redCity Search Company Inc.
TSX VENTURE : RDC

redCity Search Company Inc.

November 09, 2005 20:12 ET

redCity Search Company Announces Equity Private Placement

TORONTO, ONTARIO--(CCNMatthews - Nov. 9, 2005) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE DISTRIBUTION SERVICES

redCity also announces debt restructuring and preliminary sales results

REDCITY SEARCH COMPANY INC. (TSX VENTURE:RDC)("red City" or the "Company"), a leader in local online search technology, today announced that it has entered in to an agreement with TD Securities Inc .("TDSI ")to sell, on a best efforts basis, equity securities of the Company for total gross proceeds of up to $8 million. The offering is expected to close in December 2005.

The offering will be completed on a private placement basis. The class of equity securities of redCity to be offered and the offering price will be determined by negotiation between the Company and the syndicate led by TDSI prior to closing. The proceeds raised from the offering will be used by the Company to support its growth initiatives and for working capital and general corporate purposes, including debt settlement.

"We are gaining significant traction in the Toronto market as small - and medium-sized businesses realize that their customers are looking for them online" said redCity CEO Roger Abbiss, "This financing will allow us to begin the rollout to other cities in North America."

The offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals.

The securities to be offered will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the benefit of, U.S. persons except in certain transactions exempt from the registration requirements of such Act. This news release does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

redCity also announced preliminary advertising revenues for the quarters ended June 30 and September 30, 2005. Based on preliminary financial data, redCity expects to report advertising revenues for the quarter ended June 30, 2005 in the range of $798,800 to $837,600 (compared to $5,000 to $5,300 for the quarter ended June 30, 2004) and for the quarter ended September 30, 2005 in the range of $1,037,100 to $1,092,400 (compared to $233,200 to $245,100 for the quarter ended September 30, 2004).

The Company emphasizes that these results are unaudited and preliminary and its actual results may vary. Final results for the quarter ended June 30, 2005 and the quarter ended September 30, 2005 will be reported by the Company on November 18, 2005 and November 29, 2005, respectively.

redCity also announced that it has completed the refinancing of indebtedness owed to ABM Investments Limited ("ABM") and Gould Leasing Ltd.("Gould").

The maximum principal amount of the bridge loan provided by ABM has been reduced to $600,000 and the annual interest rate has been increased to 18%. The loan matures no later than July 31, 2006. In addition, all bonus shares issued to ABM in May 2005 in connection with an earlier refinancing of the loan have been released from escrow. ABM is a shareholder of redCity and Owen B. Menzel (a director of redCity) has a material interest in ABM.

The bridge loan provided by Gould has been modified to limit the maximum of all advances to $959,943 and to set a maturity date of no later than July 31, 2006. The bonus shares issued to Gould (and a related party, 956872 Ontario Limited) in May 2005 in connection with a previous refinancing of the loan will be released from escrow if redCity takes a further drawdown on the loan prior to maturity. Gould is a shareholder of redCity and Timothy M. Gould (a director of redCity) has a material interest in Gould.

redCity's independent directors have approved the loan refinancing arrangements with ABM and Gould.

The Company will file a material change report relating to the refinancing of the indebtedness less than 21 days before the closing date. It is in the best interests of the Company to complete the refinancing to ensure it can continue to meet its obligations as they become due.

About redCity Search Company Inc.

redCity Search Company Inc. (www.redcitysearch.com) is a leader in local online search technology. It was established in 2003 and is Toronto's first publicly listed local search engine technology company (RDC-V). Its search websites include www.redToronto.com and www.redmississauga.ca. It also publishes The Red Pages, a print directory of the websites of local Toronto businesses, which is distributed to some 400,000 households and businesses across Toronto. The websites and directory connect consumers to small-and medium-sized businesses across the two cities. All Toronto and Mississauga area businesses are entitled to complementary listings and website links, as the service is supported by advertising revenue.

The contents of this news release have been reviewed and approved by the board of directors of redCity. All currencies are stated in Canadian dollars.

FORWARD-LOOKING STATEMENTS

This news release may contain forward-looking statements based on management's current projections, beliefs and opinions at the date of this news release. Actual results could differ materially from those anticipated in the statements due to risks and uncertainties which affect the Company 's business and operations. Reference should be made to the Company's continuous disclosure documents filed from time to time with Canadian securities regulatory authorities for a detailed description of such risks and uncertainties. The Company takes no responsibility to update forward-looking statements if circumstances or management's projections, beliefs or opinions change.

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

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