Vancouver, BC – Urban Communications Inc. (TSX-V: UBN) announces that, subject to regulatory approval, the Company has signed an agreement with GC Capital Inc. for the investment of $500,000 to fund the capital cost of constructing network extensions from its backbone fibre optic network to connect residential and commercial buildings. These funds will be deployed over the next 4 months and will enable the Company to accelerate its customer acquisition program through the summer and into the fall.
The agreement provides that the parties may increase the investment by an additional $500,000 on the same terms, and by a further $4.0 million on a broader arrangement whereby the investor may become an authorized reseller of Urban’ OTT video product.
“We are very excited to be a part of Urban’s growth now and into the future,” said Gary Chen, president of GC Capital. “It is our intention to invest up to $1M this year and potentially another $4M over the next three years to fund Urban’s capital needs and help roll out Gigabit Internet services across metro Vancouver and Vancouver Island.”
In consideration of the investment the Company agrees to share revenue from the sale of its products and services for a term of up to 11 years on a declining basis over time. The Company will have the ability in certain circumstances to commute the revenue sharing agreement prior to the scheduled termination date.
“Urban is very pleased to be working with Gary Chen and his partners,” said Urban CEO, John Farlinger. “This revenue share deal represents a capital expenditure funding mechanism through which Urban can significantly reduce its need for external capital without introducing substantial shareholder dilution.”
As part of the consideration for this investment, the Company will issue 250,000 bonus warrants to purchase 250,000 common shares of the Company exercisable at a price of $0.20 per warrant share for a period of 3 years from the closing date. The agreement is scheduled to close immediately upon receiving TSX Venture Exchange approval.
ABOUT URBAN COMMUNICATIONS INC.
Urban Communications Inc. (TSX VENTURE: UBN) is a telecommunications company providing a full suite of Internet, voice, video and broadband application products over its 300 km. state-of-the-art carrier grade fibre optic network in Metro Vancouver and Victoria to commercial, residential and public sector customers. Urban has recently launched high-speed Internet service to residential and commercial subscribers on its network at 1,000 Mbps (1 Gbps).
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