Toronto Stock Exchange Symbol: LRI
LAVAL, QC, Aug. 5 /CNW Telbec/ - LAB Research Inc. ("LAB Research" or the
"Company") (TSX: LRI), a Canadian-based global non-clinical contract research
organization, today announced that it has filed a preliminary short form
prospectus in connection with a distribution to its existing shareholders of
rights exercisable to purchase additional common shares of the Company (the "
Rights Offering"), subject to receipt of all regulatory and stock exchange
All shareholders in each of the provinces of Canada will receive 1 (one)
right for each common share held. Each right will entitle the holder to
purchase 2.1 common shares of the Company at a price of $ 0.41 per share.
A fully subscribed Rights Offering is expected to raise gross proceeds of
$15.6 million. Prior to filing the prospectus, subject to certain terms and
conditions, the Company has entered into a Stand-By Purchase Agreement with
Solidarity Fund QFL ("The Fund") pursuant to which LAB Research has secured a
firm commitment from The Fund to invest up to $7.5 million (the "Stand-By
Commitment") by way of exercising its rights under the Rights Offering as a
shareholder should the issued rights not be fully exercised at the closing of
the Rights Offering. Pursuant to the terms of the Stand-By Purchase Agreement,
The Fund will exercise its rights under the Rights Offering and purchase
additional common shares not otherwise subscribed by other shareholders, until
the total number of shares owned by The Fund represents a 49% ownership
position in LAB Research without exceeding the Stand-by Commitment. To ensure
that The Fund's investment does not exceed 49% of all outstanding common
shares of the Company, The Fund may invest part of its Stand-By Commitment by
way of a loan.
The Company intends to use the first $7.5 million of proceeds from the
Rights Offering as follows: i) $0.5 million in capital repayment of a bridge
loan from The Fund; ii) $2.5 million in inhalation toxicology equipment for
LAB Research Canada; and iii) $4.5 million for working capital, and general
corporate purposes including $2.5 million which will be transferred to the
Company's subsidiaries in Europe. For proceeds raised in excess of $7.5
million, a maximum of $5 million will be used to reduce the Company's
long-term debt in Canada and the remainder, if any, will be used for working
capital and general corporate purposes. The Rights Offering is expected to
close before the end of September 2009.
Luc Mainville, President and Chief Executive Officer of LAB Research
commented: "This transaction coupled with the recently concluded renegotiation
of our Canadian banking arrangements, which is subject to certain conditions
including the completion of the Rights Offering, and the receipt of the
remaining $5 million under a loan with Investissement Quebec will provide LAB
Research with the financing required to continue serving our clients. We are
confident that these developments demonstrate to our clients, partners and
stakeholders the financial health of our Company as we continue to promote our
services to the biotechnology, pharmaceutical and chemical markets worldwide.
Although the Rights Offering will close in several weeks, we anticipate strong
support from our shareholders due to commitment from The Fund and the
sequential improvement of our operating performance and financial results. We
appreciate that the proposed transaction will cause a significant dilution to
shareholders who decide not to participate. However, we believe the Rights
Offering is the best solution to protect shareholders interest and to raise
the required level of capital to re-position LAB Research for many years of
successful growth" added Mr. Mainville.
LAB Research also announced having issued 598,193 common share warrants
to Investissement Québec following its disbursement of the remaining $5
million loan. Each common share warrant entitles Investissement Québec to
subscribe to one common share of the Company at a price of $0.51 per share
until May 3, 2013.
About LAB Research Inc.:
LAB Research is a Canadian global non-clinical contract research
organization that provides contract research services to the pharmaceutical,
biotechnology, agro-chemical, petro-chemical and industrial markets. LAB
Research supports the development of its customers' products from three
state-of-the-art facilities located in Canada, Denmark and Hungary.
LAB Research's shares trade on the TSX under the symbol "LRI", with 18.1
million shares outstanding.
This news release contains certain forward-looking statements that
reflect the current views and/or expectations of LAB Research Inc. with
respect to its performance, business and future events. Such statements are
subject to a number of risks, uncertainties and assumptions. Actual results
and events may vary significantly.
For further information:
For further information: visit LAB Research's website at
www.labresearch.com, or contact: Luc Mainville, Chief Executive Officer, (450)
973-2240 (ext. 1206), email@example.com; Frédéric Dumais, Partner,
Jasmin-Dumais Financial Communications, (514) 862-1251, firstname.lastname@example.org