Exhibit 99.1 |
FOR IMMEDIATE RELEASE |
eLEC Communications Secures $4 Million Financing |
WHITE PLAINS, N.Y. – October 10, 2007 – eLEC Communications Corp. |
(OTCBB:ELEC), a provider of wholesale IP-based communications services, today |
announced that it has received gross proceeds of $4 million from the sale of its secured |
term notes to two investment funds. The proceeds of the sale will be used primarily to |
support the growth of the voice-over-broadband wholesale services provided by its |
wholly owned subsidiary, VoX Communications Corp. |
“This financing is a significant recapitalization of our company and is designed to |
provide us with the cash resources necessary to fund our company until we are operating |
on a profitable basis,” said Paul Riss, eLEC’s CEO. “We are pleased that our investors |
have provided us with this additional cash and restructured our existing term notes so that |
we have the financial resources to succeed. While other digital voice companies have |
ceased operations, we have been able to keep our fixed network costs and per-subscriber |
marketing costs low because of our award-winning, Linux-based technology and our |
wholesale approach to the marketplace that does not require us to directly target the |
individual consumer. We believe we have a powerful business model that works and we |
are very pleased that two institutional investors have fully-funded our business plan.” |
Under the terms of the financing, the first 24 months require no principal payments on the |
secured term notes, and the first 12 months of interest payments have been deposited into |
a restricted cash account. The notes bear interest at a rate per annum equal to the Wall |
Street Journal Prime Rate plus 2%. eLEC will file today a Current Report on Form 8-K |
to disseminate more detailed terms of the transaction. |
“We believe the success of our wholesale digital voice product has now attracted |
significant financial partners who are stepping up and taking ownership in addition to |
providing the growth capital that we currently believe we need to reach profitability,” |
continued Riss. “Based upon new warrants that have been issued, which have no |
registration requirements, on a fully-diluted basis, our plan carves out 40% of eLEC for |
our current shareholders and 60% for our new financial partners, assuming our operating |
targets are met. We anticipate that the cash that has been infused onto our balance sheet |
will be noteworthy to some very large potential customers, allow VoX to continue to |
position itself as a market leader and provide added momentum for our success.” |
About eLEC Communications |
eLEC Communications Corp., through its wholly owned subsidiary, VoX |
Communications Corp., provides an integrated suite of IP-based communications |
services and offers wholesale broadband voice, origination and termination services for |
cable operators, carriers, ISPs, CLECs, resellers and other wireless and wireline |
operators, as well as enhanced VoIP telephone service to the small business and |
residential marketplace. For more information, visitwww.voxcorp.netand |
www.pervasip.com. |
This release contains forward-looking statements that involve risks and uncertainties. eLEC’s actual results |
may differ materially from the results discussed in the forward-looking statements. Factors that might |
cause such a difference include, among others, certain risks and uncertainties over which the company may |
have no control. For further discussion of such risks and uncertainties, which could cause actual results to |
differ from those contained in the forward-looking statements, see the discussions contained in eLEC’s |
Annual Report on Form 10-K for the year ended November 30, 2006, and any subsequent SEC filings. |
# # # |
For more information, please contact: | ||
Paul Riss, CEO | Ron Harden, Executive Vice President | |
eLEC Communications Corp. | VoX Communications Corp. | |
914-682-0214 | 321-282-0820 | |
phriss@elec.net | rharden@voxcorp.net |