SRX Post Holdings Inc.
TSX : SRX

May 14, 2008 18:00 ET

SRX Post Holdings Reports First Quarter 2008 Results

MONTREAL, QUEBEC--(Marketwire - May 14, 2008) - SRX Post Holdings Inc. (TSX:SRX), formerly SR Telecom Inc., today released its first quarter results for the period ended March 31, 2008. All dollar figures are in Canadian funds unless otherwise indicated.

The Company has been operating under the protection of the Companies' Creditors Arrangement Act (CCAA) since November 19, 2007. On May 1, 2008, the protection was extended to August 15, 2008.

On March 24, 2008, the Company entered into a definitive agreement with Lagasse Communications & Industries Inc. (Groupe Lagasse) to sell all of its property and assets related to the WiMAX business and symmetryTM line of products. The transaction closed on April 4, 2008 and the Company received cash proceeds of $6.05 million before transaction fees.

Following the sale of substantially all of its assets to Groupe Lagasse, the Company ceased operations and is currently pursuing the monetization of its remaining assets.

The unaudited consolidated financial statements for the period ended March 31, 2008 were prepared on an estimated net realizable value basis, in accordance with Canadian generally accepted accounting principles (GAAP). Accordingly, assets held for sale have been accounted for at their estimated net realizable value based on proceeds from the sale of asset transaction, net of transaction fees. The liabilities were adjusted to their allowed claimed amount.

Consolidated financial results

Revenue for the period was $9.7 million compared to $22.8 million during the same period in 2007. This revenue shortfall was mainly due to the impact of liquidity restrictions on sales efforts and the general uncertainty around the Company's future.

Operating loss from continuing operations was $9.0 million, up from $8.8 million in 2007. Net loss and comprehensive loss for the period ended March 31, 2008 was $16.8 million, compared to $12.2 million in the prior period. Results in 2008 were impacted by poor margins and asset impairment and restructuring charges to bring assets to their estimated net realizable value, somewhat offset by significantly lower selling, general and administrative expenses and reduced research and development expenses compared to the same period in 2007.

Total assets amounted to $33.4 million as at March 31, 2008 compared to $37.0 million as at December 31, 2007. This $3.6 million decrease is the result of the recognition of a $0.9 million asset impairment charge and the collection of $2.7 million of tax credit and trade receivables.

Liabilities increased by $13.2 million to $161.4 million as at March 31, 2008 due to interest paid in kind on the outstanding debt, customer advances received during the period, and unfavourable foreign exchange fluctuations.

Consolidated cash and cash equivalents increased by $1.0 million to $18.0 million as at March 31, 2008.

On April 4, 2008, the Company closed the sale of substantially all of its operating assets to Groupe Lagasse for net proceeds of approximately $4.6 million. On April 8, 2008 the Company repaid $11.1 million of the Term Loan. The Company's current expectations are that there will not be enough funds to fully reimburse secured creditors.



Selected Financial Information

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For the three months ended
(in thousands of Canadian dollars,
except per share information) March 31, 2008 March 31, 2007
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$ $
Revenue 9,716 22,781
Gross profit (loss) (274) 6,795
Asset impairment, restructuring
and other charges (909) -
Operating loss from continuing operations (8,975) (8,846)
Loss from continuing operations (16,791) (11,965)
Loss from discontinued operations,
net of income taxes - (252)
Net loss and comprehensive loss (16,791) (12,217)
Net loss per share basic and diluted (0.02) (0.02)

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As at March 31, December 31,
(in thousands of Canadian dollars) 2008 2007
(restated)
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Total assets 33,397 36,963
Total liabilities 161,352 148,127
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Correction of error

During the preparation of the interim consolidated financial statements for the three months ended March 31, 2008, the Company discovered an error mainly in the foreign exchange conversion of its U.S. denominated debt. As a result of the error, net loss and comprehensive loss was overstated by a non cash foreign exchange loss of $2.4 million. The Company has restated its December 31, 2007 consolidated financial statements to correct the error.

Forward-looking statements

Certain information in this news release, in various filings with Canadian and US regulators, in reports to shareholders and in other communications, is forward-looking within the meaning of certain securities laws, and is subject to important risks, uncertainties and assumptions. This forward-looking information includes, among others, information with respect to the Company's objectives and the strategies to achieve those objectives, as well as information with respect to the Company's beliefs, plans, expectations, anticipations, estimates and intentions. The words "may", "could", "should", "would", "suspect", "outlook", "believe", "anticipate", "estimate", "expect", "intend", "plan", "target" and similar words and expressions are used to identify forward-looking information. The forward-looking information in this news release describes the Company's expectations as of May 14, 2008.

The results or events predicted in such forward-looking information may differ materially from actual results or events. When relying on the Company's forward-looking information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events.

For a more complete discussion of the assumptions and risks underlying our forward-looking statements, please refer to the section entitled Risks and uncertainties in the Company's management's discussion and analysis for the period ended March 31, 2008 as supplemented by the Company's management's discussion and analysis and the section entitled Risk factors in the Company's Annual Information Form for the year ended December 31, 2007, which can be found under the Company's name at www.sedar.com.

The forward-looking information contained in this news release represents expectations of the Company as of May 14, 2008 and, accordingly, is subject to change. However, the Company expressly disclaims any intention or obligation to revise any forward-looking information, whether as a result of new information, events or otherwise, except as required by applicable law.

Contact Information

  • SRX Post Holdings Inc.
    Marc Girard
    Senior Vice-President and CFO
    514-335-2429, Ext. 4690