TeraGo Inc. Completes Acquisition of Rackforce Networks Inc.

Toronto – March 27, 2015

TeraGo Inc. (“TeraGo” or the “Company”) (TSX: TGO, , www.terago.ca), a national provider of complete end-to-end data solutions, today announced that TeraGo Networks Inc., a wholly-owned subsidiary of TeraGo has closed its previously announced acquisition (the “Acquisition”) of RackForce Networks Inc. (“RackForce”) for an enterprise value of $33.0 million. Consideration for the Acquisition consisted of cash consideration of $31.0 million and the issuance of 328,742 common shares of TeraGo.

“The combination of RackForce and TeraGo creates a unique and competitive value proposition for customers looking for a national provider of end-to-end data solutions. Together, we deliver a comprehensive portfolio that can serve the needs of customers of all sizes, from SMBs to large global enterprises,” said Stewart Lyons, President and Chief Executive Officer of TeraGo. “We are delighted to welcome the RackForce team to TeraGo and we look forward to jointly pursuing the significant opportunities ahead of us.”

“The RackForce team is excited and highly motivated to build on the momentum we are seeing in the cloud services industry. We look forward to continuing our commitment to delivering exceptional customer service,” said Tim Dufour, President and Chief Executive Officer of RackForce. “Together, the expanded capabilities of TeraGo and RackForce are very positive for our employees, customers and partners, and further strengthen our position as the largest Canadian cloud service provider.”

In connection with the closing of the Acquisition, TeraGo has entered into an amendment agreement to its credit facilities whereby the total credit facilities have increased from $50.0 million to an aggregate amount of $85.0 million, consisting of a $10.0 million revolving operating credit facility, a $50.0 million non-revolving term credit facility and a $25.0 million non-revolving acquisitions and capital expenditure facility. The covenants of the Company under the Credit Agreement remain substantially unchanged. The maturity date on which the credit facilities will be terminated has been extended to June 30, 2018 from June 6, 2017.

About TeraGo

TeraGo, through its wholly owned subsidiary TeraGo Networks Inc., provides businesses across Canada with data and voice communications services, data center colocation and hosting services as well as cloud Infrastructure as a Service (“IaaS”) computing and storage solutions. The national service provider owns and manages its IP network servicing approximately 4,100 business customers in 46 major markets across Canada including Toronto, Montreal, Calgary, Edmonton, Vancouver and Winnipeg, as well as data centers in the Greater Toronto Area and the Greater Vancouver Area. TeraGo Networks is a Competitive Local Exchange Carrier (CLEC) and was selected as one of Canada’s Top Small and Medium Employers for 2015.

For more information about TeraGo, please visit www.terago.ca.

About RackForce

RackForce is the largest Canadian enterprise cloud service provider and serves clients both nationally and globally. Since its inception in 2001, RackForce has worked with small businesses, Fortune 100 companies, governments and education clients. RackForce is a proven leader in the management of enterprise cloud services including Cloud Hosting Services (IaaS) and Application Hosting Services (SaaS) with network. RackForce’s strategic relationships with technology leaders: Cisco, VMware, IBM, Kaltura, Mitel and many others gives the company early access to game changing intelligence, products and solutions to provide enterprise cloud services. RackForce’s cloud services are provided from four network enabled cloud delivery centers spread across Canada allowing it to meet the strictest of data privacy requirements and all disaster recovery needs.

TeraGo Investor Relations
Telephone: 905-707-1862
Email:ir@terago.ca

Forward-Looking Statements

This press release includes certain forward-looking statements that are made as of the date hereof. Such forward-looking statements may include, but are not limited to, statements regarding the acquisition by the Company of Rackforce Networks Inc., growth in the cloud services industry, and expanded opportunities and capabilities of TeraGo and RackForce. All such statements are made pursuant to the ‘safe harbour’ provisions of, and are intended to be forward-looking statements under, applicable Canadian securities laws. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. The forward-looking statements reflect the Company’s views with respect to future events and is subject to risks, uncertainties and assumptions, including the risk that the acquisition of Rackforce may not be accretive to the Company’s existing business, cross-selling of TeraGo’s products and services may not succeed, revenue growth strategies may not materialize, trends in the global cloud industry may not be accurately projected, the transition to a multi-product IT services company will not generate the results intended by management, the assumption that recent revenue trends of Rackforce will not materially change after its acquisition by the Company, and those risks set forth in the “Risk Factors” section in our annual MD&A for the year ended December 31, 2014 available on www.sedar.com. Accordingly, readers should not place undue reliance on forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed with the forward-looking statements. Except as may be required by applicable Canadian securities laws, TeraGo does not intend, and disclaims any obligation, to update or revise any forward-looking statements whether in words, oral or written as a result of new information, future events or otherwise.