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BluePhoenix Solutions Enters Into Agreements To Refinance Certain Of Its Debts And To Raise $0.5 Million Of New Debt Through A Bridge Loan

BluePhoenix Solutions (NASDAQ: BPHX), the leading provider of value-driven legacy IT modernization solutions, announced today that it has entered into agreements to refinance certain of its debts and to raise $0.5 million of new debt through a bridge loan.

On March 19, 2012, the Company entered into an assignment agreement with certain of its lenders relating to the $5.0 million loan agreement that the Company entered into in April 2011, pursuant to which such loan will be assigned from the current lenders to three of the Company’s shareholders. In connection with such assignment, the Company has agreed to pay $1.0 million, subject to certain conditions, as partial repayment of the loan, which is due in May 2012, if certain funds currently held in escrow by a third party are released to the Company.

In addition, the Company entered into an agreement with the three shareholders to amend the terms of the loan following its assignment to them. The amendment includes extending the maturity date of the loan from May 2012 to May 1, 2014, and an increase of the interest rate to 6% per annum, with escalation clauses up to 9.5% if not repaid by certain dates following the maturity date, with such interest payable quarterly. The interest will be payable in the Company’s ordinary shares if the shareholders elect to receive such shares or if the Company elects so if it does not have available funds to pay the interest in cash. The number of ordinary shares to be issued will be calculated according to the 20-day volume weighted average price per share of the Company’s ordinary shares traded on the Nasdaq stock market prior to the payment date. The shareholders may elect to convert the outstanding balance of the loan and any accrued interest to the Company’s ordinary shares at a price of $3.00 per share at any time after the assignment. The revised loan agreement will contain restrictive covenants and provisions for acceleration of repayment or termination of the loan in certain events of default. In consideration of the amendment, the Company will issue to the three shareholders ordinary shares in an aggregate amount equal to 18.7% of the Company’s outstanding share capital as of the date of issuance.

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