Equipment

WaveRider Restructures

Certainly not the first fixed wireless equipment maker to experience money woes during these trying times, WaveRider takes fast action to rebuild its business while securing bridge financing, but it's still forced to cut staff.

by ISP-Planet Staff [September 25, 2001]

Toronto-based WaveRider Communications Inc. felt the pain of our continued economic instability this week. The ninth largest point-to-point fixed wireless equipment maker in the world announced that it's begun restructuring and refinancing.

Specifics of the plan include arranging for new short term financing, initiating a shareholders rights offering, and sweeping staff reductions—effective immediately. In order to further preserve cash during its restructuring phase, WaveRider laid off approximately 50 percent of its staff in North America and Australia Monday. In addition, executive staff members have agreed to waive compensation rights, while other key management personnel have agreed to a 25 percent pay reduction plan until the shareholder rights offerings are completed.

WaveRider plans to focus on sustaining its engineering and support services to clients in its most active markets, which includes parts of Africa, Asia, Australia, Bermuda, Canada, China and the United States. Engineering services will be maintained through WaveRider's dedicated service staff, as well as through strategic alliances with General Dynamics and Scientech.

With the recent launch of its "last mile solution," the LMS3000, WaveRider has developed a complete product family over the last three years. But, a smaller research and development team will carry out further enhancements of its fixed wireless line up. The planned evolution and expansion of its 2.4 GHz and 900 MHz fixed wireless gear has been put on hold until next year.

Tough choices
Bruce Sinclair, WaveRider president and chief executive officer, said the company had to make some tough choices in order to navigate trying economic conditions.

"With the continued downturn in the financial markets and the slowdown in the North American broadband market affecting our industry especially hard, it is necessary for us to make these very difficult decisions," Sinclair said.

The company has commitments to date for the purchase of more than $500,000 in promissory notes by certain large shareholders, officers and directors of the company as part of WaveRider's planned $1,000,000 total offering. The promissory notes are repayable in one year, bear interest at eight percent plus a premium of 15 percent upon repayment and are secured through a general security interest in the assets of the company. Each purchaser also receives one common share purchase warrant per dollar of notes invested.

Sinclair said that by purchasing the promissory notes and waiving compensation, the company's officers and directors are actively showing their commitment to the WaveRider.

"We are confident that we can overcome these short term financial hurdles, continue to grow the company and achieve profitable operations within the next twelve months," Sinclair said. "As the wireless broadband industry emerges from the current downturn, WaveRider will be well positioned as a global leader."

Additionally, WaveRider has an effective "shelf" registration statement available, which allows for the sale of common shares. The company intends to utilize this registration statement, from time to time, to acquire additional working capital.

WaveRider also announced it is in the process of submitting a filing to the Securities and Exchange Commission and to the securities administrators of Canada relating to the offering to its existing common shareholders of rights to subscribe for up to 14,000,000 units consisting of common shares and warrants. Gruntal & Co., an investment banking and brokerage firm headquartered in New York City will manage the offering.

WaveRider remains a leading wireless information technology company that develops, manufactures and markets products for data communications and wireless Internet networking. WaveRider's products use direct sequence spread spectrum (DSSS) technology operating in license-free 900 MHz and 2.4 GHz frequencies.

—End

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