BSM Announces Convertible Debenture Financing
Mississauga, Ontario CANADA, June 10, 2008 /FSC/ - BSM Technologies Inc. (GPS - TSX Venture), ("BSM" or the "Company") (http://www.bsmtechnologies.com), a leading provider of high security vehicle tracking and surveillance solutions, proposes to issue a minimum of $1,000,000 and up to $3,100,000 in convertible debentures (the "New Debentures") and amend the terms of $800,000 ("Reconstituted Debentures") of the $1,300,000 outstanding debentures (the "Outstanding Debentures").
The holders of the Outstanding Debentures, BSM and Nick Cirella (the "Parties") have entered into a Master Agreement which includes the terms of the New Debentures and Reconstituted Debentures (collectively the "Financing"). Upon closing of the Financing, Nick Cirella will retire as C.E.O. and Aly Rahemtulla is expected to be appointed as C.E.O. Mr. Cirella will continue as a director and will have an advisory role to the new C.E.O.
Aly Rahemtulla stated that, "I would like to thank the existing Board of Directors and Nick Cirella for their efforts in building the business of BSM and I look forward to undertaking this role and developing the Financing into a great success for BSM." Nick Cirella commented "I have full confidence in Aly and his ability to take BSM to the next level."
The New Debentures will have a term of two (2) years and are convertible into common shares of the Company at the rate of one common share for each $0.06 of debt converted. The Convertible Debentures will be secured against the assets and undertaking of the Company (including security over all subsidiaries of the Company) and will bear interest at the rate of 14% per year. The subscribers will receive warrants to acquire common shares of the Company equal in number to the number of common shares convertible upon exercise of the conversion feature of the New Debentures. Each Warrant will be exercisable at $0.10 to acquire a further common share for two (2) years from closing. The Company anticipates closing on $2,650,000 of New Debentures within one (1) week, with $1,750,000 already committed for the Financing. $500,000 of the funds from the New Debentures will be used to repay $500,000 of the Outstanding Debentures with the balance used for working capital.
$300,000 of the Outstanding Debentures will be replaced with Reconstituted Debentures on the same terms as the New Debentures. $500,000 of the Outstanding Debentures, held by Company Insiders ("Insiders"), will be replaced with Reconstituted Debentures at a conversion rate of one common share for each $0.07 of debt converted and will receive warrants to acquire common shares of the Company equal in number to the number of common shares convertible upon exercise of the conversion feature of the Reconstituted Debentures.
Aly Rahemtulla, a director and a principal of Onbelay Partners Limited ("Onbelay"), indirectly through his personal holding company holds a $100,000 Outstanding Debenture, John Bell, a director and principal of Onbelay, indirectly through his personal holding company holds a $100,000 Outstanding Debenture and Onbelay holds a $300,000 Outstanding Debenture.
The Insider Reconstituted Debentures are exempt from the valuation and minority shareholder approval requirements of Multilateral Instrument 61-101 ("61-101") by virtue of the exemptions contained in sections 5.5(g) and 5.7(e) of 61-101 in that the Company is experiencing the financial hardship criteria detailed therein.
As a result of the transaction, Onbelay will continue to own 3,333,333 common shares of BSM, a Reconstituted Debenture in the principal amount of $300,000 convertible into common shares at the rate of one (1) common share for each $0.07 in principal amount converted, and 4,285,714 Warrants. Aly Rahemtulla will continue to indirectly own 125,000 common shares of BSM, a Reconstituted Debenture in the principal amount of $100,000 convertible into common shares at the rate of one (1) common share for each $0.07 in principal amount converted and 1,428,571 Warrants. John Bell will continue to indirectly own 550,000 common shares of BSM, a Reconstituted Debenture in the principal amount of $100,000 convertible into common shares at the rate of one (1) common share for each $0.07 in principal amount converted and 1,428,571 Warrants. Aly Rahemtulla and John Bell collectively control Onbelay (referred to as the "Onbelay Group"). If the Onbelay Group were to convert the $500,000 in Reconstituted Debentures and exercise the related 7,142,857 Warrants, they would own approximately 18.32% of the outstanding capital of BSM (based upon the partially diluted capital of 99,843,444 common shares after giving effect to the conversion of Onbelay Group's Reconstituted Debentures and related Warrants).
The Onbelay Group has informed the Company that except as disclosed herein, they have acquired the Reconstituted Debentures and the Warrants issued thereto for investment purposes and that they may decrease or increase their beneficial ownership, control, or direction over common shares of the Company through market transactions, private agreements, exercise of options or warrants, other treasury issuances or otherwise.
The proceeds of this Convertible Debenture Financing will be used for the repayment of an outstanding debenture and working capital purposes.
This press release is available on the Company's official investor relations site for investor questions and commentary at http://www.agoracom.com/IR/BSM. Alternatively, investors are able to e-mail their questions to GPS@agoracom.com where they can also request addition to the BSM investor e-mail list.
About BSM Technologies
BSM Technologies designs, manufactures and markets a comprehensive line of AVSL ("Automatic Vehicle Security and Tracking") solutions for Commercial and Government Fleet Management, including Law Enforcement, through its subsidiary BSM Wireless. The BSM line of products range from Fleet Management and Consumer Vehicle Protection offerings to the full featured ''Stinger'' product featured in news media worldwide as the key technology behind the Bait and Covert application used by hundreds of Law Enforcement agencies to deter vehicular, trailer and heavy equipment theft.
Superior functionality, seamless switching between two separate footprints, enhanced reliability, advanced security features, and excellent value characterize BSM products. By incorporating advanced wireless locating and mapping technology, and IP-based communications protocols, the BSM line of products provides sophisticated real-time monitoring and control of commercial and personal vehicle assets to meet the demanding needs and stringent requirements of today's mobile environments. BSM's unique end to end solutions feature sophisticated wireless hardware, firmware and software all developed by and proprietary to BSM. The BSM product line can be easily adapted and customized to match any customer user requirement while BSM's in-house support infrastructure assures that all clients receive the premium AVSL solution in the industry to meet their needs.
About SecTrack
SecTrack sells Inmarsat D+ transceivers and airtime subscription to value added resellers around the world. These VARs are typically local companies who have built a proper monitoring and tracking service for end-users in a multitude of maritime and land based sectors including nuclear transport monitoring, mining, security tracking of trucks, trailers and other vehicles and tracking of airplanes and rescue helicopters. The company's customer base is spread over Europe, Asia, Africa and Central and South America
About Netistix Technologies
Incorporated in 2002, Netistix Technologies Corporation is headquartered in Ottawa, Canada and has developed a comprehensive and customizable wireless fleet management solution known as "FleetPulse." The Netistix "FleetPulse," Wireless Fleet Management System, delivers actionable information that reduces fleet operation and environmental costs, improves productivity and increases safety.
Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, market acceptance of principal products, the impact of competitive products and technologies, the possibility of products infringing patents and other intellectual property of fourth parties, and costs of product development.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This News Release may include certain "forward-looking statements" that involve risks and uncertainties. Actual results may differ materially from results indicated in any forward-looking statements. The company cautions that, among other things, in view of the rapid changes in communications markets and technologies, and other risks including the cost and market acceptance of the company's new products, the level of individual customer procurements and competitive product offerings and pricing, and general economic circumstances, the company's business prospects may be materially different from forward-looking statements made by the company
For more information, please visit http://www.netistix.com.
Company Contact:
Mr. Nick Cirella
President & CEO
BSM Technologies Inc.
(905) 265-1200
nickcirella@bsmwireless.com
www.bsmwireless.com
Retail Investor Inquiries:
AGORACOM Investor Relations
http://www.agoracom.com/IR/BSM
GPS@agoracom.com
Source: BSM Technologies Inc. (TSX-V: GPS) http://www.bsmtechnologies.com
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