Warnex and Diagnos enter into a pre-amalgamation agreement

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 Diagnos.

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 of Diagnos.

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 $150,000.

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 Amalgamation.

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.

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:

Michael Singer
Chairman of the Board of Directors, Warnex Inc.
Tel: (514) 940-3600

Profil de l'entreprise

Warnex Inc.

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