THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT INTENDED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.
TORONTO, April 28, 2016 (GLOBE NEWSWIRE) -- Further to its press releases of March 14, 2016 and April 7, 2016, GeneNews Limited (“GeneNews” or the “Company”) (TSX:GEN) today provided an update on its non-brokered private placement (the “Offering”).
The Company has executed a definitive financing agreement (the “Agreement”) with Alumina Partners LLC for a second tranche (the “Second Tranche”) of the Offering, whereby the Company will draw down on US$10 million in structured, unsecured convertible notes (the “Notes”), at the Company’s option, in installments of US$200,000 over a 24 month period. The initial draw will be limited to US$200,000 within the first 120 days. The Notes will have a term of one (1) year from date of issue, with interest accrued and payable at 12% per annum. Beginning 120 days after issue of each Note, the Note holder may convert all or part of the Note into GeneNews common shares at a conversion price equal to a 25% discount to the five (5) day volume-weighted average price per common share on the date of conversion. The conversion will become mandatory if the common shares trade above a 25% premium to the intraday high trading price during the 10 days immediately preceding the day on which the Notes become eligible for conversion into common shares and remains above this price for 20 consecutive trading days provided, however, that the conversion shall not result in the holder of the Note owning more than 9.9% of the issued and outstanding common shares of GeneNews. In connection with the transaction, GeneNews has agreed to issue as a commitment fee, in aggregate, a total of US$845,000 in restricted common shares over the term of the Agreement, to be paid US$200,000 upon the first draw and the remainder in 10 equal payments of US$64,500 upon each issuance of US$1 million in Notes. The restricted common shares will be issued at the market price at the time of issuance.
The Company also announced that, further to its press release of April 7, 2016, it has elected not to continue its negotiations for the issuance of up to a $2 million senior secured, collateralized convertible debenture as part of the Offering.
The Company again confirmed that the aggregate number of common shares issued in the Offering will not exceed 50 million.
“These financings have been structured to maximize GeneNews’ capital resources while, at the same time, limit dilution as much as possible,” commented GeneNews Executive Chairman, James R. Howard-Tripp. “We are very pleased with the strong level of support we have received from both new and existing investors, and remain committed to making good use of their proceeds to advance GeneNews’ leadership position in advanced cancer diagnostics and personalized medicine. To this end, the new partnership with JTS is gaining momentum and is anticipated to bear fruit over the coming months"
The Offering has TSX conditional approval and the final documents will be filed with the TSX tomorrow. The Second Tranche of the Offering closed yesterday. The securities issued will be subject to a hold period.
Financial Hardship Exemption
As the aggregate number of Common Shares issuable pursuant to the Offering exceeds 25% of the currently issued and outstanding Common Shares of the Company, the Offering may result in a new control person of the Company and the discount on pricing is above the allowable limits, GeneNews would ordinarily be required to obtain shareholder approval pursuant to the applicable policies of the TSX, which are section 607(g)(i) and section 604(1)(i) and section 607(e), respectively, of the TSX Company Manual (the “Manual”). However, the Company has applied to the TSX, pursuant to the provisions of Section 604(e) of the Manual, for a “financial hardship” exemption from the requirement to obtain shareholder approval, on the basis that the Company is in serious financial difficulty and the Offering is designed to improve the Company’s financial situation. The application was made upon the recommendation of the board, free from any interest in the transaction and unrelated to the parties involved in the transaction and was based on their determination that the transaction is reasonable for GeneNews in the circumstances.
This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the common shares or the Notes, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The common shares and the Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, "U.S. persons," as such term is defined in Regulation S under the U.S. Securities Act, unless an exemption from such registration is available.
About GeneNews
GeneNews is focused on developing and commercializing proprietary molecular diagnostic tests for the early detection of diseases and personalized health management, with a primary focus on cancer-related indications. The Company's lead product, ColonSentry®, is the world's first blood test to assess an individual's current risk for colorectal cancer. GeneNews' common shares trade on the Toronto Stock Exchange under the symbol 'GEN'. More information on GeneNews can be found at www.GeneNews.com.
About IDL
Richmond, Virgina-based IDL is a national clinical reference lab specializing in personalized blood-based testing to help find, understand, and address cancer risk in patient populations. IDL’s mission is to provide a comprehensive menu of traditional and advanced clinical evidence-based blood tests that aid in early cancer detection. Currently IDL offers risk assessment blood tests for the three most prevalent cancer types including lung, colon and prostate. IDL is actively in-licensing and commercializing an array of DNA, RNA, protein and autoantibody blood-based cancer diagnostic tests to address early detection of all major types of cancer.
Forward-Looking Statements
In order to provide GeneNews’ investors with an understanding of our current intentions and future prospects, this release may contain statements that are forward-looking. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “believes,” “anticipates,” “plans,” “expects,” “will,” “intends,” “potential,” “possible” and similar expressions are intended to identify forward-looking statements. These forward-looking statements include our expectations regarding the proposed offering and the use of proceeds from such offering.
Forward-looking statements involve risks and uncertainties related to the Offering, our business and the general economic environment, many beyond our control. These risks, uncertainties and other factors could cause our actual results to differ materially from those projected in forward-looking statements and include the risk that the Company may not be able to access additional capital pursuant to the Agreement, the Company may not earn through its operations or raise through additional financings the funds required to satisfy the obligations under the Notes, the funds raised under the Offering will only be sufficient for the Company to carry on as a going concern for three months without additional funds and there is no certainty that the Company may be able to raise such funds on terms satisfactory to it or at all, and there can be no guarantee of success under partnership arrangements.
Although we believe that the forward-looking statements contained herein are reasonable, we can give no assurance that our expectations are correct. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. 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.
Company Contact:
James R. Howard-Tripp
Executive Chairman
Office: (905) 209-2030
jhoward-tripp@genenews.com
Investor & Media Contact:
Stephen Kilmer
Kilmer Lucas Inc.
Office: (647) 872-4849
stephen@kilmerlucas.com
