GeneNews Signs Binding Commitment Letter with Milost Global for US$10 Million Financing
Jun 29, 2017, 15:01 ET
- Initial US$3 Million Convertible Note Placement to Commence Immediately -
TORONTO, June 29, 2017 /CNW/ - GeneNews Limited (TSX:GEN) ("GeneNews" or the "Company") announced today that it has signed a binding commitment letter with Milost Global Inc. ("Milost" or the Purchaser") pursuant to which Milost will initially purchase up to US$3 million in unsecured convertible notes (the "Notes") from GeneNews (the "Initial Draw Down").
The Notes will be convertible, in accordance with their terms, into common shares of GeneNews (the "Common Shares") at a price equal to the 5-day volume weighted average price of the common shares of GeneNews on the Toronto Stock Exchange ("TSX"), on the day of the draw down notice, plus a 200% premium, have a term of five (5) years from date of issue, bear interest at five percent (5%) per annum, with interest payable quarterly in arrears in cash.
Beginning 121 days after issuance of the Notes, should the market price of the Company's Common Shares trade above the 200% premium price for five (5) consecutive days, at the option of either the Company or the Purchaser, the Notes may be converted into Common Shares. The aggregate conversion by the Purchaser is limited on a weekly basis to 25% of the Company's average weekly trading volume on the TSX for the four (4) weeks immediately preceding such week.
The Notes may be pre-paid by the Company at any time subject to the Company paying to the Purchaser a pre-payment penalty equal to five percent (5%) of the aggregate principal amount of the Notes being pre-paid, if such pre-payment is on or before July 1, 2020 and three percent (3%), if such pre-payment is made thereafter.
The Initial Draw Down is expected to be completed within the next 20 business days, subject to receipt of all necessary regulatory approvals and the execution of a definitive subscription agreement.
The Initial Draw Down forms part of an equity and debt subscription agreement (the "MESA") to be entered into by GeneNews and Milost for up to US$10 million in total proceeds. The MESA includes the US$3 million Initial Draw Down and an investment from Milost of up to an additional US$3 million in unsecured convertible notes (the "Second Notes") to be drawn down ("Second Note Draw Down"), at the Company's option, and up to US$4 million in Common Shares in GeneNews to be drawn down ("Equity Draw Down"), also at the Company's option, in maximum installments of US$1 million.
Proceeds raised from the MESA will be used for working capital and corporate growth purposes, including the continued execution of the Company's growth strategy for its Virginia-based Innovative Diagnostic Laboratory ("IDL") clinical reference lab business.
"We are very pleased to secure this US$10 million total investment commitment, which has been carefully structured to maximize GeneNews' capital resources while, at the same time, limit dilution as much as possible," commented GeneNews Chairman & CEO, James R. Howard-Tripp. "To that end, in addition to the initial US$3 million sale of Notes, we will have another US$3 million in convertible debt available to us, as well as US$4 million in equity should we need it. This puts us on a more solid financial footing, enabling us to settle key payables, but more particularly, to aggressively build out the IDL business via expanded marketing programs."
Under the MESA, any Notes issued under any Second Note Draw Down will have the same terms as the Notes described above. The purchase price per Common Share issued under any Equity Draw Down will be the 5-day volume weighted average price of the Common Shares on the TSX immediately preceding the issuance of the draw down notice, plus a 50% premium (the "Purchase Price").
Should the market price of the Common Shares not be at or above the Purchase Price on or before 180 business days from the date of any Note or Equity Draw Down, then the Company will recognize to the Purchaser, as its sole remedy, a discount of 20% against the Purchase Price, such discount to be paid by the Company to Purchaser in Common Shares no later than 20 business days from the date of such determination.
In connection with the transaction, GeneNews has agreed to pay as a commitment fee, three percent (3%) of each Note Draw Down, to be paid in cash, and four percent (4%) of each Equity Draw Down, to be paid in Common Shares.
The MESA, including the Initial Draw Down and each draw down under it, are subject to the approval of the TSX.
GeneNews, an innovator in the liquid biopsy space, is committed to becoming a leader in advanced diagnostics and personalized medicine, serving as a strong commercialization outlet for early detection of cancer and other chronic diseases. Our mission is to identify, assess and make commercially available a comprehensive menu of diagnostics that provide physicians and patients with personalized clinical intelligence and actionable information to improve health outcomes through the early diagnosis of disease. Our Richmond, Virginia-based Innovative Diagnostic Laboratory clinical reference lab specializes in traditional and advanced clinical evidence-based blood testing that helps find, understand, and address cancer risk in patient populations. Currently, Innovative Diagnostic Laboratory ("IDL") offers risk assessment blood tests for four prevalent cancer types - colon, lung, prostate and breast. GeneNews' common shares trade on the Toronto Stock Exchange under the symbol 'GEN'. More information on GeneNews and IDL can be found at www.GeneNews.com and www.myinnovativelab.com, respectively.
This press release contains forward-looking statements identified by words such as "expects", "will" and similar expressions, which reflect the Company's current expectations regarding future events, including with respect to obtaining regulatory approval and execution of a definitive subscription agreement. The forward-looking statements involve risks and uncertainties that could cause the Company's actual events to differ materially from those projected herein. Investors should consult the Company's ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements, except as required by law.
SOURCE GeneNews Limited
For further information: Company Contact: James R. Howard-Tripp, Chairman & CEO, [email protected]; Investor & Media Contact: Stephen Kilmer, Office: (212) 618-6347, Mobile: (647) 872-4849, [email protected]
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