subject to a four month hold period expiring January 28, 2006.

"This is a significant and exciting step forward for Radiant, our shareholders and our customers," said Jim Grey, President and CEO of Radiant. "As a company, we have demonstrated our ability to successfully compete with the large, incumbent providers in the highly valued business connectivity market. Completing this financing provides Radiant with a strong balance sheet and a stable foundation for continued growth and success. I am pleased to see so many of our stakeholders join together to invest in the company's future."

"I view this as another very important step in Radiant's growth and success," said Chris Worthy, Chairman of Radiant and President and CEO of Worthy Capital Ltd. "Over the past 12 months, Radiant has won many new, national, multi-location customers, rolled out new, industry-leading IP products and services, added senior management and Board level expertise, and now re-structured the balance sheet to provide a sound base for continued growth. The demand for high-performance IP connectivity is rapidly increasing in the Canadian business market, and Radiant is firmly positioned to capitalize on its competitive strengths."

As previously announced, the private placement involved 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 converted $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 converted 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 12,524,994 units issued was satisfied in cash for aggregate cash proceeds to the Company of $3,256,498. The holders of the senior debentures also surrendered for cancellation 4,350,000 common share purchase warrants of the Company issued to them in connection with the purchase of their debentures. After completion of the private placement, $1,386,000 principal amount of the Company's senior debentures (and related bonus payment amount) remain outstanding. $1,386,000 of the cash proceeds from the private placement will be used for redemption of the remaining senior debentures, which is scheduled to occur on September 30, 2005, while the balance of $1,870,498 will be used for working capital. Radiant is also issuing 230,770 common shares in satisfaction of certain payments required to be made to the holders of the senior debentures on early redemption of the debentures.

As previously announced, the private placement and debenture conversion constituted a related party transaction. Working Opportunity Fund (EVCC) Ltd., ("WOF") and Pender Growth Fund (VCC) Inc., ("Pender") are insiders of the Company, held a significant majority of the senior debentures and convertible debentures and participated in the private placement, both through the conversion of their debentures and the purchase of additional units for cash. The Company has relied on the exemption from the valuation and majority of minority approval requirements for related party transactions under the policies of the TSX Venture Exchange and applicable securities laws available in cases of financial hardship. In this regard, since Radiant was unable to pay the senior debentures at maturity on December 23, 2005, which would have constituted a default under the terms of the senior debentures, the Company's board of directors, and its independent directors, acting in good faith, determined that Radiant faced serious financial difficulty and the transaction was designed to improve the financial position of the Company.

The private placement and debenture conversion remain subject to the final approval of the TSX Venture Exchange.

GrowthWorks Capital Ltd., the manager of WOF is an affiliate of GrowthWorks General Partner Ltd., manager of Pacific Venture Fund Limited Partnership ("PVF"). As a result of the completion of the private placement and the debenture conversion, GrowthWorks(i) managed funds collectively own (as described below) an aggregate of 24,233,769 common shares of Radiant, share purchase warrants to acquire up to a further 11,892,629 common shares of Radiant and options to purchase an additional 75,000 common shares of Radiant, representing, assuming the full exercise of warrants and options, approximately 51.11% of the issued and outstanding shares of Radiant.

WOF now owns an aggregate of 18,849,154 common shares of Radiant, share purchase warrants to acquire up to a further 8,366,988 common shares of Radiant and options to purchase an additional 75,000 common shares, representing, assuming the full exercise of the warrants, approximately 40.55% of the issued and outstanding common shares of Radiant. PVF now owns an aggregate of 5,384,615 common shares of Radiant and share purchase warrants to acquire up to a further 3,525,641 common shares of Radiant, representing, assuming the full exercise of the warrants, approximately 14.28% of the issued and outstanding common shares of Radiant. WOF and PVF have acquired these securities for investment purposes only. Although it is not anticipated at this time, WOF and/or PVF may make further purchases of securities of Radiant for investment purposes only.

As a result of the completion of the private placement and the debenture conversion, Pender now owns an aggregate of 9,903,845 common shares of Radiant and share purchase warrants to acquire up to a further 6,340,812 common shares of Radiant, representing, assuming the full exercise of the warrants, approximately 24.9% of the issued and outstanding common shares of Radiant. Pender has acquired these securities for investment purposes only. Although it is not anticipated at this time, Pender may make further purchases of securities of Radiant for investment purposes only.

ABOUT RADIANT COMMUNICATIONS

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.

ABOUT WORTHY CAPITAL LTD.

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

ABOUT GROWTHWORKS

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.

ABOUT PENDER GROWTH FUND (VCC) INC.

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.

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