Bridge Financing

 

TIDMFCOM 
 
RNS Number : 8447R 
First Communications, Inc. 
31 August 2010 
 

 
 
 
 
 
 
                           First Communications, Inc. 
                      Successful Bridge Financing Completed 
 
 
Akron, OH, August 31, 2010 - First Communications, Inc. (AIM: FCOM) (the 
"Company") today provides the following update on its successful equity raise 
(the "Equity Raise") to satisfy terms of its recent bank amendment (Amendment 
No.3) details of which were set out in the Company's final results announcement 
dated May 6, 2010. 
 
Equity Raise 
On August 31, 2010, the Company announced the fulfillment of an obligation in 
its existing credit facility (the "Facility") to raise at least an additional $4 
million in equity and/or a cash capital contribution by August 31, 2010. 
 
 Two of its current shareholders, FirstEnergy Corp. and The Gores Group, 
have provided $2 million each through their acquisition of Series B preferred 
shares that the Board of Directors of the Company has the authority to issue and 
price pursuant to the Company's Certificate of Incorporation and Delaware law. 
The Series B Preferred have a PIK dividend rate of 15% with no cash dividend 
payments being required. The terms of the Series B Preferred also include the 
ability for the Company to redeem the shares anytime without penalty. The Series 
B Preferred Shares are convertible into the Company's common shares at a 
conversion price of $0.15 being the closing offer price of the Company's common 
stock on the AIM on August 27, 2010, ("Conversion Price") per common share. 
 
The Gores Group has been granted the right to convert its $12 million of 
currently held Series A Preferred Shares into common shares at the Conversion 
Price and FirstEnergy has been granted the right to convert its existing 
subordinated debt of $6 million at this same per share price. These conversions 
rights, however, cannot be exercised until May 31, 2011 and the Company intends 
and expects that it will secure additional funding, part of which it will use to 
redeem the Series B Preferred Shares before they can be converted.  Shareholders 
would suffer extensive dilution should the Company not secure funding to pay 
down these convertible securities. 
 
The Company's current trading is in line with the statements made in its interim 
results ended June 30, 2010 and continues to meet management's expectations. 
 
As FirstEnergy Corp. and The Gores Group are significant shareholders in the 
Company, the above transactions will fall to be classified as related party 
transactions.  The Independent Directors, excluding those nominated to the Board 
which represent these shareholders, believe that the terms of the Equity Raise 
are fair and reasonable, insofar as shareholders are concerned, and given the 
situation in which the Company finds itself in.  In reaching its conclusion, the 
Independent Directors have also consulted with the Company's major shareholders. 
 
For Further Information: 
 
+-------------------------------------+-------------------------------------+ 
| First Communications, Inc.          |                                     | 
+-------------------------------------+-------------------------------------+ 
| Joe Morris                          | Tel: [phone]              | 
+-------------------------------------+-------------------------------------+ 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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