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Jul 22nd, 2013
 
Enablence Technologies Inc. announces financing
 
Deal with China Tricomm reduces total indebtedness from $16 million to $3 million.
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Enablence Technologies Inc. ("Enablence" or the "Company") (TSX VENTURE:ENA), a leading supplier of optical components and subsystems for access, metro and long-haul markets, announced that it has entered into an agreement in principle with China TriComm Ltd. and certain shareholders of the Company to raise up to $15,000,000 (the "Financing Transaction").

In conjunction with the Financing Transaction and as further described below, the Company is taking steps to reduce its total indebtedness from approximately $16,000,000 to approximately $3,000,000. These transactions are subject to TSX Venture Exchange approval.

The Financing Transaction is comprised of a $12,000,000 issuance of common shares (the "Equity Transaction") and a $3,000,000 convertible bridge loan (the "Bridge Loan"). The $12,000,000 Equity Transaction is structured as follows: China TriComm Ltd. and one or more of its affiliates will subscribe for 45,000,000 common shares at an issue price of $0.20 and certain shareholders of the company, which may include some insiders of Enablence, will subscribe for an additional 15,000,000 common shares also at $0.20 per share.

China TriComm Ltd. is an investment company which is under common ownership with Zhejiang Chuangyi Technologies, a leading integrated infrastructure equipment and solution provider for the cable industry in China. The parties expect to enter into definitive agreements on or before August 15, 2013 with a closing date for the Equity Transaction of no later than August 31, 2013.

The Equity Transaction is subject to several conditions including but not limited to: TSX Venture Exchange approval, written shareholder approval of the Company's shareholders holding at least 50.1% of the issued and outstanding shares of the Company, Enablence reaching a definitive agreement with the holders of the Company's secured subordinated promissory notes (the "Noteholder Condition") and the entering into of a shareholders agreement with certain of the Company's shareholders holding at least 50% of the issued and outstanding shares of the Company (the principal terms of which have already been agreed to in principle with the shareholders). Any shares issued in connection with the Equity Transaction will be subject to a four month restricted period.

As part of the $15,000,000 Financing Transaction, an affiliate of China Tricomm Ltd., is providing Enablence with the Bridge Loan for working capital purposes. A first tranche of $500,000 of the Bridge Loan has been received by Enablence. The second $2,500,000 tranche of the Bridge Loan is expected to be received on July 22, 2013.

The Bridge Loan will automatically be converted to common shares of Enablence at $0.15 per share on the closing of the Equity Transaction. In the event of a default and certain other circumstances, the lender will be entitled to demand repayment of the Bridge Loan, or optionally convert some or all of the Bridge Loan at $0.14 per share.

A finder's fee will be paid to an arm's length party in connection with the Financing Transaction in the amount of 3,600,000 common shares of Enablence. Any common shares issued on conversion of the Bridge Loan or in respect of the finder's fee will be subject to a four month restricted period.

In connection with the Noteholder Condition, Enablence has already entered into an agreement in principle with the holders of substantially all of the secured subordinated promissory notes to eliminate (pro rata to each note holder's interest) the approximately US$11,600,000 of principal and accrued interest.

Upon execution of definitive agreements, expected to be completed by August 15, 2013, with certain holders of the subordinated notes, those notes will be exchanged for total cash payments of up to US$3.5 million and the issuance of up to 20,000,000 common shares of Enablence at $0.20 per share, subject to TSX Venture Exchange approval.

The definitive agreements with any holders of the subordinated notes will be subject to the completion of the Financing Transaction and will represent a full and final settlement of such subordinated notes and the full terms and conditions will be disclosed at such time. Any shares issued in connection with the settlement of the debt arrangements will be subject to a four month restricted period.

"The closing of this financing will be the culmination of a restructuring process that began 18 months ago." said Louis De Jong, CEO. "During that time Enablence has shed non-core assets, streamlined its ongoing business, expects to reduce total indebtedness from approximately $19,000,000 to approximately $3,000,000 and will have raised sufficient capital to continue to fund its rapidly growing 100G/s transceiver business.

This transaction, when completed, will be a transformative event for Enablence which will stabilize the financial footing of Enablence's business and position Enablence to focus on its customers and future growth."


 
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