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November 21, 2007 |
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SMOBY-MAJORETTE: MGA Confirms Interest Amidst Financial Woes SR Telecom Inc. has filed for creditor protection under the Companies' Creditors Arrangement Act, with the Quebec Superior Court. On Nov. 8, the company disclosed that, further to the strategic review initiated on May 10, 2007, its Board of Directors had evaluated the company's strategic options and concluded that it is in the company's best interests to actively pursue the sale of the company and/or its assets. The company believes that CCAA protection will enable SR Telecom to better position itself for an acquisition. "Despite the CCAA filing, we remain focused on the design, delivery and deployment of our WiMAX solutions and are fully committed to ensuring the satisfaction of our customers around the world," Serge Fortin, President and CEO of SR Telecom, said. "The filing provides a framework in which to optimize and leverage our company's assets for all its stakeholders." In conjunction with the CCAA filing, the company reported that some 35 positions will be eliminated at its Montreal location and its other offices around the world. "We have taken the CCAA route to ensure the future of SR Telecom; the unfortunate side effect is that we must reduce our workforce," Mr. Fortin said. "We are maintaining appropriate staff levels to continue the development of our WiMAX solutions and sustain a strong level of customer support. This unfortunate, yet necessary, step will decrease our expenditures during the CCAA period and will reduce our operating cost base in order to facilitate an acquisition." SR Telecom believes that filing for protection is a preventive measure. Protection under CCAA will provide SR Telecom with the ability to operate without interruption and continue to serve its customers around the world. Management believes that the sale andrestructuring process will likely be completed during the first quarter of 2008. Going Concern Doubt There is substantial doubt about the appropriateness of the use of the going concern assumption because of the company's losses for the current and prior years, negative cash flows, reduced availability of supplier credit and lack of operating credit facilities. As such, the realization of assets and the discharge of liabilities and commitments in the ordinary course of business are subject to significant uncertainty. For the three and six months ended June 30, 2007, the company realized a net loss of CDN$14.9 million and CDN$27.1 million, respectively (CDN$115.6 million for the year ended Dec. 31, 2006), and used cash of CDN$9.2 million and CDN$21.6 million, respectively (CDN$45.2 million for the year ended Dec. 31, 2006) in its continuing operating activities. Going forward, the company will continue to require substantial funds as it continues the development of its WiMAX product offering. About SR Telecom Headquartered in Quebec, Canada, SR Telecom (TSX: SRX) -- http://www.srtelecom.com/ -- delivers broadband wireless access (BWA) solutions that enable service providers to deploy voice, Internet and next-generation services in urban, suburban and remote areas. SR Telecom's products are currently deployed in more than 110 countries worldwide, including France. |
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