SR Telecom Places $50M

SR Telecom announces C$50M private placement and conversion of 10% convertible secured debentures

January 25, 2006

2 Min Read

MONTREAL -- SR Telecom Inc. (TSX: SRX - News), today announced that it has agreed to issue by way of private placement $50 million of common shares to certain existing lenders and debenture holders (the "Purchasers"), including certain funds and accounts managed by DDJ Capital Management, LLC. The Company also announced that, in conjunction with the private placement, the Purchasers have each agreed to convert their respective holdings of SR Telecom 10% Secured Convertible Debentures (the "Convertible Debentures"), into common shares. These transactions are expected to close on or about February 1, 2006. The proceeds of the private placement will be used by the Company to fund its current working capital requirements. These transactions will significantly de-leverage the Company's balance sheet.

"This is a clear and strong endorsement of the technology and business plans we have developed for SR Telecom. Our advanced WiMAX and pre-WiMAX technologies will now be available to major existing and potential customers from a business that is viable, stable, and has an appropriate capital structure," said William Aziz, Interim President and CEO.

Lionel Hurtubise, Chairman of the Board of Directors, stated, "The infusion of C$50 million of new capital and the conversion of C$58 million principal amount of Convertible Debentures into common shares will enable the Company to fund its turnaround and pursue new growth opportunities."

SR Telecom will issue 333,333,333 common shares to the Purchasers at a price of $0.15 per share, representing a discount to the average market price of the common shares over the five trading days preceding the date hereof of 21.1%. The issuance of the common shares represents a dilution of approximately 49%, taking into account the conversion of all outstanding 10% Convertible Debentures. At closing the terms of the Convertible Debentures will be amended to remove certain restrictive covenants. As the Purchasers already own a significant number of the Company's common shares and Convertible Debentures, the transaction is not expected to materially affect the control of the Company.

SR Telecom Inc. (Toronto: SRX)

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