NEW YORK (GenomeWeb) – Canadian molecular diagnostics company GeneNews today announced it will borrow $400,000 and lay off 16 workers at Innovative Diagnostics Laboratory (IDL), its joint venture with Cobalt Healthcare Consultants.
Toronto-based GeneNews is scrambling to respond to IDL's financial difficulties, brought on by declining sales and accumulating losses.
The company signed an interim working capital loan agreement with a major shareholder, who is also one of the firm's directors, it said in a statement. The one-year loan bears a 2 percent interest rate and is repayable on demand, secured against the firm's intellectual property.
"The interim working capital financing announced today provides GeneNews sufficient capital to support continuing operations in the short-term," GeneNews Executive Chairman James Howard-Tripp said in a statement. The company said it will use the funds to restructure its operations, which "may include a strategic financing, sale, merger, or other business combination," though Howard-Tripp noted that "no decision has been made with regard to these alternatives, and there is no assurance that any transaction will be entered into or consummated."
The layoffs will cut the staff by 30 percent, GeneNews said, bringing IDL's headcount down to 34 employees.
IDL launched in 2013 as a joint venture between GeneNews, Cobalt, and Health Diagnostic Laboratory. GeneNews and Cobalt bought HDL's stake in May, giving each a 50 percent stake in IDL.
In morning activity on the Toronto Stock Exchange, shares of GeneNews were unchanged at C$.04 (US$.03).