DORVAL, QC, June 2, 2014 /CNW Telbec/ - Pursuant to a binding letter of
agreement entered into with Diagnos on May 5, 2014, Warnex Inc. (TSXV:
WNX.H) ("Warnex") is pleased to announce that it has entered into a pre-amalgamation
agreement on May 30, 2014 (the "Pre-Amalgamation Agreement") with Diagnos Inc. ("Diagnos"), pursuant to which Warnex agreed to carry out an amalgamation (the "Amalgamation") under which Warnex will amalgamate with a wholly-owned subsidiary of
Upon the closing of the Amalgamation, shareholders of Warnex will
receive one common share of Diagnos (a "Diagnos Share") for each common share of Warnex (a "Warnex Share") held. For the purposes of the Amalgamation, each of the Diagnos
Shares and the Warnex Shares have been attributed a value of $0.08 per
share. The warrants to purchase Warnex Shares held by Persistence
Capital Partners ("PCP"), which owns approximately 52% of the Warnex Shares, will be exchanged
for an equal number of warrants to purchase Diagnos Shares on identical
terms ("Replacement Warrants").
The Amalgamation has been unanimously approved by the board of directors
of Warnex. The approval by Warnex's board of directors followed a
thorough evaluation of the factors, potential issues and risks related
to the Amalgamation and certain advice received from its legal counsel.
In making its determination, the board of directors has also reviewed
the fairness opinion that it received from Bloom Burton & Co. Inc. to
the effect that the consideration provided pursuant to the Amalgamation
is fair, from a financial point of view, to the shareholders of Warnex.
Warnex's board of directors has also unanimously recommended that
shareholders of Warnex vote in favor of the Amalgamation.
PCP has entered into a support agreement (the "Support Agreement") with Diagnos pursuant to which it has agreed to vote its Warnex
Shares in favor of the Amalgamation. The Support Agreement
automatically terminates if, among other things, the Pre-Amalgamation
Agreement terminates or if a material adverse effect occurs in respect
Completion of the Amalgamation remains subject to a number of
conditions, including but not limited to: (i) approval by two-thirds of
the votes cast at the annual and special meeting of shareholders of
Warnex to be held on June 26, 2014, (ii) Warnex's satisfaction with the
results of its due diligence review of Diagnos by June 26, 2014
relating to the clinical and medical reliability of Diagnos' products,
Quality of Earnings investigation related to Diagnos' accounting
policies, financial statements, and sustainability of reported
earnings, and review of Diagnos' material contracts, (iii) satisfaction
of standard closing conditions for transactions of this nature, and
(iv) approval by the TSX-V.
The Pre-Amalgamation Agreement provides for, among other things, a
non-solicitation covenant on the part of Warnex, subject to a customary
"fiduciary out" provision, which entitles Warnex to accept an
unsolicited superior proposal, subject the reimbursement to Diagnos for
its fees and expenses related to the Amalgamation up to a maximum of
Unless Diagnos is so prohibited, each shareholder of Warnex and of
Diagnos will, upon the closing of the Amalgamation, also receive one
half warrant (a "Warrant") to purchase one Diagnos Share for each Warnex Share or Diagnos Share
held. Each whole Warrant will be exercisable at a price of $0.10 per
share for a period of twelve months following the closing of the
It is expected that, upon closing of the Amalgamation, the
securityholders of Warnex will hold, in the aggregate, Diagnos Shares
and Replacement Warrants representing approximately 27.96% of the
issued and outstanding shares of Diagnos on a fully-diluted basis and
the shareholders of Diagnos will hold, in the aggregate, Diagnos Shares
representing approximately 72.04% of the issued and outstanding shares
of Diagnos on a fully-diluted basis.
It is also expected that, following the effective date of the
Amalgamation, the Warnex Shares will be delisted from trading on the
NEX and the amalgamated entity will apply to cease being a reporting
issuer under the securities legislation of each province of Canada
where it is a reporting issuer.
A management information circular detailing the rationale for
recommending the Amalgamation to the shareholders of Warnex will be
mailed to shareholders in the course of next week. Shareholders are
urged to read the management information circular once it is
available. Shareholders will be asked to vote on the Amalgamation at
the annual and special meeting of the shareholders of Warnex scheduled
on June 26, 2014.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this news release are forward-looking
and are subject to numerous risks and uncertainties, known and unknown.
For further information identifying known risks and uncertainties,
relating to financial resources, liquidity risk, volatility of share
price and other important factors that could cause actual results to
differ materially from those anticipated in the forward-looking
statements, please refer to the heading Risks and Uncertainties in
Warnex's most recent Management's Discussion and Analysis, which can be
found at www.sedar.com. Consequently, actual results may differ materially from the
anticipated results expressed in these forward-looking statements. The
Amalgamation is subject to the receipt of requisite shareholder
approval by Warnex and the satisfaction of the conditions under the
Pre-Amalgamation Agreement, including the due diligence condition.
There is no assurance that the Amalgamation will be completed as
proposed or at all. Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy
of this release.
SOURCE: Warnex Inc.
For further information:
Chairman of the Board of Directors, Warnex Inc.
Tel: (514) 940-3600