Vecima Networks Inc.
TSX : VCM

Vecima Networks Inc.

February 16, 2007 16:00 ET

Vecima Networks to Acquire Spectrum Signal Processing in Cash and Share Transaction

VICTORIA, BRITISH COLUMBIA and BURNABY, BRITISH COLUMBIA--(CCNMatthews, Feb. 16, 2007) - Vecima Networks Inc. ("Vecima") (TSX:VCM) and Spectrum Signal Processing Inc. ("Spectrum") (TSX:SSY)(NASDAQ:SSPI), today announced the signing of a definitive agreement under which Vecima will acquire all the outstanding common shares of Spectrum in a transaction leveraging synergistic technology, administrative efficiencies, and combined sales channels thereby strengthening the market position of both companies. Vecima expects that the acquisition will be immediately accretive to revenues.

Under the terms of the agreement, Vecima will purchase all of the outstanding common shares of Spectrum for the equivalent of $0.8939 per share based on a value per Vecima share of $10.06 which was the 30-day volume weighted average trading price of Vecima shares to January 23, 2007, the date that Spectrum and Vecima executed a non-binding letter of intent. This represents a 39% premium over the 30-day average closing price of Spectrum shares to February 15, 2007. Consideration will be comprised of cash of $0.4915 and 0.04 of one Vecima common share for one common share of Spectrum, subject to maximum aggregate cash consideration of $10,075,000 and a maximum of 820,000 Vecima shares. Vecima will also acquire all outstanding stock options and warrants to acquire Spectrum shares in exchange for options and warrants of Vecima. The closing prices of Spectrum and Vecima shares on the TSX on February 15, 2007 were $0.56 and $10.39, respectively.

"Spectrum and its financial advisor, PricewaterhouseCoopers Corporate Finance Inc. ("PWC"), have been actively pursuing financing alternatives to enable Spectrum to fully execute its strategic plan," said Irving Ebert, chairman of Spectrum's board of directors. "The board concluded that this transaction is the best alternative for Spectrum shareholders, customers and employees and recommends that Spectrum shareholders vote to approve the cash and share offer from Vecima Networks Inc."

In deciding to recommend the transaction to Spectrum shareholders, Spectrum's board of directors considered a number of factors and received an opinion from CIBC World Markets Inc., and subject to the assumptions and conditions set forth in such opinion, that the consideration to be received for the common shares of Spectrum is fair, from a financial point of view, to Spectrum shareholders.

Brent Flichel, Spectrum's President and CEO, remarked, "Balance sheet strength is a requirement to win long-term defense contracts where supply commitments can extend well beyond a decade. Spectrum is now at the point where such strength is critical in enabling the conversion of its existing design-in portfolio into long-term supply agreements. As a part of Vecima Networks Inc., Spectrum will have the critical mass to realize its full potential. Additionally, the share portion of the transaction should allow Spectrum shareholders to participate in realizing this potential as well as the upside potential of Vecima's existing business."

Vecima's position as a leading vendor in the emerging WiMAX market, a market poised for rapid growth worldwide, will be further strengthened by the technological resources provided by Spectrum, giving the company an edge over its competitors. Both Spectrum's and Vecima's product portfolios are powered at their core by field programmable gate array chips, digital signal processing chips, and general purpose processors running software tailored to broadband wireless communications. Vecima also intends to target high growth commercial markets such as public safety, homeland security, satellite communications, and broadband wireless with Spectrum's software defined radio solutions, such markets often demanding a software configurable radio solution such that various agencies can communicate in an interoperable manner.

On February 13, 2007, Vecima reported record sales of $23 million in its second quarter, representing an increase of 22% over the same period last fiscal year. Vecima's year-to-date revenues for the six months ended December 31, 2006 increased by $6.6 million or 18% to $43.3 million, as compared to $36.7 million for the six months ended December 31, 2005. During the company's second quarter earnings call, management reiterated that 20-30% revenue growth is expected in the current fiscal year relative to Vecima's $80 million in sales for fiscal 2006.

"Vecima and Spectrum combine to offer a compelling product portfolio for the commercial and defense broadband wireless markets," stated Dr. Surinder Kumar, President and CEO of Vecima. "Together, we expect to bring the power of software-defined radio technologies to the commercial broadband wireless market and introduce Vecima's portfolio of last-mile wireless solutions to Spectrum's current market. Meanwhile, Vecima has a solid strategic plan to bring Spectrum's financial results in alignment with our historical profit model in the near term, taking advantage of a single public company listing and commensurately reduced administrative expenses. I anticipate that Vecima's track record of 18 consecutive years of profitability will prove compelling to Spectrum's shareholders and employees moving forward."

The transaction will be carried out by way of a statutory plan of arrangement and must be approved by the Supreme Court of British Columbia and by 75 percent of the votes cast by holders of Spectrum shares. The transaction is also subject to certain closing conditions, including the approval of the United States Department of State and the Committee on Foreign Investments in the United States (CFIUS) as well as the receipt of all other required regulatory approvals and customary closing conditions. The transaction is expected to close in April 2007.

Further information regarding the proposed transaction will be contained in an information circular which Spectrum will mail to the Spectrum shareholders in connection with the special meeting of shareholders to be held to approve the transaction. It is expected that the materials will be mailed in March 2007 for a meeting anticipated to be held in April 2007.

PWC and CIBC World Markets Inc. act as financial advisors and McCarthy Tetrault LLP acts as legal advisor to Spectrum and the special committee of its board of directors. Bull, Housser and Tupper LLP acts as legal advisor to Vecima.

All financial figures herein are stated in Canadian dollars.

Spectrum Conference Call Information

Spectrum will conduct a conference call and live audio webcast on February 16, 2007 at 4:30 pm Eastern/1:30 pm Pacific time. The call can be accessed via telephone or audio web cast. The dial-in number for the call is 1.866.497.3339. A replay of the call will be available from February 16, 2007 to February 23, 2007 and can be accessed by dialing 1.866.501.5559 followed by the access code 21217221 followed by the number sign. The live audio web cast can be accessed on Spectrum's web site at www.spectrumsignal.com. The replay will be available on Spectrum's web site until February 23, 2007.

About Vecima Networks Inc.

Vecima Networks Inc. (TSX:VCM) designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. Vecima's hardware products incorporate original embedded software to meet the complex requirements of next-generation, high-speed digital networks. Service providers use Vecima's solutions to deliver services to a converging worldwide broadband market, including what are commonly known as "triple play" (voice, video and data) and "quadruple play" (voice, video, data and wireless) services. Vecima's solutions allow service providers to rapidly and cost-effectively bridge the final network segment that connects the system directly to end users, commonly referred to as "the last mile", by overcoming the bottleneck resulting from insufficient carrying capacity in legacy, last mile infrastructures. Vecima's products are directed at three principal markets: Data over Cable, Broadband Wireless and Digital Video. The Company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fiber to the home and IP video. For more information on Vecima, please visit www.vecimanetworks.com.

Vecima Forward-Looking Statements

Certain statements in this news release may constitute forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements are generally identified by the use of such words as "may", "will", "expect", "believe", "plan", "intend" and other similar terminology. These statements reflect Vecima's current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors including, but not limited to, the factors discussed under "Risk Factors" in the Company's Annual Information Form dated September 27, 2006 available on SEDAR (www.sedar.com), could cause actual results to differ materially from the results discussed in the forward-looking statements. Although the forward-looking statements contained in this news release are based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.

About Spectrum Signal Processing Inc.

Spectrum Signal Processing Inc. (TSX:SSY)(NASDAQ:SSPI) is a leading supplier of software defined platforms for defense electronics applications. Spectrum's products and services are optimized for military communications, public safety, signals intelligence, surveillance, electronic warfare and satellite communications applications. Spectrum's integrated, application-ready products provide its customers with compelling time-to-market and performance advantages while mitigating program risk and cost parameters. Spectrum Signal Processing (USA) Inc., based in Columbia, MD, provides applications engineering services and modified commercial-off-the-shelf platforms to the US Government, its allies and its prime contractors. For more information on Spectrum and its flexComm™ product line, please visit www.spectrumsignal.com.

Spectrum Forward-Looking Safe Harbour Statement

This news release contains forward-looking statements related to Spectrum Signal Processing Inc. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including the timely development and acceptance of Spectrum's new products, the impact of competitive products and pricing, availability of components, changing market conditions and the other risks detailed from time to time in other company filings. Actual results may differ materially from those projected. These forward-looking statements represent the company's judgment as of the date of this release and Spectrum may or may not update these forward-looking statements in the future. Readers are referred to Spectrum's assumptions and risk factors set out in the most current Form 20-F filed with the Securities and Exchange Commission and the British Columbia Securities Commission.

™ flexComm is a trademark of Spectrum Signal Processing Inc.

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