Phonetime completes private placement

MISSISSAUGA, ON, July 22 /CNW/ – Phonetime Inc. (TSX: PHD), one of the world’s fastest growing providers of international long-distance telecommunication services, announced today that it has completed a $560,000 equity private placement through First Republic Capital Corporation, that it has amended its Bank credit facility arrangements to achieve more favourable terms and that it has executed a term sheet for a $5 million secured debenture offering scheduled to close on or about August 30, 2009.

“Our ability to close an equity private placement priced at a 50% premium to market price, particularly under current economic conditions, speaks volumes about Phonetime’s long-term potential,” said Rodney Franklin, Chairman and CFO of Phonetime. “This capital infusion, along with our recently adjusted bank and debt-service arrangements, strengthens the Company’s balance sheet and enhances our financial status.”

The equity financing was effected by way of a private placement of 3.73 million units, priced at $0.15 per unit, generating gross proceeds of $560,000. The units are comprised of one common share and one common share purchase warrant. Each warrant will be exercisable at $0.30 per share, at any time during the two years following closing.

Mr. Franklin continued, “I am also very pleased that members of Phonetime’s senior management have personally participated in this private placement. This represents a significant vote of confidence by senior management in the Company, as well as their support for Phonetime’s plans to continue expanding in the fast growing Asia-Pacific, European, Middle Eastern, and African long-distance markets.”

The debenture financing will consist of the issuance of $5 million of subordinated debentures to one or more private investors. The debentures will have a 3-year term to maturity and rate of interest of 12.5% per annum. For each dollar of debt subscribed for, Phonetime will issue to the subscribers two common share purchase warrants: one exercisable at $0.20 per share within the first 12 months of closing, and one exercisable at $0.30 per share within the first 24 months of closing. The transaction, which is subject to negotiation and execution of definitive documentation and regulatory approval, is expected to close on or about August 30, 2009. Phonetime believes that the debenture financing will significantly enhance the execution of the next stage of its growth strategy.

About Phonetime Inc.

Established in 1994, Phonetime is a leading supplier of international wholesale and retail long distance telecommunications services with network facilities in Canada, the U.S., Europe, Africa and Asia. Through its Wholesale Division, Phonetime buys and resells long-distance services to major telephone carriers around the world using its proprietary call trading platform. Through its Retail Division, Phonetime provides subscription-based long distance services to targeted ethnic consumers across Canada and competitively markets a range of long distance calling cards. Phonetime’s common shares trade on the Toronto Stock Exchange under the symbol PHD. More information can be found at the Company’s website, www.phonetime.com

Caution Regarding Forward Looking Information:

This press release contains forward-looking statements, which may be identified by words like “expects”, “anticipates”, “plans”, “intends”, “indicates” or similar expressions. These statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. Phonetime’s actual results could differ materially from those currently anticipated due to a number of factors set forth in reports and other documents filed by the Company with Canadian securities regulatory authorities from time to time.

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