Agreement Includes Refinancing of Existing Long-Term Debt
TORONTO, Jan. 22, 2014 /CNW/ - Microbix Biosystems Inc. (TSX: MBX), an innovator of biological products and technologies, announced today it has signed a letter of intent to finance the development of the LumiSort® prototype instrument for its semen sexing technology.
LumiSort® is a completely new instrument-based livestock sex selection technology that will significantly improve the yield and quality of sexed semen leading to higher conception rates and better economics compared to current methods. LumiSort® employs novel and innovative instrument designs that address fundamental problems with existing commercial sex selection technologies, based on established Microbix intellectual property.
The new financing for the development of the prototype instrument is being provided by a holder of $4.5 million of existing Microbix convertible debentures. The new financing agreement represents total new money of $2.75 million, comprised of: 1) a new $1.5 million convertible debenture at 9% interest due in 2028 that is convertible into Microbix common shares at $0.35 per share, and 2) a balance of $1.25 million that will be payable, at the option of Microbix, upon the achievement of certain development milestones.
The debenture holder has also agreed to refinance $2.0 million of the $4.5 million of existing debentures, removing their convertibility option and making this debenture callable by Microbix upon 3 months notice.
The incremental impact of these debenture changes adds approximately 2,000,000 shares to the Company's total share count on a converted basis. In addition, the debenture holder acquires a 10% interest in the LumiSort® venture.
The Company also announced the involvement of Lathrop Engineering of California in the LumiSort project. Lathrop helped Microbix develop the LumiSort® proof-of-concept in 2011 and has now been engaged to design, build and test the prototype. Lathrop will initiate the prototype development work in the very near future and the Company anticipates completion of the prototype later this year.
Vaughn Embro-Pantalony, President and Chief Executive Officer said, "Our new agreement with the debenture holder is the culmination of several months of review and negotiation which has resulted in a comprehensive and balanced solution addressing many key objectives of our Company. First, we now have the required funding to demonstrate the superior features of our LumiSort® technology. Second, we have negotiated more favourable terms on a significant portion of our existing debt load -thereby reducing the carrying costs and strengthening our balance sheet. Finally, we have accomplished both of these important objectives with minimal dilution impact on our existing shareholders, while at the same time retaining 90% ownership of the LumiSort® venture."
Embro-Pantalony continued, "We are very excited to be launching the development of the LumiSort® prototype in the coming days, and we look forward to providing ongoing progress reports during 2014."
Microbix' semen sexing technology will enter the livestock artificial insemination market estimated at $2 billion. Microbix has already negotiated term sheet agreements for its technology with 25% of global livestock genetics companies, agreements that will become effective once LumiSort® is commercially available. Protected by a strong intellectual property position, Microbix expects LumiSort® will become the industry standard for livestock producers.
About Microbix Biosystems
Microbix Biosystems Inc. specializes in the development of biological solutions, including products for vaccine and diagnostics markets worldwide. The company owns intellectual property for an approved biological drug, a vaccine technology and an animal reproduction technology. Established in 1988, Microbix is headquartered in Toronto.
Microbix' pipeline of innovative technologies and products includes LumiSort® semen sexing technology for the livestock industry, Kinlytic®, a thrombolytic drug with several approved and potential applications including the treatment of life-threatening blood clots, and VIRUSMAX®, a proprietary technology for increasing virus yields in influenza vaccine manufacture.
This press release may contain forward-looking statements which are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements including the risks associated with litigation, operations in foreign jurisdictions, foreign currency and exchange rate risk, and risks of raising capital on acceptable terms or at all. These statements reflect management's current estimates, beliefs, intentions and expectations; they are not guarantees of future performance. The Company cautions that all forward-looking information is inherently uncertain and the actual performance may be affected by a number of material factors, many of which are beyond the Company's control. Accordingly, actual future events, conditions and results may differ materially from the estimates, beliefs, intentions and expectations expressed or implied in the forward-looking information. All statements are made as of the date of this news release. The Company is under no obligation to update or alter any forward-looking information.
Please visit www.sedar.com for recent Microbix Biosystems Inc. filings on its pipeline products and financial information.
SOURCE: Microbix Biosystems Inc.
For further information:
Visit www.microbix.com or contact: Vaughn C. Embro-Pantalony, CEO, (905) 361-8910 (ext. 350) or Charles Wallace, CFO (905) 361-8910 (ext. 255).