NEW YORK (GenomeWeb News) – Warnex announced that it has sold its medical laboratories division to Gamma-Dynacare Medical Laboratories for C$7.5 million (US$7.3 million).
The medical laboratories division offers medical diagnostics, including molecular and pharmacogenetics, and forensic testing services. It brought in revenues of C$1.2 million for the third quarter of 20122, down 7 percent year over year, though molecular diagnostics and forensics testing sales increased 36 percent and 20 percent, respectively, year over year.
Warnex said that it also may receive C$2.6 million in additional consideration based on certain financial performance targets being met by the medical laboratories division. Gamma-Dynacare also assumed certain liabilities of the division and will provide employment to the 25 employees of the division.
The Laval, Quebec-based firm said that it received the requisite approval of its four debenture holders for the transaction. Warnex has agreed to use a portion of the proceeds from the sale to fully repay and settle the debentures of three of the holders and repay a "substantial" portion of the debentures held by the fourth holder.
The three debenture holders with whom Warnex is settling were owed US$3,135,481, US$1,091,097, and US$363,699 each on their 18 percent convertible debentures due Jan. 31, 2012. They have agreed to accept a one-time payment equal to 91 percent of the amount owed to them to settle the debt. Those payment collectively equal around US$4.2 million.
The fourth debenture holder, Persistence Capital Partners, will receive from Warnex a one-time payment of C$1,166,104, which is equal to nearly 43 percent of the amount due to the investment firm for its January 2012 debenture and February 2012 debenture. The balance on those debentures will remain outstanding.
"Warnex has been working diligently over the past few months to improve its balance sheet and position the company for the future," Michael Singer, chairman of the executive committee of the board of directors. "The sale of the medical laboratories division and the agreement with the debenture holders are key steps in this process, and over the coming months we will continue to focus our efforts on positioning the company for future success and increasing shareholder value."
Warnex recently announced the resignation of President and CEO Mark Busgang. The firm also recently formed its executive committee, comprised of independent directors, to oversee and make recommendations to the board regarding a review of the company's strategic alternatives.