TORONTO, Oct. 12 /CNW/ - PharmEng International Inc. ("PharmEng" or the
"Company") (TSX-V: PII) announced today that in connection with negotiations
initiated in July, and pursuant to the terms of a payout letter dated October
11, 2007 (the "Payout Letter"), it has repaid all of its outstanding
obligations under a previously announced financing arrangement with Laurus
Master Fund, Ltd. (the "Laurus Financing"). As part of the terms of early
repayment, Laurus has agreed to waive prepayment penalties that would
otherwise apply to the Company and has agreed to cancel the common stock
purchase warrant (the "Laurus Warrant") issued to it as part of its
consideration for the Laurus Financing in exchange for a new warrant to
purchase common shares of the Company under amended terms. PharmEng used the
proceeds of a loan entered into on October 9, 2007 with a shareholder (the
"Shareholder Loan") to repay the obligations owing under the Laurus Financing.
Repayment of the Laurus Financing and the New Warrant
The Laurus Financing consisted of a three-year US$2.5 million secured
convertible revolving facility (the "Revolving Loan") and a three-year,
US$4.5 million secured convertible term loan (the "Term Loan"). Pursuant to a
Consent, Waiver and Amending Agreement entered into by the Company and Laurus,
among others, on July 17, 2007 Laurus agreed to early repayment of the
Revolving Loan and the Term Loan, without penalty, subject to certain timing
conditions to be met by the Company. In turn, the Company requested that
Laurus waive the requirement to pay the prepayment premiums for redemption
prior to maturity set out in the notes evidencing each of the Revolving Loan
and the Term Loan.
In addition, in connection with the repayment, the Company and Laurus
agreed to certain amendments to the Laurus Warrant, including the exercise
price and the term. The Laurus Warrant had a three-year term and granted
Laurus the right to purchase 4,354,128 common shares of the Company at a price
of CDN$0.572 for the first 1,451,376 common shares; CDN$0.599 for the second
1,451,376 common shares; and CDN$0.692 for any additional common shares. Under
the terms of the new warrant, Laurus has the right to purchase 2,902,752
common shares of PharmEng at a price of CDN$0.60 for each common share for a
term of three years from October 12, 2007.
Under the terms of the Payout Letter, upon delivery by the Company of
US$4,499,612.80 and the new warrant to Laurus, the obligations of the Company
under the Laurus Financing are satisfied in full and the security granted to
Laurus is released. The amount of US$4,499,612.80 was wired to Laurus today
and the new warrant is expected to be delivered to Laurus by no later than
October 15, 2007.
In order to repay the Revolving Loan and the Term Loan, PharmEng secured
the Shareholder Loan from Shropshire S.à.r.l ("Shropshire"), a related party
to the Company. Pursuant to the loan, Shropshire made available to the Company
a term loan of CDN$3,000,000 which is due on November 30, 2007 or such other
date as may be agreed to by the parties. PharmEng may repay the Loan at any
time without penalty or bonus. The loan is secured by the Company's accounts
receivable and is personally guaranteed, on a limited recourse basis, by Alan
Kwong, the Company's CEO, by way of a pledge of 10,000,000 common shares. The
interest rate on the loan is 10% per annum to be paid on maturity and to be
calculated monthly and accrue daily.
Shropshire, a company created under the laws of Luxembourg, is an insider
and control person of PharmEng (each as defined in the TSX Venture Exchange
Corporate Finance Manual). As of August 17, 2007 Shropshire held 30,000,000
common shares, representing approximately 39.3% of the total issued and
outstanding common shares of PharmEng.
"With this loan repayment to Laurus, the company frees up the collateral
obligation on the company's assets and has more flexibility to execute the
business expansion strategy," commented Alan Kwong, CEO of the Company.
About PharmEng International Inc.
PharmEng International Inc., headquartered in Toronto, Canada, is a
full-service consulting and contract manufacturing company that serves the
pharmaceutical and biotechnology industries in North America and
internationally. Consulting services include project management, engineering,
GMP, validation, calibration, regulatory compliance and certified training
services. Contract manufacturing includes pharmaceutical support, formulation
development, laboratory testing, and finished solid dosage and liquid
products. PharmEng's shares trade on the TSX Venture Exchange under the symbol
PII. To find out more about PharmEng International Inc. (TSX-V: PII), visit
our website at www.pharmeng.com.
Certain statements in this press release may include "forward-looking"
statements which involve known and unknown risks, uncertainties and other
factors which may cause actual results, performance or achievements of
PharmEng to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. When
used in this press release, such statements use such words as "may", "will",
"expect", "anticipate", "project", "believe", "plan", and other similar
terminology. The risks and uncertainties are detailed from time to time in
reports filed by PharmEng with the securities regulatory authorities in all of
the provinces and territories of Canada. New risk factors may arise from time
to time and it is not possible for management to predict all of those risk
factors or the extent to which any factor or combination of factors may cause
actual results, performance and achievements of PharmEng to be materially
different from those contained in forward-looking statements. Given these
risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.
For further information:
For further information: PharmEng International Inc., Charles Ivey, Vice
President, Tel: (905) 415 3922 x 116, E-mail: firstname.lastname@example.org