Espial Announces Private Placement of Units

Espial Announces Private Placement of Units Search By: Investor Relations

Espial a leader in the delivery of on-demand TV software and services, announced today that it intends to complete a brokered private placement (the Offering) of up to 5,714,286 units for gross proceeds of up to $4,000,000.

OTTAWA, Nov. 8, 2013 /CNW/ Espial Group Inc. ( Espial or the Company ), (TSX: ESP), a leader in the delivery of on-demand TV software and services, announced today that it intends to complete a brokered private placement (the Offering ) of up to 5,714,286 units for gross proceeds of up to $4,000,000. Each unit (a Unit ) will be issued at a price of $0.70 per Unit and consist of one common share of the Corporation (the Common Shares ) and one half of one common share purchase warrant (the Warrants ). Each whole Warrant will entitle the holder thereof to acquire one common share of the Company at a price of $0.72 per share for a period of twelve months from the date of issuance. The Warrants contain customary anti-dilution provisions, including adjustments upon the payment of a dividend in Common Shares; subdivision or combination of the Common Shares; or the issuance of rights, options or warrants to all or substantially all holders of the Common Shares. The current number outstanding Common Shares of the Company, without giving effect to the Offering, is 14,106,829 (the Undiluted Issued and Outstanding ). Global Maxfin Capital Inc. will act as exclusive agent (the Agent ) in connection with the Offering.

Closing of the Offering is anticipated to occur on or before November 15, 2013 and is subject to receipt of applicable regulatory approvals, including approval of the Toronto Stock Exchange (the TSX ). The issue price of the Units represents approximately a 2.7% discount on the market price of the Common Shares on the date of a binding agreement, as defined by the TSX. Securities issued will be subject to a hold period, which will expire four months plus one day from the date of closing.

Under Subsection 607(g)(i) of the TSX Company Manual, the Company is required to obtain majority shareholder approval to private placements involving the issuance of greater than 25% of the Company's issued and outstanding Common Shares. In obtaining the written consent of shareholders holding a majority of the Company's common shares, the Company is relying on the TSX exemption set forth in Subsection 604(d) of the TSX Company Manual from the requirement to hold a shareholder meeting.

It is anticipated that the net proceeds of the Offering will be used by the Company for general working capital purposes.

The Offering has been negotiated at arm's length and will not affect control of the Company. In connection with the Offering, it is expected that:

PenderFund Capital Management ( Pender ), which to the knowledge of the Company does not currently hold any Common Shares, will purchase up to 1,797,143 Units, comprised of 1,797,143 Common Shares (which represents up to approximately 12.7% of the Undiluted Issued and Outstanding) and 898,571 Share Purchase Warrants (which, upon exercise, would represent up to approximately 6.4% of the Undiluted Issued and Outstanding). Pender will become a new insider of the Company, as that term is defined in applicable securities laws;

JL Albright Group of Funds, a control person who collectively currently own 2,800,000 Common Shares (which represent 19.9% of the Undiluted Issued and Outstanding) and 823,529 warrants (which, upon exercise, would represent 5.8% of the Undiluted Issued and Outstanding), will purchase up to 571,429 Units, comprised of up to 571,429 Common Shares (which represents up to approximately 4.1% of the Undiluted Issued and Outstanding) and 285,714 Warrants (which, upon exercise, would represent up to 2.0% of the Undiluted Issued and Outstanding);

Difference Capital Funding Inc., who together with its associates, currently own 18.6% of the Undiluted Issued and Outstanding, will purchase up to 142,857 Units, comprised of up to 142,857 Common Shares (which represents up to approximately 1.0% of the Undiluted Issued and Outstanding) and 71,429 Warrants (which, upon exercise, would represent up to 0.5% of the Undiluted Issued and Outstanding); and

Carl Smith, Espial's Chief Financial Officer, will purchase up to 71,429 Units, comprised of up to 71,429 Common Shares (which represents up to approximately 0.5% of the Undiluted Issued and Outstanding) and 35,714 Warrants (which, upon exercise, would represent up to 0.3% of the Undiluted Issued and Outstanding).

Such participation by current Espial insiders may be considered a related party transaction , as defined under Multilateral Instrument 61-101 ( MI 61-101 ). The transaction will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of any units issued to or the consideration paid by such persons will exceed 25% of the Company's market capitalization. A material change report in respect of the transaction was not filed 21 days in advance of the expected closing of the Offering. The shorter period was necessary in order to permit the Company to close the Offering in a timeframe consistent with usual market practice for transactions of this nature.

In connection with the Offering, the Agent will receive cash compensation equalling 7.0% of the gross proceeds raised under the Offering, as well as compensation options entitling the Agent to subscribe for that number of Common Shares that is equal to 7.0% of the total number of Units sold pursuant to the Offering. Subject to regulatory approval, each compensation option will be exercisable for a period of 18 months following the closing of the Offering at an exercise price of $0.72 per Common Share.

The maximum number of Common Shares issuable in

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