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.
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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
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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
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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)
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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
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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
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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)
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(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)
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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.
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