Thursday, April 28, 2016

GeneNews closes $10M (U.S.) note financing with Alumina

GeneNews closes $10M (U.S.) note financing with Alumina

2016-04-28 10:32 ET - News Release

Mr. James Howard-Tripp reports
Further to its press releases of March 14, 2016, and April 7, 2016, GeneNews Ltd. has provided an update on its non-brokered private placement.
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.

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