Acquisition deepens millimetre wave spectrum
coverage in Canada's six largest
cities
TORONTO, Sept. 21,
2018 /CNW/ - TeraGo Inc. ("TeraGo" or the "Company")
(TSX: TGO, www.terago.ca), today announced that it has entered into
a definitive share purchase agreement under which TeraGo Networks
Inc., a wholly-owned subsidiary of TeraGo, will acquire (the
"Acquisition") all of the issued and outstanding shares of
Mobilexchange Spectrum Inc. and its parent holding company
Mobilexchange Spectrum Holdings Inc. (collectively "MSI")
for aggregate cash consideration of $5,664,716 (the "Purchase Price"). The
Acquisition is being funded through the net proceeds of TeraGo's
bought deal equity offering which previously closed on June 18, 2018.
The Acquisition will provide TeraGo with six 24 GHz spectrum
licences totalling 960 MHz (the "Spectrum Licences") in
Canada's six largest cities
covering approximately 3.1 billion MHz-Pop1. TeraGo has
already been using the Spectrum Licences to provide wireless
internet services to its business customers through subordinate
licences issued to it under an existing lease with MSI. As
referenced in TeraGo's final short-form prospectus dated
June 11, 2018 (the "Final
Prospectus") and filed on Sedar (www.sedar.com), the Company
has since delivered its notice to exercise its purchase option to
acquire the Spectrum Licences under the lease for an aggregate cash
consideration equal to the Purchase Price. Following discussions
and negotiations with MSI and its shareholders, the proposed
Acquisition provides TeraGo with the Spectrum Licences in lieu of
completing the purchase option. At closing, MSI is expected to have
no cash or debt, and accordingly, there will be no post-closing
adjustments to the Purchase Price. The shareholders of MSI have
provided TeraGo with an indemnity to support various
representations and warranties provided in connection with the
Acquisition.
"With the acquisition of MSI and their spectrum assets, TeraGo
will be the primary license holder of 24 and 38 GHz fixed wireless
spectrum in Canada's major markets
covering approximately 8.1 billion MHz-Pop1," said
Tony Ciciretto, President and CEO of
TeraGo. "Since 1999, TeraGo has invested in spectrum equipment and
technology to provide a competitive alternative to the larger
wireline incumbent carriers. With the introduction of 5G technology
and the increased bandwidth and capabilities it provides, the value
of our millimetre wave spectrum assets will be further enhanced,
greatly improving our overall competitiveness."
Along with customary closing conditions, the Acquisition and
transfer of the Spectrum Licenses to TeraGo is subject to
Innovation, Science and Economic Development Canada ("ISED")
approval. The Acquisition is expected to close following ISED
approval.
Forward-Looking Statements
This news release includes certain forward-looking statements
that are made as of the date hereof. Such forward-looking
statements may include but are not limited to statements regarding
the acquisition by the Company of MSI and its Spectrum Licences,
technology advancement expectations from 5G, value enhancement of
millimetre wave spectrum assets, improvement of competitiveness,
and ISED approval of the transfer of the Spectrum Licences. All
such statements constitute "forward-looking information" as defined
under, applicable Canadian securities laws. Any statements
contained herein that are not statements of historical facts
constitute forward-looking information. The forward-looking
statements reflect the Company's views with respect to future
events and is subject to risks, uncertainties and assumptions,
including risks relating to the proposed acquisition of additional
spectrum and those risks set forth in the "Risk Factors" sections
in each of the Final Prospectus and the annual MD&A of the
Company for the year ended December 31,
2017, which is available on www.sedar.com under the
Company's corporate profile. Factors that could cause actual
results or events to differ materially include the inability to
satisfy closing conditions contained in the share purchase
agreement for the Acquisition, the failure to receive ISED approval
with respect to the proposed transfer of the Spectrum Licences,
certain counterparty risks in dealing with the current shareholders
of MSI and the assumption that there will be no material assets and
liabilities of MSI on closing other than the Spectrum Licences.
Until all the closing conditions are satisfied or waived, there can
be no assurances that the Acquisition will be completed.
Accordingly, readers should not place undue reliance on
forward-looking statements as a number of factors could cause
actual future results, conditions, actions or events to differ
materially from the targets, expectations, estimates or intentions
expressed with the forward-looking statements. Except as may be
required by applicable Canadian securities laws, TeraGo does not
intend, and disclaims any obligation, to update or revise any
forward-looking statements whether in words, oral or written as a
result of new information, future events or otherwise.
About TeraGo
TeraGo provides businesses across Canada and internationally with cloud,
colocation and connectivity services. TeraGo manages over 3,000
cloud workloads, operates five data centres in the Greater Toronto Area, the Greater Vancouver Area, and Kelowna, and owns and manages its own IP
network. The Company serves approximately 4,000 business customers
in 46 major markets across Canada
including Toronto, Montreal, Calgary, Edmonton, Vancouver and Winnipeg. TeraGo Networks is a Competitive
Local Exchange Carrier (CLEC) and was recognized by IDC as a
Major Player in MarketScape Cloud
Vendor Assessment. TeraGo Networks was also selected as one of
Canada's Top Small and Medium
Employers for 2017.
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1Based on ISED's population figures for 2011.
SOURCE TeraGo Inc.