BluePhoenix Solutions Raises $4.2 Million in Private Placement of Ordinary Shares and Warrants

• Press Release
• Source: BluePhoenix Solutions Ltd
• On 9:45 am EDT, Monday October 12, 2009

HERZLIYA, Israel, October 12 /PRNewswire-FirstCall/ -- BluePhoenix Solutions (NASDAQ: BPHX - News), the leader in value-driven legacy modernization, today announced that it has entered into a Securities Purchase Agreement with certain institutional investors for the sale of approximately $4.2 million of its ordinary shares at a purchase price of $3.05 per share. Pursuant to the Securities Purchase Agreement, the investors also received 818,744 Series A warrants, 1,364,575 Series B warrants and 818,744 Series C warrants (collectively, the "Warrants"), each exercisable for the purchase of the Company's ordinary shares. The Series A warrants are exercisable immediately at an exercise price of $3.95 and have a five-year term. The Series B warrants are exercisable immediately at an exercise price of $3.05 and a term expiring upon the earlier of (a) four and one-half months from the effective date of the registration statement with respect to the Series B warrants and (b) four and one-half months from the date on which each of the ordinary shares, Warrants and shares underlying the Warrants sold pursuant to the Securities Purchase Agreement (the "Securities") may be sold by non-affiliates of the Company without the requirement that the Company be in compliance with Rule 144(c)(1) under the Securities Act of 1933, as amended (the "Securities Act"). The Series C warrants are exercisable immediately upon the exercise of the Series B warrants at an exercise price of $3.95, and will expire upon the earlier of (a) five years and four and one-half months from the effective date of the registration statement with respect to the Series C warrants and (b) five years and four and one-half months from the date on which all of the Securities may be sold by non-affiliates of the Company without the requirement that the Company be in compliance with Rule 144(c)(1) of the Securities Act. The Series C warrants are exercisable into a number of ordinary shares equal to 60% of the Series B warrants ultimately exercised.

The net proceeds of the offering will be used towards the repayment of debt, potential acquisitions and general working capital. The Company anticipates closing the transaction on or prior to October 15, 2009.

The ordinary shares issued in the private placement have not been registered under the Securities Act, and may not be subsequently offered or sold by the investors in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements. The Company has agreed to file a registration statement with respect to the resale by the investors of (i) the ordinary shares issued pursuant to the Securities Purchase Agreement, (ii) the ordinary shares issuable upon exercise of the Warrants, (iii) any additional ordinary shares issuable in connection with any anti-dilution provisions in the Warrants (without giving effect to any limitations on exercise set forth in the Warrants) and (iv) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

About BluePhoenix Solutions

BluePhoenix Solutions (NASDAQ: BPHX - News) is the leading provider of value-driven legacy IT modernization solutions. The BluePhoenix portfolio includes a comprehensive suite of tools and services from global IT asset assessment and impact analysis to automated database and application migration, rehosting, and renewal. Leveraging over 20 years of best-practice domain expertise, BluePhoenix works closely with its customers to ascertain which assets should be migrated, redeveloped, or wrapped for reuse as services or business processes, to protect and increase the value of their business applications and legacy systems with minimized risk and downtime.

BluePhoenix provides modernization solutions to companies from diverse industries and vertical markets such as automotive, banking and financial services, insurance, manufacturing, and retail. Among its prestigious customers are: Aflac, Capita Group, CareFirst, Citigroup, Danish Commerce and Companies Agency, Desjardins, Los Angeles County Employees Retirement Association, Rabobank, Rural Servicios Informaticos, SDC Udvikling, TEMENOS, Toyota, and Volvofinans. BluePhoenix has 15 offices in the USA, UK, Denmark, Germany, Italy, France, The Netherlands, Romania, Russia, Cyprus, South Korea, Australia, and Israel.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this release may be deemed forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other Federal Securities laws. You can identify these and other forward-looking statements by the use of words such as "may," "will," "plans," "believes," "estimates," "intends," the negative of such terms, or other comparable terminology. Because such statements deal with future events, plans, projections, or future performance of the Company, they are subject to various risks and uncertainties that could cause actual results to differ materially from the Company's current expectations. These risks and uncertainties include but are not limited to: the ability to successfully defend claims brought against the Company; the effects of the global economic and financial crisis; market demand for the Company's products; successful implementation of the Company's products; changes in the competitive landscape, including new competitors or the impact of competitive pricing and products; the ability to manage the Company's growth; the ability to recruit and retain additional software personnel; the ability to develop new business lines; and such other risks and uncertainties as identified in BluePhoenix's most recent Annual Report on Form 20-F and other reports filed by it with the SEC. Except as otherwise required by law, BluePhoenix undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

This press release is also available at http://www.bphx.com. All names and trademarks are their owners' property.

    Company Contact
    Varda Sagiv
    BluePhoenix Solutions
    +972-9-9526110
    vsagiv@bphx.com

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