Mr. Gregory Cochrane reports

DATA COMMUNICATIONS MANAGEMENT CORP. ANNOUNCES RIGHTS OFFERING AND STAND-BY COMMITMENT TO RAISE GROSS PROCEEDS OF UP TO $4.95 MILLION

Data Communications Management Corp. will conduct an offering of rights to acquire common shares of the company to raise gross proceeds of up to $4.95-million.

Details of the rights offering

Pursuant to the rights offering notice and the rights offering circular filed by Data Communications Management with Canadian securities regulatory authorities, each eligible registered shareholder of the company resident in Canada holding common shares as at 5 p.m. Toronto time on Dec. 2, 2019, will be entitled to participate in the rights offering. Eligible holders of common shares will receive one right for each common share held. No fractional rights will be issued. Each right will entitle the holder to subscribe for one common share at the subscription price of 23 cents per common share. Shareholders who fully exercise their rights under the basic subscription privilege will also be entitled to subscribe for additional common shares, on a pro rata basis, if available, as a result of unexercised rights prior to the expiry time, subject to certain limitations as set out in the company's rights offering circular.

Data Communications Management currently has 21,523,515 common shares issued and outstanding. If all rights are exercised, an additional 21,523,515 common shares would be issued and the gross proceeds of the rights offering would be approximately $4.95-million. The completion of the rights offering is not conditional upon the company receiving any minimum amount of subscriptions for common shares.

A notice of rights offering will be mailed to each registered shareholder of the company resident in Canada as at the record date. Registered shareholders who wish to exercise their rights must forward the completed rights certificate, together with applicable funds, to the rights agent, Computershare Investor Services Inc., on or before the expiry time. Shareholders who own their common shares through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials and instructions from their intermediary.

The rights will be transferable. The rights will be listed on the Toronto Stock Exchange under the symbol DCM.RT and will be posted for trading on the TSX until 12 p.m. Toronto time on Dec. 27, 2019, at which time they will be halted from trading. The rights will expire at 5 p.m. Toronto time on Dec. 27, 2019. Rights not exercised before the expiry time will be void and of no value. If a holder does not exercise their rights and the rights offering is completed, such holder's percentage interest in the company will be diluted upon the exercise of rights by other holders. Holders of rights who wish to exercise their rights must do so in the manner set forth in the rights offering circular.

Insider participation and standby commitment agreement

Directors and officers of the company who currently beneficially own, directly or indirectly, or who have control or direction over 5,016,302 common shares (representing approximately 23.3 per cent of the company's issued and outstanding common shares), have indicated that they intend to exercise their subscription privileges to acquire common shares representing total subscription proceeds of approximately $1.2-million, which would represent approximately 23.3 per cent of the rights offering assuming it is fully subscribed.

In addition, the company has entered into a standby purchase agreement with Gregory Cochrane, Michael Sifton, Merv Simpson, J.R. Kingsley Ward, Christopher Lund and Michael Cote. Each of such individuals, other than Mr. Simpson, is a director and/or officer of the company. Pursuant to the standby purchase agreement, the standby purchaser has agreed to purchase, subject to certain terms, conditions and limitations set forth in the standby purchase agreement, and the company has agreed to issue, on the closing date (as defined herein), such number of common shares, as is necessary to ensure that the aggregate gross proceeds of the rights offering are at least $4.6-million, at a price of 23 cents per common share.

The commitment pursuant to the standby purchase agreement will be completed, subject to the satisfaction of the conditions thereunder, including there being no material adverse effect upon the business of the company, including the failure of the company to enter into amendments to its existing credit agreements with its senior lenders, which are satisfactory to the standby purchaser, including, without limitation, amendments to the respective financial covenants of the company in such agreements, prior to the expiry date of the rights. The company is seeking to reach agreement with its senior lenders on the terms of the credit facilities amendments by no later than Dec. 15, 2019. In that regard, the company's senior lenders have agreed to waive certain financial covenants for the period of Sept. 1, 2019, to Dec. 15, 2019. There can be no assurance that the company will negotiate and implement the credit facilities amendments on terms satisfactory to the company prior to Dec. 15, 2019, or the expiry time, or at all.

The standby purchaser will not receive a fee for providing the standby commitment.

Use of proceeds

The company will use the net proceeds from the rights offering to reduce its outstanding indebtedness, by repaying amounts drawn on its revolving credit facility and repaying up to $1.5-million of outstanding promissory notes, including up to $1-million of promissory notes entered into by Data Communications Management in July, 2019, with certain parties, including related parties of Data Communications Management, and up to $500,000 of promissory notes entered into with the vendor of Perennial Inc. in May, 2017, subject to the standby purchaser carrying out its standby commitment, and subject to receipt of the consent of Data Communications Management's lenders under the company's senior credit facilities. Repayments of borrowings made under the revolving credit facility increase the borrowing base available to the company under that credit facility, thereby enhancing the company's available liquidity. Mr. Cochrane, Mr. Cote, Mr. Simpson and Mr. Ward (or, in each case, companies controlled by such individual) are holders of related-party promissory notes and a relative of Mr. Lund holds the Perennial note.

Data Communications Management intends to spend the net proceeds from the rights offering as stated above. However, there may be circumstances where a reallocation of those proceeds may be necessary. The company will reallocate funds only for sound business reasons and in furtherance of its business.

More information

Data Communications Management has retained Kingsdale Advisors as the information agent in connection with the rights offering. Questions and requests for assistance relating to the rights offering may be directed to Kingsdale at contactus@kingsdaleadvisors.com or 1-866-851-2484.

The rights offering notice and rights offering circular containing details of the rights offering will be filed on SEDAR and on the company's website.

About Data Communications Management Corp.

Data Communications is a communication solution partner that adds value for major companies across North America by creating more meaningful connections with its customers. Data Communications pairs customer insights and thought leadership with cutting-edge products, modular enabling technology and services to power its clients' go-to market strategies. Data Communications helps its clients manage how their brands come to life, determine which channels are right for them, manage multimedia campaigns, deploy location-specific and one-to-one marketing, execute custom loyalty programs, and fulfill their commercial printing needs all in one place.

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