News
NEWLOOK SUBSIDIARY COMPLETES EXIT OF PREPAID CARD BUSINESS
TORONTO, ONTARIO, October 29, 2008 - Newlook Industries Corp. (TSX Venture Exchange: NLI), ("Newlook" or "the Company") announced today that its majority owned subsidiary Wireless Age Communications, Inc. (OTCBB:WLSA), ("Wireless Age") has agreed on the terms and conditions of exiting the prepaid card distribution business.
As previously announced by Wireless Age in a press release on August 25, 2008, Wireless Age and its Saskatchewan cellular network services provider (the "Network Services Provider") mutually agreed to terminate the Prepaid Cellular Service Card Distribution Agreement (the "Prepaid Agreement") effective September 30, 2008. Historically, Wireless Age earned less than 3% profit margin under the Prepaid Agreement. With the recent introduction of a cardless or ePin service, the profit margin had become negligible. Management believed that continuing to provide the service for the Network Services Provider in light of falling margins and rising costs made little economic sense.
As of September 30, 2008, Wireless Age owed its Network Services Provider approximately $6.4 million for prepaid card purchases and the parties agreed to repay this debt over a one year period beginning November 30, 2008. As of October 23, 2008, the Network Services Provider owed Wireless Age approximately $1.7 million. Based on current level of operations, the Network Services Provider will pay Wireless Age approximately $7-8 million for adding new customers and servicing existing customers on their cellular network.
The Network Services Provider and Wireless Age agreed that they will retain all payments to Wireless Age until the amount payable equals the amount of the loans obtained by the Company and Wireless Age from its senior secured asset based lender. As of October 23, 2008, the amount of these loans was approximately $2.7 million. Once the amounts are equal, the Network Services Provider will discharge the loans on behalf of the Company and Wireless Age, and will receive a first charge security interest in certain of Wireless Age’s assets.
The Company and Wireless Age also entered into a Cross Guarantee and Indemnification Agreement under which the Company agreed to guarantee and indemnify Wireless Age for interest or principal amounts effectively paid by Wireless Age to its senior secured asset based lender on behalf of the Company. The Company also agreed to pay interest to Wireless Age at the same rate of interest as specified under the loans. As part of this agreement, the Company is obligated to provide Wireless Age the same security interest in its assets which was previously provided by the Company to the asset based lender. However, Wireless Age agreed not to demand repayment of the amounts owed by the Company to Wireless Age and Wireless Age agreed to release its first charge security interest in the Company’s assets in order for it to pledge a first charge security interest to others in any potential financing transaction for the purpose of repaying amounts owed by the Company to Wireless Age.
For a more detailed explanation of these agreements we refer interested parties to the Company’s Material Change Report filed today on SEDAR and posted on the Company’s website.
John G. Simmonds, Newlook CEO stated: "In essence we took this opportunity, with the support of one of our most important business partners, to refinance the ongoing business of Wireless Age on extremely favourable terms. Under this agreement we have the ability, subject to meeting certain payment dates, to pay zero interest. It also allows Wireless Age a soft landing from the exit of a line business we viewed as no longer in its best interests. We plan to refocus management’s efforts on more profitable components of our continuing operations."
About Newlook Industries Corp.
Newlook Industries Corp., headquartered in Toronto, Ontario is a publicly traded company listed on the TSX Venture Exchange. For more information please call (416) 477-5656 or refer to www.sedar.com.
The management of the company, who take full responsibility for its content, prepared this press release. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. This press release contains forward-looking statements relating to future events and results that are based on Newlook's current expectations. These statements involve risks and uncertainties including, without limitation, Newlook's ability to successfully develop and market its products, consumer acceptance of such products, competitive pressures relating to price reductions, new product introductions by third parties, technological innovations, and overall market conditions. Consequently, actual events and results in future periods may differ materially from those currently expected.
John G. Simmonds
Chief Executive Officer
Newlook Industries Corp.
Telephone: (416) 477-5656 x301
