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YANGAROO Announces Sweeping Plan to Reduce Debt, Consolidate Shares, and Raise Capital to Expand; Current Debt to be amended and reduced with committed support of majority of debt holders

YANGAROO Announces Sweeping Plan to Reduce Debt, Consolidate Shares, and Raise Capital to Expand; Current Debt to be amended and reduced with committed support of majority of debt holders


TORONTO, CANADA - YANGAROO Inc. (TSX-V: YOO, OTC: YOOIF), the industry's leading secure digital media management company (the "Company"), is pleased to announce its strategic plan, which includes raising capital to accelerate growth, reducing the debt to deleverage the balance sheet, improving the terms of the residual debt, and proceeding with the previously approved share consolidation.

"We have undertaken an exhaustive process to assess the multiple scenarios for YANGAROO's financial structure going forward," said Gary Moss, President and CEO. "We have heard consistently, from both current and prospective stakeholders, that our balance sheet is an impediment to capitalizing on growth opportunities, as well as maximizing value for shareholders. We have consulted with many independent advisors and the consensus has been universal - raise sufficient working capital to exploit growth opportunities, reduce debt levels and reduce the number of outstanding shares. The process to achieve this is complicated, but achieves the objectives set. The process requires the support of our shareholders and debenture holders and we are very pleased that preliminary discussions with many of these stakeholders have been positive. Based on these discussions, we expect to receive the necessary approvals at our upcoming AGM. I want to thank everyone who has assisted us in this process so far," added Moss. "We look forward to focusing on growing YANGAROO, with a capital structure and balance sheet that will maximize value creation for all stakeholders."

The Board of Directors has authorized the following plan and each transaction thereunder as described in detail below:

Subject to regulatory approvals, a brokered private placement (the "Private Placement") to raise a minimum of $750,000 (the "Minimum Amount") and up to $1,250,000 through the issuance of a minimum of 3,000,000 and up to 5,000,000 subscription receipts ("Subscription Receipts") at a price of $0.25, based on the post-consolidation share price, per Subscription Receipt (the "Subscription Price").

Each Subscription Receipt represents the right of the holder to receive, without payment of additional consideration or further action on the part of the holder, on the Conversion Date (as defined below) one common share of the Company (each a "Common Share") and one warrant (each a "Warrant") of the Company upon and subject to the satisfaction of the Release Conditions (as defined below). Each Warrant will entitle the subscriber, upon exercise, to purchase one Common Share during a period of thirty-six (36) months (the "Warrant Exercise Period") following the Conversion Date (the Warrant Expiry Date"), at a price of $0.25 within the first year of the Warrant Exercise Period and at a price of $0.35 within the second and third years of the Warrant Exercise Period.

The Private Placement closing date is anticipated to be that date which is the later of: a) the date upon which the Minimum Amount is reached; or b) July 23rd, 2013.

Concurrently and continuing following the closing of the Private Placement, the Company shall undergo certain transactions as described herein (the completion of which shall together be referred to collectively as the "Release Conditions", each a "Release Condition", and the date upon which the last such transaction is completed being the "Conversion Date").

The first Release Condition is a share consolidation (the "Share Consolidation") proposed by the Company on the same terms as had been previously approved by the shareholders of the Company at its Annual and Special Meeting on January 11, 2012. The Share Consolidation is subject to TSX Venture Exchange approval as well as re-approval of its shareholders at the Annual and Special Meeting of the Shareholders, scheduled to take place on August 15th, 2013.

The Company currently has 163,244,771 Common Shares outstanding and proposes to consolidate its Common Shares such that one new Common Share would be issued for every ten Common Shares outstanding on the effective date of the Share Consolidation.

Following the Share Consolidation on a ten for one basis, the Company would have approximately 16,324,477 Common Shares outstanding. The change in the number of issued and outstanding Common Shares that would result from the Share Consolidation would not materially affect any shareholder's percentage ownership in the Company, although such ownership would be represented by a smaller number of Common Shares.

Letters of transmittal with respect to the Share Consolidation will be mailed out to all registered shareholders together with the Notice and Information Circular prior to the Annual and Special Meeting of the Shareholders. All registered shareholders of the Company will be required to send their certificates representing pre-consolidation Common Shares with a properly executed letter of transmittal to the Company's transfer agent, Equity Financial Trust Company, in accordance with the instructions provided in the letter of transmittal.

The second Release Condition is a shares for debt transaction (the "Shares for Debt Transaction"), which the Company proposes to effect with respect to all or a portion, but not less than 40%, of the outstanding indebtedness of the Company (the "Debt"), and following the Share Consolidation. The Company intends to enter into a Shares for Debt Agreement with its current debenture holders (collectively the "Debenture Holders"), whereby the Company will issue one (1) Common Share in exchange for each $0.25 of the Debt. No warrants will be issued with respect to the Shares for Debt Transaction.

The Shares for Debt Transaction is subject to approval by the TSX Venture Exchange. As the Shares for Debt Transaction will not result in the creation of a new control person, disinterested shareholder approval is not required.

For the avoidance of doubt, in order for this second Release Condition to have been met, 40% or greater of the Debt must be converted into Common Shares in accordance the pending Shares for Debt Agreement(s).

It is in the opinion of the Board of Directors that the Share Consolidation and the Shares for Debt Transaction are necessary conditions precedent to the Private Placement. Once both the Share Consolidation and the Shares for Debt Transaction have been completed, the Release Conditions will have been met, and the day upon which the latter of the two (2) Release Conditions is completed shall be the Conversion Date.

Subscription proceeds will be held in escrow by Equity Financial Trust Company (the "Escrow Receipt Agent") until the Conversion Date. On or about the Conversion Date, each Subscription Receipt shall be released from escrow to the subscribers and shall automatically convert to Common Shares and Warrants and the subscription proceeds shall be released from escrow to the Company.

In connection with the Private Placement, the Corporation shall pay to Fraser Mackenzie Limited ("Fraser") a commission comprised of (i) a cash fee equal to eight percent (8%) of the gross subscription proceeds, and (ii) broker warrants (the "Broker Warrants") entitling Fraser, upon exercise of the Broker Warrants, to purchase, in aggregate, Common Shares equal to eight percent (8%) of the number of Common Shares sold pursuant to the Private Placement. Such Broker Warrants shall be exercisable at a price of $0.25 per Common Share until the Warrant Expiry Date.

In compliance with applicable securities laws and the rules of the TSX Venture Exchange, (i) the Common Shares, the Warrants and the Broker Warrants will be subject to a hold period of four (4) months following the issuance thereof, and (ii) the Common Shares underlying the Warrants and the Broker Warrants will be subject to a four (4) month hold period following their issuance upon exercise thereof.

The Private Placement and any modifications thereto are subject to compliance with applicable securities laws and to receipt of the approval of the TSX Venture Exchange. The Subscription Proceeds from the Private Placement shall be used as working capital, subject to payment of professional fees associated herewith.

The Company reserves the right to increase the size of the Private Placement or to modify the type, nature and/or price of the subscription receipts for any reason.

In addition to the reduction of debt, the Company proposes to amend the terms of the residual debt. Prior to the Shares for Debt Transaction, the Company will offer to all Debenture Holders the option to amend their debenture agreements (the "Debenture Agreements") in return for additional warrants (the "Bonus Warrants"). Subject to TSX Venture Exchange approval, the Company will offer a one-half of one Warrant for every $1.00 of Debt to the Debenture Holders as consideration for amending the Debenture Agreements to reflect more favourable terms, as are described below. Each whole Warrant will be exercisable for a period of thirty-six (36) months from the date of issuance at a price equal to $0.25.

There are currently three (3) separate Debenture Agreements. The amendment of each of these three (3) classes of Debt will be subject to the approval of 66 2/3 of the Debenture Holders of each class, as well as the TSX Venture Exchange. A letter will be sent to each Debenture Holder outlining the offer to amend as well as describing those transactions described herein, including the Private Placement, the Share Consolidation and the Shares for Debt Transaction. Each Debenture Holder will be asked to consent, and will be offered the opportunity to participate in the Private Placement, as is required under the Debenture Agreements.

If approved, the Company intends to amend the Debenture Agreements by reducing the interest rate from fourteen percent (14%) to ten percent (10%), extending the term by an additional twelve (12) months to March 28, 2016, and by waiving so called "Cash Sweeps", as defined in the Debenture Agreements. Currently, pursuant to the Cash Sweeps, the Company is required to pay 25% of each equity, debt or equity-like financing, including the Private Placement, to the Debenture Holders. Upon amendment, which the Company proposes to have occur prior to the Conversion Date, such requirement would be eliminated in connection with the Private Placement and all future debt, equity, and equity-like financings.

In addition to the above transactions, the Board of Directors is also pleased to announce that it proposes to amend its "fixed" stock option plan (the "Old Plan") to change it to a 10% "rolling" plan (the "Amended Plan"), following the Share Consolidation.

Under the Old Plan, the Company had reserved a fixed number of 11,804,761 Common Shares for the grant of stock options. Under the Amended Plan, the Company would be entitled to grant stock options to purchase up to 10% of the issued capital of the Company at the time of an applicable option grant.

Based on the current issued capital of the Company and considering the Share Consolidation, the Company would initially have approximately 1,632,447 stock options available for grant, which number includes the 853,633 options, post-consolidation (8,536,333 pre-consolidation), that are currently issued and outstanding. The number of stock options available for grant will increase on or about the Conversion Date upon the release of the Common Shares from escrow.

The Amended Plan is subject to TSX Venture Exchange approval, as well as the approval of the Company's shareholders at the upcoming Annual and Special Meeting of the Shareholders to be held on August 15th, 2013. A copy of the Amended Plan will be available for examination at such meeting.

The Company will also present to the shareholders for ratification at the Company's Annual and Special Meeting the Shareholder Rights Plan (the "Rights Plan") that was adopted by the Company on and effective as of April 8th, 2013, following the expiration of the previous Shareholders Rights Plan (the "Previous Rights Plan"). The Rights Plan is substantially similar to the Previous Rights Plan, ratified by the shareholders in June 2009. The Company has not received a take-over bid, and a copy of the Rights Plan is available on SEDAR. The Company had received TSX Venture Exchange approval at the time of adoption, which shall be valid until the earlier of: a) shareholder approval; or b) October 8th, 2013, being the expiration of 6 months following the date of the Rights Plan.


YANGAROO is a company dedicated to digital media management. YANGAROO's patented Digital Media Distribution System (DMDS) is a leading secure B2B digital cloud based solution focused on the music and advertising industries. The DMDS solution provides more accountable, effective, and far less costly digital management of broadcast quality media via the Internet. It replaces the physical, satellite and closed network distribution and management of audio and video content, for music, music videos, and advertising to television, radio, media, retailers, and other authorized recipients. The YANGAROO Awards platform is now the industry standard and powers most of North America's major awards shows.

YANGAROO has offices in Toronto, New York, Los Angeles, and Dallas. YANGAROO trades on the TSX Venture Exchange (TSX-V) under the symbol YOO and in the U.S. under OTCBB: YOOIF. For further information, please contact Gary Moss at 416-534-0607 ext.111 or visit


The statements contained in this release that are not purely historical are forward-looking statements and are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Copyright (c) 2013 TheNewswire - All rights reserved.

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