NEW YORK (GenomeWeb) – Canadian molecular diagnostics firm GeneNews announced today that it intends to sell up to C$5 million ($3.8 million) in common stock through an unbrokered private placement.
The company plans to sell up to 50 million shares at C$.10 apiece. Any remaining unfunded portion of the offering may be raised with the issuance of a senior secured, collateralized convertible debenture, which will be issued with a one-year term and payable at 15 percent with a conversion price of C$.16 per share.
Roughly C$700,000 of the proceeds from the offering will be used to settle aged payables, C$300,000 will be used to pay interest associated with third-party debts, and the remaining C$4 million will be used for general corporate purposes and working capital, GeneNews said
The company has applied with the Toronto Stock Exchange for a financial hardship exemption, which would allow the offering to go forward without shareholder approval. The offering is expected to close in several tranches beginning around March 21 but no later than March 29.
Plans for the offering come amid financial difficulties for GeneNews, which recently considered restructuring or selling itself off after raising just C$1.3 million of a planned C$3 million financing. Earlier this month, the company signed an agreement to acquire full ownership of joint venture Innovative Diagnostic Laboratory as part of an effort to reinvigorate the clinical reference lab
During midday trading on the Toronto Stock Exchange, shares of GeneNews were up nearly 12 percent at C$.14.