Coded Communications announces Grupo ISA to acquire controlling interest, restructuring of debt and partnership for Mexico orders.

CARLSBAD, Calif.--(BUSINESS WIRE)--May 3, 1996--Coded Communications Corp. (NASDAQ Electronic Bulletin Board symbol: CODD and VSE symbol: CCI) Friday announced an agreement with Grupo Information, Satellites and Advertising S.A. de C.V. ("ISA") and the Company's senior secured debt holders, pursuant to which ISA is to acquire a controlling common stock ownership interest in Coded and the company's senior secured debt holders are to restructure their debt.

The transaction is subject to final due diligence and a review of Coded's operations by ISA, and the company's shareholder approval of, among other things, an increase in the authorized number of common shares and the new classes of preferred stock.

ISA is a privately held Mexican corporation and is Coded's exclusive distributor of mobile data systems and products in Mexico. Currently, in addition to its mobile communication business, ISA has several companies throughout Latin America involved primarily in satellite communications, computer network systems, electronic signage and advertising.

Under the terms of the agreement, ISA is to receive approximately 49 million shares of Coded common stock, or a common stock ownership interest of approximately 67 percent, and the company will receive (i) $400,000 in cash; (ii) a guarantee that ISA will place not less than $10 million in orders for Coded's mobile data communications systems and products over an 18 month period, secured by up to one-half of ISA's shares in Coded; (iii) a working capital loan from ISA to Coded in the amount of $1 million, with the working capital loan convertible into Coded common shares at a price of 25 cents per share; (iv) the immediate release to Coded of orders for mobile data products valued at approximately $1 million together with a cash deposit against these orders of $500,000; and (v) an agreement from senior secured creditors for the restructuring of their debt.

Holders of the company's senior secured $1.8 million Bridge Loan, which was due on April 17, 1996, are to receive at the closing date a cash payment of $400,000; a new $600,000 principal amount, six percent interest rate one-year term loan, convertible into common shares at a price of 25 cents per share; and newly issued Series A preferred stock. The Series A preferred stock has a liquidation preference of $800,000, a dividend of eight percent per year, and is convertible into 2.4 million shares of common stock. Warrants to purchase 3.6 million shares of common stock issued to holders of the Bridge Loan at the time the Bridge Loan was funded, are to be canceled.

Renaissance Capital Partners II, holders of the company's $4 million, secured 12 percent Convertible Debentures and approximately $800,000 in accrued interest, will exchange their 12 percent Debentures and accrued interest at the closing date for a new seven year, $4.8 million principal amount, six percent Debenture. The six percent Debenture is convertible into a new Series B preferred stock, liquidation preference of $4.8 million with a dividend rate of six percent per year. The Series B preferred stock is convertible into approximately 7,344,000 shares of common stock.

Jack Robinson, president and CEO of Coded since March 1995, when he assumed leadership to implement a turnaround and restructuring, commented, "When we started our efforts to rebuild Coded last year, we believed a strategic partner with the ability to help us expand our business was critical to our success. In ISA and its President Hugo Camou, we have a partner that has demonstrated the ability to bring new orders to Coded in markets where we anticipate explosive demand for mobile data communications. We are very pleased with our relationship with ISA and, supported by their resources, we expect to become a leading supplier of mobile data communications in not only the United States, but in Mexico and Latin American markets as well.

"With ISA and the cooperation and support of Renaissance Capital and our senior debt holders, we now have in place the resources to aggressively compete for new business with working capital and a recapitalized balance sheet. The company has reported three consecutive quarters of operating profits, and with the completion of this transaction our turnaround will be complete."

Camou, president and CEO of Grupo ISA, said, "I am delighted with our expanding relationship with Coded. Together, ISA and Coded will bring Coded's technology, products and know-how to customers throughout Mexico and Latin America. There is a very high demand for Coded's products in Mexico and Latin America and we have an exciting opportunity to secure a leadership position in these markets. ISA and Coded are committed to profitable growth and increasing shareholder value, which can only be achieved through the dedicated efforts of the extraordinary employees of Coded and ISA."

Robinson concluded, "We are preparing the materials necessary for shareholder approval as well as the final transaction documentation. We will hold our 1996 Annual Shareholders' meeting as soon as reasonably possible and, with the shareholders' approval, complete this important milestone in the history of Coded."

The company has approximately 14.7 million common shares outstanding. Assuming the conversion of the existing 12 percent Debentures into approximately 2,667,000 shares of common stock and the exercise of all existing common stock purchase warrants, there would be approximately 20,967,000 shares of the company's common stock outstanding. Assuming that the transaction with ISA and the company's secured debt holders is consummated, and assuming all preferred stock to be issued to secured debt holders is converted into shares of the company's common stock, there would be approximately 73,441,000 shares of common stock outstanding.

With headquarters in Carlsbad, Coded Communications is a leader in providing wireless data and aerospace telemetry solutions to public safety, government entities and commercial customers worldwide. Coded's World Wide Web site can be accessed at http://www.coded.com

CONTACT: Coded Communications

Jack Robinson, 619/431-1945

or

Gibson/Nostas

Lawrence Gibson, 619/431-0077, ext.246