Feb 16, 2007
VICTORIA, BRITISH COLUMBIA AND BURNABY, BRITISH COLUMBIA
MARKET WIRE
Vecima Networks Inc. ("Vecima") (TSX: VCM) and Spectrum Signal Processing Inc.
("Spectrum") (TSX: SSY)(NASDAQ: SSPI), today announced the signing of a
definitive agreement under which Vecima will acquire all the outstanding common
shares of Spectrum in a transaction leveraging synergistic technology,
administrative efficiencies, and combined sales channels thereby strengthening
the market position of both companies. Vecima expects that the acquisition will
be immediately accretive to revenues.
Under the terms of the agreement, Vecima will purchase all of the outstanding
common shares of Spectrum for the equivalent of $0.8939 per share based on a
value per Vecima share of $10.06 which was the 30-day volume weighted average
trading price of Vecima shares to January 23, 2007, the date that Spectrum and
Vecima executed a non-binding letter of intent. This represents a 39% premium
over the 30-day average closing price of Spectrum shares to February 15,
2007. Consideration will be comprised of cash of $0.4915 and 0.04 of one Vecima
common share for one common share of Spectrum, subject to maximum aggregate cash
consideration of $10,075,000 and a maximum of 820,000 Vecima shares. Vecima will
also acquire all outstanding stock options and warrants to acquire Spectrum
shares in exchange for options and warrants of Vecima. The closing prices of
Spectrum and Vecima shares on the TSX on February 15, 2007 were $0.56 and
$10.39, respectively.
"Spectrum and its financial advisor, PricewaterhouseCoopers Corporate Finance
Inc. ("PWC"), have been actively pursuing financing alternatives to enable
Spectrum to fully execute its strategic plan," said Irving Ebert, chairman of
Spectrum's board of directors. "The board concluded that this transaction is the
best alternative for Spectrum shareholders, customers and employees and
recommends that Spectrum shareholders vote to approve the cash and share offer
from Vecima Networks Inc."
In deciding to recommend the transaction to Spectrum shareholders, Spectrum's
board of directors considered a number of factors and received an opinion from
CIBC World Markets Inc., and subject to the assumptions and conditions set forth
in such opinion, that the consideration to be received for the common shares of
Spectrum is fair, from a financial point of view, to Spectrum shareholders.
Brent Flichel, Spectrum's President and CEO, remarked, "Balance sheet strength
is a requirement to win long-term defense contracts where supply commitments can
extend well beyond a decade. Spectrum is now at the point where such strength is
critical in enabling the conversion of its existing design-in portfolio into
long-term supply agreements. As a part of Vecima Networks Inc., Spectrum will
have the critical mass to realize its full potential. Additionally, the
share portion of the transaction should allow Spectrum shareholders
to participate in realizing this potential as well as the upside potential of
Vecima's existing business."
Vecima's position as a leading vendor in the emerging WiMAX market, a market
poised for rapid growth worldwide, will be further strengthened by the
technological resources provided by Spectrum, giving the company an edge over
its competitors. Both Spectrum's and Vecima's product portfolios are powered at
their core by field programmable gate array chips, digital signal processing
chips, and general purpose processors running software tailored to
broadband wireless communications. Vecima also intends to target high
growth commercial markets such as public safety, homeland security, satellite
communications, and broadband wireless with Spectrum's software defined radio
solutions, such markets often demanding a software configurable radio solution
such that various agencies can communicate in an interoperable manner.
On February 13, 2007, Vecima reported record sales of $23 million in its second
quarter, representing an increase of 22% over the same period last fiscal year.
Vecima's year-to-date revenues for the six months ended December 31, 2006
increased by $6.6 million or 18% to $43.3 million, as compared to $36.7 million
for the six months ended December 31, 2005. During the company's second quarter
earnings call, management reiterated that 20-30% revenue growth is expected in
the current fiscal year relative to Vecima's $80 million in sales for fiscal
2006.
"Vecima and Spectrum combine to offer a compelling product portfolio for the
commercial and defense broadband wireless markets," stated Dr. Surinder Kumar,
President and CEO of Vecima. "Together, we expect to bring the power of
software-defined radio technologies to the commercial broadband wireless market
and introduce Vecima's portfolio of last-mile wireless solutions to Spectrum's
current market. Meanwhile, Vecima has a solid strategic plan to bring
Spectrum's financial results in alignment with our historical profit model
in the near term, taking advantage of a single public company listing and
commensurately reduced administrative expenses. I anticipate that Vecima's track
record of 18 consecutive years of profitability will prove compelling to
Spectrum's shareholders and employees moving forward."
The transaction will be carried out by way of a statutory plan of arrangement
and must be approved by the Supreme Court of British Columbia and by 75 percent
of the votes cast by holders of Spectrum shares. The transaction is also subject
to certain closing conditions, including the approval of the United States
Department of State and the Committee on Foreign Investments in the United
States (CFIUS) as well as the receipt of all other required regulatory approvals
and customary closing conditions. The transaction is expected to close in April
2007.
Further information regarding the proposed transaction will be contained in an
information circular which Spectrum will mail to the Spectrum shareholders in
connection with the special meeting of shareholders to be held to approve the
transaction. It is expected that the materials will be mailed in March 2007 for
a meeting anticipated to be held in April 2007.
PWC and CIBC World Markets Inc. act as financial advisors and McCarthy Tetrault
LLP acts as legal advisor to Spectrum and the special committee of its board of
directors. Bull, Housser and Tupper LLP acts as legal advisor to Vecima.
All financial figures herein are stated in Canadian dollars.
Spectrum Conference Call Information
Spectrum will conduct a conference call and live audio webcast on February 16,
2007 at 4:30 pm Eastern / 1:30 pm Pacific time. The call can be accessed via
telephone or audio web cast. The dial-in number for the call is 1.866.497.3339.
A replay of the call will be available from February 16, 2007 to February 23,
2007 and can be accessed by dialing 1.866.501.5559 followed by the access
code 21217221#. The live audio web cast can be accessed on Spectrum's web site
at www.spectrumsignal.com. The replay will be available on Spectrum's web site
until February 23, 2007.
About Vecima Networks Inc.
Vecima Networks Inc. (TSX: VCM) designs, manufactures and sells products that
enable broadband access to cable, wireless and telephony networks. Vecima's
hardware products incorporate original embedded software to meet the complex
requirements of next-generation, high-speed digital networks. Service providers
use Vecima's solutions to deliver services to a converging worldwide broadband
market, including what are commonly known as "triple play" (voice, video and
data) and "quadruple play" (voice, video, data and wireless) services. Vecima's
solutions allow service providers to rapidly and cost-effectively bridge the
final network segment that connects the system directly to end users, commonly
referred to as "the last mile", by overcoming the bottleneck resulting
from insufficient carrying capacity in legacy, last mile
infrastructures. Vecima's products are directed at three principal markets: Data
over Cable, Broadband Wireless and Digital Video. The Company has also developed
and continues to focus on developing products to address emerging markets such
as Voice over Internet Protocol, fiber to the home and IP video. For more
information on Vecima, please visit www.vecimanetworks.com.
Vecima Forward-Looking Statements
Certain statements in this news release may constitute forward-looking
statements which involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. When used in this news release, such statements are
generally identified by the use of such words as "may", "will",
"expect", "believe", "plan", "intend" and other similar terminology.
These statements reflect Vecima's current expectations regarding future events
and operating performance and speak only as of the date of this news release.
Forward-looking statements involve significant risks and uncertainties, should
not be read as guarantees of future performance or results, and will not
necessarily be accurate indications of whether or not such results will be
achieved. A number of factors including, but not limited to, the factors
discussed under "Risk Factors" in the Company's Annual Information Form
dated September 27, 2006 available on SEDAR (www.sedar.com), could cause actual
results to differ materially from the results discussed in the forward-looking
statements. Although the forward-looking statements contained in this news
release are based upon what management of the Company believes are reasonable
assumptions, the Company cannot assure investors that actual results will be
consistent with these forward-looking statements. These forward-looking
statements are made as of the date of this news release, and the Company assumes
no obligation to update or revise them to reflect new events or circumstances.
About Spectrum Signal Processing Inc.
Spectrum Signal Processing Inc. (TSX: SSY)(NASDAQ: SSPI) is a leading supplier
of software defined platforms for defense electronics applications. Spectrum's
products and services are optimized for military communications, public safety,
signals intelligence, surveillance, electronic warfare and satellite
communications applications. Spectrum's integrated, application-ready
products provide its customers with compelling time-to-market and
performance advantages while mitigating program risk and cost
parameters. Spectrum Signal Processing (USA) Inc., based in Columbia,
MD, provides applications engineering services and
modified commercial-off-the-shelf platforms to the US Government, its allies and
its prime contractors. For more information on Spectrum and its flexComm(TM)
product line, please visit www.spectrumsignal.com.
Spectrum Forward-Looking Safe Harbour Statement
This news release contains forward-looking statements related to Spectrum Signal
Processing Inc. These statements are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve risks and uncertainties, including the timely development and
acceptance of Spectrum's new products, the impact of competitive products
and pricing, availability of components, changing market conditions and the
other risks detailed from time to time in other company filings. Actual results
may differ materially from those projected. These forward-looking statements
represent the company's judgment as of the date of this release and Spectrum may
or may not update these forward-looking statements in the future. Readers are
referred to Spectrum's assumptions and risk factors set out in the most
current Form 20-F filed with the Securities and Exchange Commission and
the British Columbia Securities Commission.
(TM) flexComm is a trademark of Spectrum Signal Processing Inc.
Contacts: Spectrum Signal Processing Inc. Brent Flichel President and Chief
Executive Officer (604) 676-6733 Email: brent_flichel@spectrumsignal.com
Website: www.spectrumsignal.com
Spectrum Signal Processing Inc. Alan
Brick Investor Relations Officer (250) 881-1982 Email:
alan.brick@vecimanetworks.com Website: www.vecimanetworks.com
SOURCE: Spectrum Signal Processing Inc. and Vecima Networks Inc.
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