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Delphax Completes $7 Million Financing Transaction; Company also closes on new $13.7 Million Senior Credit Facilities

Press release from the issuing company

MINNEAPOLIS, Sept. 11 -- Delphax Technologies Inc. , a global provider of high-speed digital printing systems, announced today that it has closed on the second and final phase of the company's previously announced $7 million subordinated financing transaction with an affiliate of Whitebox Advisors LLC ("Whitebox").
In this phase, approved by shareholders in July, Delphax's Canadian subsidiary issued a $7 million five-year secured subordinated promissory note. The company used $3 million of the new financing to pay off subordinated debt due in February 2008 and $900,000 to pay off the subordinated note issued at the first phase closing on March 26, 2007, that was also due in February 2008. Delphax issued to Whitebox a warrant to purchase an additional 6.3 million shares of Delphax common stock, bringing to 7.5 million the number of warrants issued in connection with the financing. For a period of one year after the second closing, Whitebox has the right to buy on the same terms an additional $1.4 million subordinated note and obtain a warrant for an additional 1.5 million shares.
In connection with the subordinated financing with Whitebox, Delphax and its Canadian subsidiary also closed on new senior credit facilities totaling $13.7 million with Wells Fargo Business Credit (an operating division of Well Fargo Bank, N.A.) and Wells Fargo Financial Corporation Canada. These new credit facilities have a four-year term and consist of secured revolving credit facilities of up to $13 million, subject to availability under a borrowing base of accounts receivable and inventory, and a secured term loan of $653,000. The senior credit facilities are also subject to certain financial covenants.
"Along with the tightening of our cost structure and implementation of new sales initiatives, the completion of this financing ranked at the very top of our recovery objectives for Delphax," said Dieter Schilling, president and chief executive officer. "We view these arrangements with Whitebox Advisors and Wells Fargo as votes of confidence in our strategy for getting Delphax on track for profitable growth. They provide the immediate capital resources we need to exploit the competitive advantages we have in our electron-beam imaging technology and the high-speed digital presses that this technology makes possible. At the same time, we expect our strengthened balance sheet to have a positive marketplace impact."