TeraGo Announces $14.7 Million Private Placement

/THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT AUTHORIZED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

TORONTO, April 14, 2021 /CNW/ - TeraGo Inc. ("TeraGo" or the "Company") (TSX: TGO) (www.terago.ca), is pleased to announce that it has entered into subscription agreements dated April 14, 2021 (the "Subscription Agreements"), pursuant to which Cymbria Corporation, acting at the direction of its portfolio manager, EdgePoint Investment Group Inc. ("Cymbria") and other certain institutional investors (collectively with Cymbria, the "Purchasers") will subscribe for an aggregate of 934,100 Series A Units, 934,100 Series B Units and 934,100 Series C Units of the Company at a subscription price of $5.25 per Unit, for an aggregate purchase price of $14,712,075, all by way of a private placement (the "Private Placement").

Each Series A Unit is comprised of one common share in the capital of the Company (a "Unit Share") and one-half (½) of one Series A Warrant; each Series B Unit is comprised of one Unit Share and one-half (½) of one Series B Warrant; and each Series C Unit is comprised of one Unit Share and one-half (½) of one Series C Warrant. Each whole Series A Warrant, Series B Warrant or Series C Warrant (each a "Warrant") will entitle the holder to purchase one common share in the capital of the Company (a "Warrant Share") at an exercise price of $7.00, $7.50 and $8.00, respectively, within a period of 24 months, 30 months and 36 months, respectively, from the date of closing of the Private Placement.

The Company intends to use the net proceeds of the Private Placement in support of the Company's proposed launch of 5G fixed wireless services in Canada, to continue testing and trialling 5G technology, upgrade its core network, and support its current networking business. In addition, portions of the net proceeds will be used to repay indebtedness and for general corporate purposes.

"We are excited to announce Cymbria as a strategic financial partner, allowing TeraGo access to capital to invest in our proposed 5G fixed wireless business that further leverages the use of our spectrum assets," said Matthew Gerber, CEO of TeraGo. "The investments they are making with the other institutional investors will facilitate our strategic plan of becoming one of Canada's first 5G fixed wireless operators."

Closing of the Private Placement is expected to occur on or about April 21, 2021 (the "Closing Date") and will be subject to customary closing conditions and required approvals, including approval from the Toronto Stock Exchange to list all the Unit Shares and the Warrant Shares.

Upon closing of the Private Placement, Cymbria's Subscription Agreement will provide it with certain participation rights to future equity offerings of TeraGo to maintain its pro-rata ownership in the common shares ("Common Shares") of the Company (the "Participation Right"). The Participation Right will remain in place for up to three years from the Closing Date so long as Cymbria owns more than 10% of the outstanding common shares of TeraGo. In addition, so long as Cymbria owns more than 10% of the outstanding common shares, it will have the right to specify an individual to be nominated to the board of directors of the Company (the "Board"). Subject to customary background checks, TeraGo has also agreed to appoint a designee director to be put forward by Cymbria to fill the current vacancy on the Board within 30 days of the Closing Date.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Cymbria Early Warning Disclosure

Immediately prior to the Private Placement, Cymbria did not have beneficial ownership of, or control or direction over, any securities of TeraGo. Immediately following the closing of the Private Placement, Cymbria will have ownership of, or control or direction over, (i) 2,418,300 Common Shares, representing approximately 12.33% of the issued and outstanding Common Shares, and (ii) Warrants to purchase 1,209,150 Common Shares.  If Cymbria were to exercise the Warrants, it would have ownership of, or control or direction over 3,627,450 Common Shares, representing approximately 17.26% of the issued and outstanding Common Shares.

Cymbria's acquisition of the Common Shares and Warrants is being made in the ordinary course of business and for investment purposes. Cymbria may acquire or dispose of additional securities of TeraGo or may enter into derivative or other transactions with respect to such securities.

Cymbria will prepare and file a report containing the information required by Form 62-103F1 – Required Disclosure under the Early Warning Requirements in connection with the matters referred to in this press release. Once filed, a copy of this report can be obtained by contacting Sayuri Childs, Chief Compliance Officer at EdgePoint Investment Group Inc. (Cymbria's portfolio manager) at (416) 963-9353. Cymbria's head office is located at 150 Bloor Street West, Suite 500, Toronto, Ontario M5S 2X9. TeraGo's head office is located at 55 Commerce Valley Drive West, Suite 800, Thornhill, Ontario L3T 7V9.

Forward-Looking Statements

This news release includes certain forward-looking statements that are made as of the date hereof. Such forward-looking statements may include, but are not limited to, statements relating to proposed upgrades to the Company's core network, the Company's continued testing and trialing of 5G technology, the Company's launch of 5G fixed wireless services in Canada, the intended use of proceeds of from the Private Placement, becoming one of Canada's first 5G fixed wireless operators, the future exercise of the Warrants and the appointment of a designee director to the Board. All such statements constitute "forward-looking information" as defined under applicable Canadian securities laws. Any statements contained herein that are not statements of historical facts constitute forward-looking information. The forward-looking statements reflect the Company's views with respect to future events and are subject to risks, uncertainties and assumptions, including risks relating to the inability of the Company to complete the Private Placement, the continued availability of 5G equipment that is suitable and will allow the Company to complete its technical and customer trials, the impacts and restrictions caused by the COVID-19 pandemic which may be prolonged and which may further delay technical and customer trials, the results of the technical and customer trials not being satisfactory to TeraGo or any of its technology partners, the economic viability of any potential services that may result from the technical and customer trials, industry competitors who may have superior technology or are quicker to take advantage of 5G technology, the inability of the Company to launch a 5G fixed wireless business, future regulatory decisions that would be unfavourable to the Company and the spectrum licences it currently holds, and those risks set forth in the "Risk Factors" section in the annual MD&A of the Company for the year ended December 31, 2020, which is available on www.sedar.com under the Company's corporate profile. Factors that could cause actual results or events to differ materially include the ability to satisfy conditions of the Private Placement, the failure to receive regulatory approvals with respect to the Private Placement, changes in the Canadian securities markets and the inability of the Company to launch a successful 5G fixed wireless business. Accordingly, readers should not place undue reliance on forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed with the forward-looking statements. Except as may be required by applicable Canadian securities laws, TeraGo does not intend, and disclaims any obligation, to update or revise any forward-looking statements whether in words, oral or written as a result of new information, future events or otherwise.

About TeraGo

TeraGo owns a national spectrum portfolio of exclusive 24 GHz and 38 GHz wide-area spectrum licences including 2,120 MHz of spectrum across Canada's 6 largest cities. TeraGo provides businesses across Canada with cloud, colocation, and connectivity services. TeraGo manages over 3,000 cloud workloads, operates five data centres in the Greater Toronto Area, the Greater Vancouver Area, and Kelowna, and owns and manages its own IP network. The Company serves business customers in major markets across Canada including Toronto, Montreal, Calgary, Edmonton, Vancouver, Ottawa and Winnipeg.

For more information about TeraGo, please visit www.terago.ca.

SOURCE TeraGo Inc.