SR Telecom Loses CFO

SR Telecom announces the completion of its 8.15% debentures exchange offer, changes to its board, and the departure of its CFO

August 26, 2005

5 Min Read

MONTREAL -- SR Telecom Inc. (TSX: SRX; Nasdaq: SRXA) announced the completion of its offer toexchange its outstanding CDN$71 million 8.15% debentures due August 31, 2005 (the "8.15% Debentures") and accruedinterest thereon of approximately CDN$4.8 million into new 10% Secured Convertible Debentures due October 15, 2011 (the"10% Secured Convertible Debentures"). SR Telecom also announced the resignation and appointment of certain boardmembers and the departure of Mr. David Adams, its Senior Vice-President, Finance and Chief Financial Officer.

Completion of the Exchange Offer

As previously announced, CDN$70.5 million in principal amount of the 8.15% Debentures were tendered, representingapproximately 99.3% of the outstanding 8.15% Debentures. In exchange, the Corporation issued CDN$75.3 million of 10%Secured Convertible Debentures, representing principal and accrued interest on the 8.15% Debentures tendered. Funds andaccounts managed by DDJ Capital Management, LLC hold approximately 33% of the outstanding 10% Secured ConvertibleDebentures.

In addition, SR Telecom has amended the terms of the 8.15% Debentures to, among other things, extend the maturity thereofto coincide with the maturity date of the 10% Secured Convertible Debentures and remove certain covenants. Holders of8.15% Debentures who did not tender under the exchange offer continue to hold such debentures, which debentures aregoverned by the indenture so amended.

"We are pleased with the conclusion of the balance sheet restructuring of SR Telecom. We can now turn our attention to theinnovation and customer service aspects of the business, as we develop and deploy our symmetry and WiMax solutions," saidWilliam E. Aziz, Interim President and Chief Executive Officer.

Jackson S. Craig, Vice President of DDJ Capital Management, also commented, "The consummation of the exchange offercompletes the Company's recapitalization plan, and puts SR Telecom on a solid footing to execute on its business plan andcapitalize on its future growth prospects."

Changes to the Board of Directors

As contemplated under the previously announced recapitalization plan of the Corporation, SR Telecom also announced theresignation of John C. Charles, Constance L. Crosby, Nancy E. McGee, Peter L. Jones, Paul E. Labbé and Robert E.Lamoureux as members of the board of directors of the Corporation effective today. On behalf of the Corporation, LionelHurtubise, Chairman of the SR Telecom Board of Directors, said, "SR Telecom wishes to thank the outgoing directors for theirleadership and service to the Corporation and wish them success in their future endeavours."

The board of directors of the Corporation has appointed Kirk Flatow, Patrick J. Lavelle and Paul J. Griswold to act as directorseffective today, filling three of the vacancies created by such resignations. SR Telecom expects that some of the remainingvacancies shall be filled at a future date.

Mr. Flatow is Senior Vice President, Advanced Semiconductor Packaging Group of Tessera, Inc. Prior to that, he served asSenior Vice President of Marketing and Sales, a position he assumed in February 2002. From January 2001 to December2001, Mr. Flatow served as President and Chief Executive Officer of Novera Optics, Inc., a dynamic optical componentcompany. From April 1997 to January 2001, Mr. Flatow held several executive positions at Harmonic, Inc., an opticalnetworking company, including President of Broadband Access Network Division, Vice President of Worldwide Sales and VicePresident of International Operations. From October 1994 to April 1997, Mr. Flatow served as Vice President of BusinessDevelopment-North America for Flextronics International Ltd. Mr. Flatow was co-founder of nCHIP Inc. where, from February1989 to October 1994, he held senior level positions including Vice President of Worldwide Sales, Vice President of Japan,Vice President of Finance and Chief Financial Officer. Mr. Flatow received a B.S. from the University of Santa Clara and anM.B.A. from the University of Chicago.

Mr. Lavelle is Chief Executive Officer of Patrick J. Lavelle and Associates, a management consulting firm. Mr. Lavelle iscurrently Chairman of UE Waterheaters Inc., and is a director of McQuarry Energy Inc., Westport Innovations Inc., TaheraDiamond Corporation, and Canadian Bank Note Company Limited. He serves as a Trustee of Arriscraft International IncomeFund and Retrocom Mid-Market Real Estate Investment Trust. He is Chairman of the Bay of Spirits Gallery and on theadvisory board of International M.B.A. Program at York University. Mr. Lavelle has previously served as Chairman and CEOof Unique Broadband Systems Inc., VP Corporate Development at Magna International Inc., Chairman of Export DevelopmentCorp., Chairman of the Business Development Bank of Canada, and a director of Lions Gate Entertainment Corp., SolignTechnologies, Inc., Algoma Steel Inc., Proprietary Industries Inc., Newmex Minerals Inc. He was Chairman of CanadianCouncil for Aboriginal Business. He has served as Deputy Minister of Industry, Trade and Technology for Ontario, FirstSecretary of the Premier's Council, a senior advisor to the Planning and Priorities Board of the Ontario Cabinet and as agentGeneral for the Government of Ontario in Paris, France.

Mr. Griswold is CEO of SLI Holdings International, LLC of Purchase New York. Prior to May 2003, he served as the President,Chief Executive Officer and Director of Paxar Corporation. He was elected President and Chief Executive Officer of thecompany in August 2001. He had previously served as the President and Chief Operating Officer since February 2000. Priorto that time, Mr. Griswold was the Senior Vice President, Protective Packaging and International Operations, at PactivCorporation, formerly Tenneco Packaging. Prior to joining Tenneco in 1994, he was the Vice President of PackagingDevelopment and Procurement for Pepsi International.

Departure of the Chief Financial Officer

The Corporation announced the departure of David Adams as Senior Vice-President, Finance and Chief Financial Officer. Toensure proper transition, an agreement has been made that Mr. Adams will continue in his current capacity until no later thanOctober 11, 2005.

"David has helped guide the Corporation through a challenging period and SR Telecom is grateful to David for his dedicatedservice," said Lionel Hurtubise, Chairman of SR Telecom's Board of Directors. "We would like to thank him for his contributionsduring his years with SR Telecom and wish him success in his future endeavours."

Mr. Hurtubise indicated that a search is already in progress for Mr. Adams' replacement.

Financial Advisor

Genuity Capital Markets advised SR Telecom on the recapitalization plan and led negotiations with the Debenture holders.

SR Telecom Inc.

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