Cricket Media proceeding with proposed debt restructuring

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

WASHINGTON, Dec. 21, 2015 /CNW/ - Cricket Media Group Ltd. (TSXV:CKT) ("Cricket Media" or the "Company") announces that it is proceeding with the previously announced restructuring of the Company's 6.5% secured convertible debentures in the aggregate principal amount of C$11,999,000 (the "Junior Indebtedness") issued pursuant to a trust indenture dated October 19, 2012 and the Company's 10% secured convertible debentures in the aggregate principal amount of C$10,000,000 (the "Senior Indebtedness") issued pursuant to a trust indenture dated March 20, 2013, all as more fully described below (the "Debt Restructuring"). Subject to the receipt of final formal approvals from holders of the requisite amounts of Junior Indebtedness and Senior Indebtedness, the Company expects to complete the Debt Restructuring within approximately 2 weeks.

The Debt Restructuring requires the approval of holders of 66 2/3% of the aggregate principal amount of Junior Indebtedness and holders of 66 2/3% of the aggregate principal amount of Senior Indebtedness. As previously announced, holders of greater than 90% of the principal amount of each of the Junior Indebtedness and the Senior Indebtedness are supportive of the Debt Restructuring on the terms described below. The implementation of the Debt Restructuring has been conditionally accepted by the TSX Venture Exchange ("TSXV"), subject to the Debt Restructuring being completed by January 21, 2016.

The proposed Debt Restructuring includes the following principal terms:

Treatment of Junior Indebtedness and Senior Indebtedness

• The Junior Indebtedness and the Senior Indebtedness will be consolidated into a single class of U.S. dollar senior indebtedness ("New Senior Indebtedness") evidenced by secured convertible debentures ("New Secured Debentures") in the aggregate principal amount of approximately US$14.1 million, having principal terms as more fully discussed below.
• Current holders of Junior Indebtedness will receive New Senior Indebtedness in a principal amount equal to US$566 for every CDN$1,000 of Junior Indebtedness held.
• Current holders of Senior Indebtedness will receive New Senior Indebtedness in a principal amount equal to US$705 for every CDN$1,000 of Senior Indebtedness held.

Principal Terms of New Senior Indebtedness

• The New Secured Debentures will mature four (4) years following the date of closing of the Debt Restructuring and will bear interest at a rate of 5% per annum, commencing as of May 1, 2015 and payable annually in arrears on April 30 of each year. Subject to the prior approval of the TSXV, in respect of any payment of interest on the New Senior Debentures prior to the second anniversary of the issue date thereof, the Company will be entitled to satisfy such interest obligation by issuing, at a holder's option, either: (i) voting common shares or restricted voting common shares of the Company at a price equal to the weighted average closing price of the voting common shares of the Company on the TSXV for the ten (10) trading days preceding the date of settlement ("Market Price"); or (ii) preferred shares of the Company ("Series A Preferred Shares") to be created in connection with the closing of the Debt Restructuring having a deemed issue price of US$0.82 per share (the "Series A Preferred Share Issue Price").
• The New Senior Indebtedness will be denominated in U.S. dollars and the New Secured Debentures will not be listed for trading on the TSXV or any other public marketplace.
• The New Secured Debentures will be convertible into voting common shares or restricted voting common shares of the Company, at the option of the holder, at a conversion price equal to US$3.33 per share.
• The Company will be entitled to satisfy payment obligations under bank indebtedness, subject to a maximum payment of principal of US$400,000 per fiscal year, provided that until the Company raises a minimum of US$3,000,000 pursuant to one or more additional financings, the Company shall be entitled to repay an aggregate of US$180,000 of principal.
• The Company will be permitted to dissolve or wind-up dormant or inactive subsidiaries and dispose of certain non-core or immaterial portions of its business at fair market value.
• Annual mandatory prepayment of principal shall be made on the New Secured Debentures to holders on a pro rata basis, in an amount equal to 20% of the free cash flow of the Company in respect of such fiscal year.
• The indenture governing the New Senior Indebtedness will include covenants of the Company in respect of cash flow.
• The Company will be prohibited from incurring additional indebtedness ranking senior to or pari passu with the New Senior Indebtedness (provided, however, that the Company has previously issued 5% bridge senior trance debentures in the principal amount of US$4,000,000 (the "Senior Bridge") ranking senior to the New Senior Indebtedness).

Conversion of Indebtedness to Preferred Shares

• Immediately upon the completion of the Debt Restructuring, New Senior Indebtedness held by affiliates of two members of the board of directors of the Company (the "ZG Entities) in the aggregate principal amount of US$2,625,000 will convert into an aggregate of 3,414,634 Series A Preferred Shares. In addition, subject to the approval of the TSXV, the ZG entities will have the option to convert all or part of the remaining New Senior Indebtedness held by them into Series A Preferred Shares at the Series A Preferred Share Issue Price.
• In the event that the Company raises aggregate gross proceeds of a minimum of US$5 million pursuant to an equity financing of preferred shares (the "Financing"): (i) all New Senior Indebtedness held by the ZG Entities will convert into the preferred shares issued pursuant to the Financing; and (ii) all outstanding bridge loan indebtedness of the Company (including the Senior Bridge and convertible bridge indebtedness ranking junior to the New Senior Indebtedness) will convert into, at the option of the holder, the preferred shares issued pursuant to the Financing, voting common shares or restricted voting common shares, or a combination thereof, at the holders option.

Cricket Media believes the Debt Restructuring is of benefit to all stakeholders for the following reasons:

• The Company's current balance sheet is a significant impediment to capitalizing on growth opportunities and strategic initiatives and the Debt Restructuring is expected to provide financial flexibility for the Company to further focus on enhancing long-term value for its stakeholders.
• Current holders of Junior Indebtedness will now rank pari passu with current holders of Senior Indebtedness since such indebtedness will be consolidated into a single debt instrument.
• Subject to the security interest in respect of the Senior Bridge and customary permitted encumbrances, the New Senior Indebtedness will have a first ranking priority security interest in the Company's assets.
• Upon the Company achieving certain financing milestones: (i) New Senior Indebtedness held by the ZG Entities will convert into preferred shares, thereby increasing each other holder's percentage holding of the New Senior Indebtedness; and (ii) all outstanding Senior Bridge indebtedness will convert into preferred shares thereby elevating the priority of the security interest of the New Senior Indebtedness.
• Absent the Debt Restructuring, the Company may have more difficulty raising additional capital and in pursuing its operating strategy.   

Certain of the transactions described in this news release constitute or will constitute "related party transactions" within the meaning of Multilateral Instrument 61-101 Protection of Minority Shareholders in Special Transactions ("MI 61-101"). For these transactions the Company intends to rely on the exemption from the formal valuation requirements of MI 61-101 contained in section 5.5(b) of MI 61-101 on the basis that no securities of the Company are listed on a specified market set out in such section and the Company intends to rely on the exemption from the minority shareholder approval requirements of MI 61-101 contained in Section 5.7(1)(e) of MI 61-101 on the basis of meeting the financial hardship exemption requirements.

About Cricket Media

Cricket Media (TSXV: CKT) is an education media company that provides award-winning content on a safe and secure learning network for children, families and teachers across the world. Cricket Media's 11 popular media brands for toddlers to teens include Babybug, Ladybug, Cricket® and Cobblestone®. The Company's innovative web-based K12 tools for school and home include the ePals community and virtual classroom for global collaboration as well as In2Books®, a Common Core eMentoring program that builds reading, writing and critical thinking skills. Cricket Media serves approximately one million classrooms and millions of teachers, students and parents in over 200 countries and territories through its platform and NeuPals, its joint venture with China's leading IT services company Neusoft. Cricket Media also licenses its content and platform to top publishing and educational companies worldwide. For more information, please visit www.cricketmedia.com.  

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward Looking Statements

This news release contains statements that may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. Readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by the Company and described in the forward-looking statements contained in this press release. No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do so, what benefits the Company will derive therefrom. The forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

SOURCE Cricket Media Inc.

Aric Holsinger, Chief Financial Officer, Cricket Media, Phone: [phone], [email protected]; Cory Pala, Investor Relations, E.vestor Communication Inc., Phone: [phone], [email protected]