SR Telecom Receives C$45 Million Financing

SR Telecom Inc. announced that it has entered into an agreement with a syndicate of lenders comprised of shareholders and lenders of the Company providing for a term loan of up to $45.0 million, of which $35.0 million was drawn today and an additional $10.0 million will be available for drawdown for a period of up to one year from closing, subject to certain conditions. The term loan has a five-year term and is subject to the same security as the existing loans under the Company’s existing credit facility, but ranking senior to the existing loans. The term loan bears cash interest at a rate equal to the greater of 6.5% or the three-month US dollar LIBOR rate plus 3.85% and additional interest that may be paid in cash or in kind, at the option of the Company, at a rate equal to the greater of 7.5% or the three-month US dollar LIBOR rate plus 4.85%. The cash portion of the interest will be payable in kind until December 2008. A payout fee of 5% of the term loan will be paid to lenders upon repayment or maturity of the loan.

“The level of support we have received today from our shareholders and lenders is a strong indication of their ongoing belief in SR Telecom, its people, its products and its WiMAX strategy,” said Serge Fortin, SR Telecom’s President and Chief Executive Officer. “While it is clear that much remains to be done for SR Telecom to regain positive and sustainable momentum, these additional funds will enable us to execute on our growth strategy even though the delay in finalizing today’s announcement has had a negative impact on manufacturing schedules and deliveries, and will have an unfavourable effect on second and third quarter results.”

Amendments to terms
In connection with entering into this new term loan, the syndicate of lenders has agreed to amend some of the terms of the initial advances under the credit facility and the convertible term loan. The maturity date has been amended to match the maturity date of this new financing and the cash portion of the interest will be payable in kind until December 2008.

In addition, amendments were also made to the terms of the credit facility and the convertible term loan for the portion of the debt held by two of the lenders, who are not Company insiders, whereby their respective portions would be convertible into common shares of the Company at a price of $0.114 per share. As well, the conversion price of the portion of the convertible term loan held by one of the lenders was amended to the same price.

As some of the parties participating in the financing are related parties of the Company, as defined by applicable securities legislation in Quebec and Ontario, the financing is considered a related-party transaction. However, it is exempt from the valuation and minority approval requirements, as it is a loan to the Company obtained on reasonable commercial terms that are no less advantageous to the Company than if the loan had been obtained from persons that were dealing at arm’s length with the Company.

The Company will file a material change report less than 21 days prior to the closing date of the financing, a shorter period that is reasonable and necessary under the circumstances, which will allow the Company to complete the transaction in a timely manner in order to finance its operations and execute on its growth strategy.

Status update on results
The Company intends to update its financial statements and accompanying management’s discussion and analysis for the periods ended December 31, 2006 and March 31, 2007 in the coming days.