Phonetime Inc., an international telecommunications network carrier, has completed the disposition of its retail customer base in light of its restructuring plan. Additionally, the company has also obtained minority shareholder approval that allows it to convert up to $2.3 million of outstanding inside shareholder debt into equity units and raise as much as $200,000 in cash.

With the disposition of the Consumer business along with the collection of receivables, the company hopes to collect approximately $5.6 million of funds. The company plans to improve working capital by reducing bank debt to $2,500,000 using the collected funds, and also pay off the company’s subordinated debt and accumulated interest of $825,000. These transactions relieve the company of approximately $5.8 million in future commitments. The contract dispute with the former CEO has also been resolved.

The Annual and Special Meeting of Shareholders (AGM) was held on August 31st, 2010, whereby the minority shareholders gave approval for conversion of $2.3 million of inside shareholder debt into equity units and acquire additional equity units for up to $200,000 in cash. Each equity unit is comprised of one common share with the subscription price of $0.07 plus a six month $0.07 warrant and a 12 month $0.09 warrant. After closing down the retail business, Phonetime will focus and strengthening its Network Services business. Upon completion of a debt to equity conversion by the end of December, the company’s debt will come down to $3.5 million from the existing $7.8 million, which includes around $2.5 million to senior lenders and $1 million to shareholders. As part of its major restructuring plan, the company is also scaling down its employee base to around 45 employees, which should help scale revenue.

At the AGM meeting, the shareholders also elected the company’s new board of directors and appointed Ernst & Young LLP as the company's new auditor. Gary Clifford, who was elected as one of the company’s directors, was pleased with the progress made, saying “the ongoing support of our shareholders, employees, suppliers and customers has and continues to be exceptional. We have strengthened our balance sheet and our board of directors, and we continue to improve our business and corporate governance practices.”