SOURCE: Urban Communications Inc.

Urban Communications Inc.

October 07, 2015 16:30 ET

Urban Communications Inc. Announces Loan Agreement to Refinance Existing Debt

VANCOUVER, BC--(Marketwired - October 07, 2015) - Urban Communications Inc. (TSX VENTURE: UBN) is pleased to announce that, subject to regulatory approval, the Company has entered into a loan agreement with a lender to borrow the principal amount of $3,150,000. The loan is secured by a General Security Agreement against all the assets of the Company. No finder's fee is payable in connection with the loan.

The loan is due and payable in 24 months, bears interest at the rate of 11% per annum, payable quarterly, and may be repaid at any time after the first year of the term upon notice in increments of not less than $500,000 without penalty. The lender is an arms-length party, and the Company will pay a loan bonus of 18,900,000 warrants to purchase common shares exercisable at $0.10 each within four years as consideration for the loan advance. Any shares issued pursuant to the loan bonus will be subject to a statutory four month plus one day hold period from the date of issuance of the loan bonus warrants.

The proceeds from the loan will be used firstly to redeem approximately $2,700,000 of convertible debentures which carry a potential dilutive effect of 54,000,000 shares if they were fully converted and warrants attached to those instruments are fully exercised. The Company will give each debenture holder notice of the redemption to allow holders to convert, failing which the Company will redeem those debentures. In addition, the Company will repay a secured loan that is not convertible in the amount of $230,000.

To the extent funds are not used to redeem loans because the debenture holders have converted, the loan proceeds will be used for working capital. In the event that more than 67% of the convertible debentures are required to be redeemed, the loan principal may be increased at the option of the Company to $3,650,000, with a grant of an additional 3,000,000 loan bonus warrants, to ensure sufficient working capital is available to conduct operations during the next 6-12 months.

ABOUT URBAN COMMUNICATIONS INC.

Urban Communications Inc. (TSX VENTURE: UBN) is a telecommunications company providing a full suite of Internet, voice, video and broadband application products over its state-of-the-art carrier grade fibre optic network to commercial, residential and public sector customers. The Company's 200 km. fibre optic network spans metro Vancouver and Victoria and has a potential serviceable market size of 850,000 residential units and 80,000 commercial enterprises. Urban recently launched its high-speed Internet service to residential and commercial subscribers on its network at 1,000 Mbps (1Gbps) and has plans to grow to 2,000 residential subscribers in addition to several hundred commercial subscribers by the end of 2015.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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