RE:RE:i say 10 to 12 cents pp TORONTO, March 14, 2016 (GLOBE NEWSWIRE) -- GeneNews Limited ("GeneNews" or the "Company") (TSX:GEN) today announced that it is undertaking a non-brokered private placement of up to 50,000,000 common shares of the Company at a price of $0.10 per share (the "Offering"). Any remaining unfunded portion of the Offering may be raised with the issuance of a senior secured, collateralized convertible debenture. If needed, this convertible debenture would be issued with a term of 1 year from date of issue, interest accrued and payable at 15% and with a conversion price of $0.16 per Common Share. The conversion would become mandatory if the Common Shares trade above $0.16 for 30 consecutive trading days. In connection with the Offering, GeneNews has applied to the Toronto Stock Exchange (the "TSX") for exemption under Section 604(e) of the TSX Company Manual for a "financial hardship" exemption, as detailed below.
As announced on November 13, 2015, the Company had earned limited revenue from royalties from its joint venture in Innovative Diagnostic Laboratory, Inc. ("IDL").
In August 2015, the Company laid out a five-point action plan designed to reinvigorate IDL's business. This consisted of completing the transition of IDL billings to a new third-party billing provider, bringing the contract sales force of Cobalt Healthcare Consultants, Inc. ("Cobalt") in-house at IDL, adding marketing and sales support, building out an inside-sales effort, establishing additional contractual relationships with hospital and large practice groups, and continuing to expand IDL's menu of advanced cancer assays. Also, in August, the Company closed a financing of $1.27 million, short of its goal of $3 million.
A substantial impediment to this, and any further financing, was the requirement that GeneNews have full control of IDL and be able to implement its reorganization plan. This involved buying out our partner in IDL, Cobalt. As outlined in GeneNews' press release dated March 4, 2016, this has now been done. However, due to the length of time required to reach this agreement, the Company is in immediate need of finances in order to complete its restructuring, settle the aged payables and focus on the plan to reinvigorate IDL's business.
Assuming the Offering is fully subscribed, GeneNews expects to use the proceeds of the Offering as follows: $700,000 to settle aged payables, $300,000 to pay interest associated with third-party debts and $4.0 million to fund general corporate and working capital purposes (all amounts are approximate). The actual allocation of the proceeds may vary from the uses set forth above, depending on future operations or unforeseen events or opportunities. If the Offering is not fully subscribed, the Company may apply the proceeds of the Offering in such priority and proportion as the Board of Directors of the Company determines is appropriate.
The Offering is open to all existing shareholders of the Company, subject to the limitations discussed herein. No insiders are participating in the Offering. The Offering will be conducted in reliance upon prospectus exemptions which permit the Company to distribute securities pursuant to the existing security holder's prospectus exemption available under OSC Rule 45-501 - Ontario Prospectus and Registration Exem