Intercable ICH inc. (Intercable) (TSX VENTURE: ICH) announced today
its financial results for the third quarter ended September 30,
2008 and provided an update regarding the status on financing. The
financial statements are available at www.sedar.com.
Highlights for the third quarter and subsequently:
a) Operations:
- Activation of the television, Internet and telephony
offerings, including double and triple play bundles;
- Start-up of the commercial operations in the Saint-Paul
commune; 400 subscribers were activated as of November 27, 2008 and
an average of 1.8 service units per subscriber;
- Moderated expansion of the FTTC network: construction of 110
Km of aerial and underground networks (as of November 24, 2008),
representing a potential of approximately 10,000 homes of which
2,400 can be connected;
- Redeployment of the network in the aerial sectors to pursue
the expansion during the dispute with France Telecom;
b) Financial Situation:
- Completion of a bridge loan of 3 million Euros ($4,500,300)
with Mauritius Commercial Bank (MCB); undrawn balance of 400,000
Euros ($600,040) as of November 27, 2008;
- Filing of a preliminary prospectus in Canada for a new issue
of units comprising of debentures and warrants; solicitations of
interest to date has not met the fund raising objectives of the
Company;
- Continuation of discussions with potential institutional
investors;
- Uncertainty regarding the continuation of operations; the
pursuit of the Company's operations is based on its capacity to
obtain additional funds in December 2008 and to secure a financing
offer over the next few weeks.
During this trying period related to tightening of credit
worldwide, we have slowed down our deployment plan and our
commercial activities in certain aerial sectors of Reunion Island.
Our service offerings were thus far well received by our customers
who appreciate the quality and the competitive pricing of our
television, Internet and telephony services, indicated Guy
Laflamme, President and Chief Executive Officer of Intercable. We
are increasing our efforts to secure financing in the very short
term and we continue to explore different possibilities in order to
ensure the continuity and growth of the Company.
MANAGEMENT REPORT
SCOPE OF THE FINANCIAL SITUATION ANALYSIS
This MD&A must be read in conjunction with the Company's
financial statements and the accompanying notes for the quarter
ended September 30, 2008 and the fiscal year ended December 31,
2007, as well as the 2007 annual report. The financial statements
have been prepared in compliance with the Canadian Generally
Accepted Accounting Principles (GAAP).
OUR COMPANY
ICH is a Canadian telecommunication company that builds and
operate a very high-speed network in the Reunion Island, a French
Overseas Department. This international broadband telecommunication
business opportunity is perfectly aligned with ICH's strategy,
which consists in focusing on underserved telecommunication and
cable markets. To achieve its objective, ICH is implementing its
own broadband network using cutting-edge technology, which it
operates in order to offer television services (basic, premium and
on-demand), high-speed internet services and quality telephony
services. ICH targets markets where (i) cable communication service
is limited or non-existent, (ii) cables can be installed in aerial
or within existing underground ducts and (iii) the political
environment is stable.
GOING CONCERN UNCERTAINTY
The assumption of the Company's ability to continue its
operations is based on its capacity to obtain financing in the very
short term in order to discharge its liabilities and to pursue its
operations. Without new funding, the Company anticipates that it
will be running out of cash before the end of 2008. Due to the
deterioration of the financial market caused by the credit crisis,
it is uncertain that the Company will be able to secure such
financing and to continue as a going concern.
The consolidated financial statements for the third quarter of
2008 have been prepared on a going concern basis, which assumes the
Company will be able to realize its assets and discharge its
liabilities and commitments in the ordinary course of business. The
financial statements of this quarter do not include any adjustments
that would be necessary should the Company not be able to secure
the necessary financing to continue its operations.
STATUS ON FINANCING
On October 16, 2008, the Company filed a preliminary prospectus
with the regulatory authorities of British Columbia, Alberta,
Ontario and Quebec for an offering of units. The offering consists
of units of the Company at a price of $5,000 per unit, each unit
consisting of five 15% secured subordinated debentures in the
principal amount of $1,000 due three years from the date of closing
of the offering, and 1,250 common share purchase warrants. Each
warrant will entitle its holder to purchase one common share at a
price of $1.50 at any time during the period of four years
following the closing. The agent is Jones Gable & Company
Limited. The issue price of the units has been negotiated with the
agent. The Company also applied with the TSX Venture Exchange for a
listing of its common shares issuable under the warrants. The
Company wishes with this offering to conclude a minimum financing
of 15 million dollars.
At the same time, the Company continues to explore other
financing options, including by way of a private placement. While
the Company's management continues to discuss with potential
institutional investors, there is no guarantee that these
discussions will result in a financing offer.
FINANCIAL SITUATION
Selected balance sheet data
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In Canadian $ Sept. 30, 2008 Dec. 31, 2007
------------------------------------------------------------------------
Cash and cash equivalents 1,104,395 12,750,389
Current assets 2,224,941 13,591,769
Capital assets 18,348,514 6,746,278
Deferred charges 3,820,502 1,113,992
Total assets 24,393,957 21,452,039
Bank indebtedness 2,100,140 -
Other current liabilities 4,896,879 2,082,659
Long-term debt 902,440 956,427
Capital stock 20,273,524 20,273,524
Accumulated other comprehensive income (107,553) (446,279)
Deficit (4,445,850) (2,188,668)
Shareholders' equity 16,494,498 18,412,953
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As of September 30, 2008, the Company had $1,104,395 in cash and
bank deposit certificates renewable every 30 days. On August 28,
2008, the Company signed a bridge loan of 3 million Euros
($4,500,300) maturing on October 31, 2008 with Mauritius Commercial
Bank Ltd (MCB), a bank affiliated to MCB Equity Fund, a shareholder
and insider of the Company, that will enable it to pursue its
operations and to meet its short term obligations. The bridge loan
shall be disbursed in tranches, carries interest at 3-month LIBOR
plus a margin varying between 5% and 7%, is guaranteed first rank
by the overall assets of the Company, and shall be repaid in
priority with the funds raised with the next financing. On October
21, 2008, the Company received a first notice extending the
maturity date to November 30, 2008 and, on November 19, 2008, it
received a second notice extending the maturity date to January 31,
2009. As of September 30, 2008, the Company had drawn 1,400,000
Euros ($2,100,140) from the bridge loan. Subsequently to the end of
the quarter, an additional amount of 1,200,000 Euros ($1,800,120)
has been drawn, resulting in an unused portion on the loan of
400,000 Euros ($600,040) as of November 27, 2008.
The Company's long-term debt, consisting of the obligation under
a capital lease maturing in 2012, amounted to $902,440 as of
September 30, 2008. The Company did not enter into any new
long-term indebtedness during the third quarter of 2008.
The working capital deficiency increased to $4,772,078 as of
September 30, 2008, resulting mainly from a significant reduction
in the Company's liquidity, an increase in the bank indebtedness
and an increase in accounts payable. The Company has negotiated
longer payment terms with certain suppliers, including a 14-month
credit agreement with a major supplier of network components and
home terminal devices, carrying interest at the 6-month LIBOR rate
plus a 4% margin, payable by equal monthly instalments over a
12-month period.
During the third quarter and subsequently, the Company continued
a moderate deployment of its network, maximizing the utilization of
the existing inventory of network parts and equipments and delaying
new orders with network equipment suppliers. The Company also
suspended the use of external subcontractors and optimized its
internal resources.
Although the Company will continue to closely manage its
liquidities over the next few weeks, the current amount of cash and
cash equivalents combined with the unused balance of the MCB bridge
loan will not be sufficient to enable it to meet its current
financial obligations by the end of December 2008. Consequently,
the Company's ability to continue its operations is based on its
capacity to obtain additional interim financing in the very
short-term and to conclude mid or long-term financing over the next
few weeks. There is no guarantee that the Company will be able to
obtain such financing in the required timeframe.
CASH REQUIREMENTS
Based on its revised business plan, the Company estimates that
its cash requirements will range between $20 million and $30
million for the next 12 months, which will allow it to connect
between 30,000 and 50,000 homes during that period. The Company
estimates that it will need between $40 million and $50 million to
achieve positive earnings before interest, taxes, depreciation and
amortization (EBITDA). These amounts include capital expenditures
relating to the network construction, installation at the customers
premises and home terminal devices, operating expenditures net of
revenues generated during that period, working capital requirements
and financial charges related to debt financing. The revised
business plan is subject to a series of assumptions and
uncertainties that may materially differ from reality. Please see
the section on Forward-looking statements and risks factors.
COMMERCIAL ACTIVITIES
The Company began its commercial activities in June 2008 with
the official launch of its ZEOP brand on the market. It proposes to
the population of Reunion single and multiservice offerings that
compare advantageously to those offered by competition. The first
homes were connected in August 2008 in the Saint-Paul commune. As
of November 27, 2008, the Company had 2,400 homes that could be
connected, 1,900 of which were visited by sales representatives. As
of that date, the Company provided television, internet and
telephony services to over 400 customers, each subscribing to an
average of 1.8 service units.
The delay experienced in the commercial launch compared to the
initial forecast of April 2007 is due to several factors including
delays caused by conducting a comprehensive cost/benefit analysis
of the Company's technological choices, manufacturing and
transportation delays for certain network components, local
administrative delays related to obtaining work permits, the real
estate situation in the Reunion that required a delay of almost
nine months to find a location for the Company's installations, the
conflict with France Telecom related to the usage of their civil
engineering infrastructures, and the delays for searching mid or
long-term financing.
NETWORK DEPLOYMENT STRATEGY
In order to reduce costs of deploying its network, the Company
must use existing infrastructures that are owned by third parties,
including the infrastructures of France Telecom. Consequently, the
Company has signed several agreements, namely with social syndics,
local communities and owners of electrical distribution networks
(SIDELEC / Electricite de France).
On July 7, 2008, despite both civil engineering leasing
conventions signed with France Telecom, the Company received a
formal notice from France Telecom requiring it to terminate all new
deployments and to proceed with the removal of its cables installed
prior to the signature of the said conventions. France Telecom
blames the Company for using its infrastructures without
authorization and in a manner that could affect its network. France
Telecom is also claiming for a provision payment in the amount of
500,000 Euros for future damages as well as the payment of 20,000
Euros per day commencing on the sixteenth day after the delivery of
a possible order to remove the cables.
On September 10, 2008, the request by France Telecom was heard
before the Tribunal mixte de commerce of Saint-Denis, in Reunion
Island. The Tribunal rendered its decision on October 8, 2008 and,
as expected by the Company and upon its request, declared that it
did not have the required competence to hear this case since the
civil engineering leasing conventions concluded with France Telecom
provided for a conciliation process under the jurisdiction of the
Tribunal de Commerce of Paris. Furthermore, the Tribunal mixte de
commerce of Saint-Denis has condemned France Telecom to pay 15,000
Euros to the Company as discretionary expenditures for legal fees
incurred. France Telecom appealed that decision before the Court of
appeal of Saint-Denis. The hearing date has been set to February
16, 2009.
The Company's management believes that the claims made by France
Telecom are unjustified and that they are only intended to delay
the deployment of its network and to avoid the entrance of a
competitor on the Reunion territory. Consequently, it has taken
steps to vigorously contest them.
Following a request made by the Company, and in accordance with
the conciliation procedure provided for by the civil engineering
leasing conventions mentioned above, a conciliator was appointed by
order of the Tribunal de Commerce of Paris on August 14, 2008 in
order to attempt to resolve informally the differences related to
the execution and the interpretation of the signed convention by
both parties. In light of the refusal by France Telecom to
conciliate, the President of the Tribunal de Commerce of Paris, by
order rendered on November 13, 2008, has limited the mandate of the
conciliator to a technical expertise mission in order to determine
if the underground deployment of some 39 km of cables by the
Company in Le Port and Possession communes were performed according
to accepted engineering practices. The report of the conciliator
will be released by March 15, 2009 at the latest.
At the same time, on August 28, 2008, upon a request made by the
Company, the Autorite de Regulation des Communications
Electroniques et des Postes (ARCEP) that regulates competition in
the telecommunication industry in France, took hold of the dispute
resolution process with France Telecom. It is important to note
that ARCEP, which is in favour of free competition by encouraging
alternative network operators to enter the market, published on
July 24, 2008 a decision regarding technical and financial
conditions attached to the access to the civil engineering
infrastructures belonging to an operator exerting significant
influence on the market. This decision ordered France Telecom to
open its infrastructures to competition and to propose contractual
terms which are more accessible, fair and non discriminatory to
alternative network operators. A hearing is planned for December 2,
2008. The Company expects that ARCEP will render its decision by
December 28, 2008 at the latest.
As a result of the dispute between the Company and France
Telecom, the Company has suspended the network deployment in
underground areas. The Company had in fact completed approximately
80% of the cable network build-out on some 6,000 homes in Port and
Possession communes when France Telecom requested that deployment
be suspended. If the dispute with France Telecom is resolved in a
satisfactory manner, the Company estimates that it will be able to
connect those 6,000 homes over a two month period.
Consequently, the Company has redirected its network deployment
towards high density aerial sectors where it has executed
agreements to use existing third party infrastructures. It has
started its aerial deployments in the West sector of the Reunion
Island (Saint-Paul) where, as of November 27, 2008, it had deployed
its network to approximately 4,000 homes, of which approximately
60% have been connected.
Over the next twelve months, subject to resolving the conflict
with France Telecom and obtaining mid or long-term financing of
approximately $20 million to $30 million, the Company estimates
that it will be able to connect between 30,000 and 50,000
homes.
OPERATING RESULTS AS OF SEPTEMBER 30, 2008
Having not yet started in any significant way its commercial
activities, the Company was still considered as being in a start-up
phase. As of September 30, 2008, the Company had connected 178
customers, who generated subscription and installation revenues
totalling $14,487. Consequently, the pre-operating revenues as well
as all disbursements related to planning and implementing
commercial activities and network deployment have been capitalized
as pre-operating costs and presented as deferred charges in the
balance sheet. Certain pre-operating costs incurred during the
previous quarters were reclassified in order to comply with the
presentation adopted during the third quarter. The following table
facilitates the identification of the disbursements that have been
capitalized during the current quarter and the nine months ended
September 30, 2008.
-----------------------------------------------------------------------
In Canadian $ Quarter ended September 30 2008
-----------------------------------------------------------------------
Capitalised
as Deferred Statement of
Amount Charges Earnings
-----------------------------------------------------------------------
Pre-operating revenues 33,210 33,210 -
Direct costs 521,605 521,605 -
Network expenses (271,462) (271,462) -
Salaries and fringe benefits 474,346 289,910 184,436
Directors' fees and expenses 42,316 - 42,316
Advertising and promotions (739) (739) -
Rental and other services 143,576 63,893 79,682
Electricity and heating 33,365 - 33,365
Taxes and permits 32,604 - 32,604
Maintenance and repairs 27,168 - 27,168
Office expenses 33,145 - 33,145
Insurance 65,690 - 65,690
Travel and representations 7,487 - 7,487
Communications 31,097 - 31,097
Professional fees 476,548 (21,519) 498,067
Other expenses 1,725 - 1,725
Interest and bank charges 141,199 - 141,199
Foreign exchange loss (gain) 35,168 6,446 28,721
Loss on disposal of fixed assets 17,239 - 17,239
Depreciation of fixed assets 1,111 - 1,111
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Total $1,846,399 $621,345 $1,225,054
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-----------------------------------------------------------------------
Nine months ended September 30, 2008
-----------------------------------------------------------------------
Capitalised
as Deferred Statement of
Amount Charges Earnings
-----------------------------------------------------------------------
Pre-operating revenues (45,585) (45,585) -
Direct costs 918,111 918,111 -
Network expenses 195,718 195,718 -
Salaries and fringe benefits 1,206,476 748,002 458,475
Directors' fees and expenses 106,825 - 106,825
Advertising and promotions 216,009 216,009 -
Rental and other services 579,154 411,541 167,613
Electricity and heating 42,048 - 42,048
Taxes and permits 68,724 - 68,724
Maintenance and repairs 107,759 - 107,759
Office expenses 144,816 - 144,816
Insurance 135,836 - 135,836
Travel and representations 56,375 - 56,375
Communications 79,341 - 79,341
Professional fees 1,366,890 252,519 1,114,370
Other expenses 2,548 - 2,548
Interest and bank charges 217,034 - 217,034
Foreign exchange loss (gain) (338,694) (3,657) (335,037)
Loss on disposal of fixed assets 17,239 - 17,239
Depreciation of fixed assets 2,816 - 2,816
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Total $5,079,439 $2,692,658 $2,386,781
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Net Loss
For the third quarter of 2008, the Company reported a
consolidated net loss of $1,203,448, or $0.05 per share, compared
to $74,912 or $0 per share for the same period in 2007. For the
first nine months of 2008, the Company recorded a consolidated net
loss of $2,257,181 or $0.09 per share, compared to a consolidated
net loss of $173,345 or $0.01 per share for the same period in
2007.
Consolidated operating results
-----------------------------------------------------------------------
3 months ended Nine months ended
In Canadian $ September 30 September 30
2008 2007 2008 2007
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Operating loss 1,225,054 264,039 2,386,781 485,283
Interest income (21,606) (189,127) (129,600) (311,938)
-----------------------------------------------------------------------
Net loss 1,203,448 74,912 2,257,181 173,345
Deficit,
beginning of
period 3,242,402 1,454,258 2,188,668 1,355,825
-----------------------------------------------------------------------
Deficit, end of
period $4,445,850 $1,529,170 $4,445,850 $1,529,170
Net loss per
basic and
diluted share $0.05 $0.00 $0.09 $0.01
-----------------------------------------------------------------------
The increase in the net loss is due to the following
factors:
a) An increase in the operating costs, before financial expenses
and foreign exchange loss or gain, amounting to $1,055,134 and
$2,504,784 respectively during the third quarter and the first nine
months of 2008, compared to $263,652 and $481,886 for the same
periods in 2007. These increases are attributable to an increase of
the Company's activities in view of the commercial launch. The
Company had approximately 100 employees and contract workers as of
September 30, 2008 while it had approximately 25 employees as of
September 30, 2007. During the first nine months ended September
30, 2008, Intercable ICH also recorded, as a reduction of the
operating expenses, a foreign exchange gain of $335,037 related to
the cash and cash equivalents held in Euros. This foreign exchange
gain reflects a major appreciation of the value of the Euro against
the Canadian dollar between December 31, 2007 and until such time
when the cash was transferred to the subsidiary.
b) An increase in the financial expenses amounting to $141,199
and $217,034 respectively during the third quarter and the first
nine months of 2008, compared to $387 and $3,397 for the same
periods in 2007. The financial expenses are mainly related to the
execution, during the quarter, of a bridge loan to be drawn in
tranches up to 3 million Euros ($4,500,300), to the interest on the
obligation under a capital lease related to the land, and to the
interest paid in accordance with arrangements to defer payments
with suppliers.
c) A reduction in interest income during the third quarter and
the first nine months of 2008 which amounted to $21,606 and
$129,600 respectively, compared to $189,127 and $311,938 for the
same periods in 2007.
CASH FLOWS AND LIQUIDITY
-----------------------------------------------------------------------
3 months ended Nine months ended
In Canadian $ September 30 September 30
2008 2007 2008 2007
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Operating
activities
Cash-flows from
operations (1,201,347) (74,912) (2,254,927) (172,381)
Changes in
non-cash working
capital items 845,257 20,647 2,527,459 (175,265)
-----------------------------------------------------------------------
(356,090) (54,265) 272,532 (347,646)
Investing
activities (4,051,899) (691,376) (14,489,279) (1,369,899)
Financing
activities 2,069,303 - 2,009,893 18,966,318
Effect of
exchange rate
changes on cash
and cash
equivalents 229,613 (547,383) 560,862 (592,753)
-----------------------------------------------------------------------
Net change in
cash an cash
equivalents (2,109,073) (1,293,024) (11,645,993) 16,656,020
Cash and cash
equivalents,
beginning of
period 3,213,468 18,482,859 12,750,389 533,815
-----------------------------------------------------------------------
Cash and cash
equivalents, end
of period $1,104,395 $17,189,835 $1,104,395 $17,189,835
-----------------------------------------------------------------------
During the third quarter and the first nine months of 2008, the
Company has generated cash outflows from its operations of
$1,201,347 and $2,254,927 respectively, compared to $74,912 and
$172,381 during the same periods in 2007. In return, the variations
in the non-cash working capital items generated cash inflows of
$845,257 and $2,527,459 respectively during the third quarter and
the nine months of 2008, compared to cash inflows of $20,647 and
cash outflows of $175,265 for the same periods in 2007. Such
increase was mainly due to the significant increase in trade
accounts payable, particularly after entering into a 14 month
credit agreement with a major network equipment supplier.
The Company reported investing activities totalling $4,051,899
and $14,489,279 respectively during the third quarter and the first
nine months of 2008, compared to $691,376 and $1,369,899 for the
same periods in 2007. The investing activities include acquisitions
of capital assets and increases of deferred charges, which are
mainly comprised of capitalized pre-operating expenses. The
increase in investing activities during the quarter is attributable
to the commencement, in April 2008, of the network construction
activities, comprised mainly of (i) direct labour costs and a
portion of the overhead expenditures incurred during the
construction; (ii) acquisitions of network materials and
components; (iii) purchase of subscriber terminals such as decoders
and cable modems; and (iv) acquisitions of construction vehicles
and equipments required to deploy cables and optical fibre. As of
September 30, 2008, the Company had deployed approximately 110 km
of network reaching a potential of some 10,000 homes in Port,
Possession and Saint-Paul communes.
The operating and investing activities were partially financed
by a net cash inflow of $2,069,303 during the third quarter as a
result of a $2,100,140 drawdown on the bridge loan, counterbalanced
by the monthly repayments of the obligation under capital lease.
Comparatively, cash receipts of $18,966,318 in 2007 were generated
by the Company's initial public offering.
The net utilisations of cash and cash equivalents, taking into
account the impact of differences in exchange rates from the
conversion of the self-sustaining subsidiary s accounts, amounted
to $2,109,073 and $11,645,993 respectively during the third quarter
and the first nine months of 2008.
EFFECT OF THE EXCHANGE RATE
The Euro is the primary functional currency of the Company's
business operations, defined as the main economic environment in
which the Company generates and expends cash. Consequently, the
Company is exposed to the risk related to the exchange rate
fluctuations, mainly the fluctuation of the value of the Euro
compared to the Canadian dollar. This risk is actually reduced by
the fact that the Company pays an important part of its capital
expenditures in Canadian dollars and maintains cash in Euros in
order to pay Euro-denominated expenses.
All assets and liabilities of the self-sustained subsidiary,
Intercable Reunion S.A.S, have been converted into Canadian dollars
using the exchange rate in effect as of September 30, 2008, i.e.
$1.5001 Canadian dollars for 1.00 Euro. The average exchange rate
used during the first nine months of 2008 to convert into Canadian
dollars the subsidiary s revenues and expenses was $1.5502 for 1.00
Euro.
Unrealized gains and losses arising from the currency
translation of the self-sustaining subsidiary s accounts are not
tax affected and are included in the accumulated other
comprehensive income presented as a separate item of shareholders
equity. During the third quarter of 2008, the Company recorded an
unrealized foreign exchange loss of $1,058,363 from the translation
of the net investment in the subsidiary, attributable to the
depreciation of approximately 6% of the Euro against the Canadian
dollar during that period. As of September 30, 2008, the cumulative
balance of the unrealized foreign exchange loss stemming from the
translation of the net investment in the subsidiary was $107,553,
compared to an unrealized foreign exchange loss of $446,279 as of
December 31, 2007. The variation is explained mainly by an
appreciation of the Euro against the Canadian dollar during that
period.
Adjustment and reclassification of certain items in the
financial statements
In order to comply with the Company's accounting policies,
certain items of the balance sheet for the fiscal year ended
December 31, 2007 have been adjusted to capitalize as capital
assets certain expenditures related to the network design and
construction. These expenditures had been previously capitalized as
deferred charges in the balance sheet. The impact of these
adjustments mainly resulted in an increase of the capital assets
and a reduction of the deferred charges on the balance sheet, and
had no impact on the Company's cash and cash equivalents or its
operating results. Furthermore, certain expenses incurred during
the first and second quarters of 2008 were reclassified in order to
comply with the presentation of the third quarter of 2008.
Shareholders equity
The net proceeds from the Company's initial public offering on
April 4, 2007 amounted to $18,898,442 after deducting the direct
expenses incurred for this financing.
At the initial public offering, the Company issued 24,850,002
warrants with an exercise price of $1.50 per share until the expiry
date of April 4, 2010. The Company also granted 1,925,000 broker
warrants as compensation to Desjardins Securities Inc. and Dundee
Securities Corporation, acting as agents in that public offering.
Each warrant enables its holder to purchase one share at the price
of $1.50 until the expiry date of April 4, 2010. During the quarter
ended September 30, 2008, no warrants were exercised.
As of September 30, 2008, 26,775,002 warrants were outstanding.
If all warrants were exercised before their maturity on April 4,
2010, the Company could increase its equity and liquidity by
$40,162,503.
The Company offers a stock option plan to its officers,
directors, key employees and consultants. A total of 2,485,000
common shares were reserved under this plan. During the fiscal year
ended December 31, 2007, 1,140,000 options were granted at an
exercise price of $2.50. Of this number, 855,000 were granted to
officers and directors and 285,000 to employees. No option was
granted, exercised or cancelled during the quarter ended September
30, 2008.
The Company's shareholders have also agreed to adopt a
share-based compensation plan for its officers, directors, key
employees and consultants. The total number of common shares
reserved under this plan cannot exceed the lesser of 1,000,000
shares or a total of 2,485,000 shares including any other
outstanding security in connection with any share-based
compensation plan offered by the Company.
The Company is authorized to issue an unlimited number of common
shares of no par value and an unlimited number of participating,
non-voting preferred shares of no par value that could be issued in
series. As of September 30, 2008, 24,850,002 common shares were
outstanding.
DE-TAXATION PROGRAM
On November 8, 2007, the Company filed a de-taxation request
with the Direction Generale des Impots (DGI), under which the
Company could expect to realize, under certain conditions,
important savings with regards to the construction costs of the
project. These conditions include, among others, securing long-term
financing on terms acceptable by the DGI as well as the favourable
outcome of the dispute opposing the Company to France Telecom.
Consequently, the Company cannot currently determine with certainty
that it will be able to benefit from the savings with regard to the
de-taxation program. If the DGI approves the eligibility of the
project, the Company estimates that the value of the potential
savings could reach between $25 million and $30 million over the
planned duration of the project construction.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
Occasionally, we may make certain forward-looking statements
within the meaning of certain securities laws, including the "safe
harbour" provisions of the Securities Act (Ontario). We may make
forward-looking statements in the present document, in other
documents filed with Canadian regulatory authorities, in reports to
shareholders as well as in a number of other communications.
These forward-looking statements include, among others,
statements with respect to our objectives, goals and strategies to
achieve those objectives, as well as statements with respect to our
beliefs, plans, expectations, anticipations, estimates and
intentions. The words "may", "will", "could", "should", "would",
"suspect", "outlook", "believe", "plan", "anticipate", "estimate",
"expect", "intend", "forecast", "objective" and "continue" (or the
negative thereof), and words and expressions of similar
terminology, are intended to identify forward-looking
statements.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, both general and specific, which
give rise to the possibility that predictions, forecasts,
projections and other forward-looking statements will not be
achieved.
We caution readers not to place undue reliance on these
statements as a number of important factors, many of which are
beyond our control, could cause our actual results to differ
materially from the beliefs, plans, objectives, expectations,
anticipations, estimates and intentions expressed in such
forward-looking statements.
These factors include, but are not limited to:
- Risks relating to credit, market, liquidity, financing and
operations, notably our ability to conclude a mid to long-term
financing;
- Our uncertain ability to access additional funds until the
closing of a mid or long-term financing;
- Our uncertain ability to repay the bridge loan maturing on
January 31, 2009;
- Resolution of the conflict with France Telecom regarding the
utilization of their infrastructures;
- Uncertainty related to the eligibility to the de-taxation
program;
- Relative strength of the Canadian, European and Reunion
economies, where the Company operates;
- Fluctuations of the Canadian dollar against other currencies,
and more specifically the Euro (euros);
- Effect of changes in interest rates;
- Competition in the markets serviced by the Company;
- Our ability to successfully realign our Company, our resources
and our processes;
- Availability, delivery delays and cost of raw materials;
- Operational risks and risks related to access to
infrastructures, as well as other factors that may influence future
results including, but not limited to, bundling and launching new
products and services at the appropriate time, changes to fiscal
legislation, technological evolution and regulatory changes;
- Possible impact on our activities of public health
emergencies, uncontrollable events such as tsunamis, volcanic
eruptions, tropical storms, international conflicts and other
unpredictable events;
- The extent to which we are able to predict and manage the
risks inherent to the above-mentioned factors.
We caution that the foregoing list of important factors that may
affect future results is not exhaustive. When reviewing our
forward-looking statements, investors and others should carefully
consider the foregoing factors and other uncertainties and
potential events. We do not commit ourselves into any update of any
forward-looking statements, whether written or oral, that may be
made from time to time by us or on our behalf, unless otherwise
prescribed by the regulatory authorities. Any forward-looking
statements made in this document are based on current expectations
and information available as of November 27, 2008.
About Intercable ICH
ICH is a Canadian telecommunications company that builds and
operates a very high-speed network in the Reunion Island, a French
overseas department. This international broadband telecommunication
business opportunity is perfectly aligned with ICH's strategy,
which consists in focusing on underserved telecommunication and
cable markets. To achieve its objective, ICH is implementing its
own broadband network using cutting-edge technology, which it
operates in order to offer television services (basic, premium and
on-demand), high-speed Internet services and quality telephone
services. ICH targets markets where (i) cable communication service
is limited or non-existent, (ii) cables can be installed in aerial
or within existing underground ducts and (iii) the political
environment is stable.
This press release contains forward-looking statements that are
subject to known and unknown risks and uncertainties that could
cause actual results to vary materially from targeted results. Such
risks and uncertainties include those described in Intercable's
prospectus dated March 23, 2007 or in the filings made by
Intercable from time to time with securities regulators. Intercable
undertakes no obligation to publicly release the result of any
revision of these forward-looking statements to reflect events or
circumstances after the date they are made or to reflect the
occurrence of unanticipated events.
The TSX Venture Exchange has not reviewed this release and
therefore does not accept responsibility for its adequacy or
accuracy.
Contacts: Intercable ICH Inc. Guy Laflamme President and Chief
Executive Officer 450-582-7953 guylaflamme@intercable.ca Intercable
ICH Inc. Serge Dupuis Chief Financial Officer 514 904-0163
sergedupuis@intercable.ca www.intercable.ca
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