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Transgenomic Closes $2.2M Private Placement, Inks Preferred Stock Conversion Deal

NEW YORK (GenomeWeb) – Transgenomic said today that it has raised $2.2 million through the private placement of preferred stock and warrants with existing investors Crede Capital Group and Third Security.

Separately, the molecular diagnostics firm announced that it has signed an agreement with holders of its outstanding Series A and Series B convertible preferred stock to convert the securities into common stock.

Under the terms of the private placement, Transgenomic sold roughly 2.4 million shares of Series A-1 convertible preferred stock and warrants to purchase up to approximately 1.8 million shares of common stock. The stock and warrants were sold as units for $.93 apiece.

The Series A-1 preferred shares are convertible into common stock at an initial rate of one for one. The warrants are immediately exercisable and carry a term of five years, with an exercise price of $1.21 per common share. Each warrant includes a cash and cashless exercise feature, as well as an exchange feature.

Proceeds from the private placement will be used for general corporate and working capital purposes, including the ongoing commercialization of Transgenomic's ICE COLD-PCR technology, the company said.

Transgenomic also amended a loan and security agreement with affiliates of Third Security holding Series A and Series B convertible preferred stock to convert those shares, as well as accrued and unpaid dividends on the shares, into common stock.

In conjunction with the deal, Transgenomic said it has issued more about 6.8 million additional shares of common stock to the affiliates. Following the conversion, no shares of the firm's Series A or Series B convertible preferred stock will be outstanding.

The conversion "will help simplify our equity structure and thereby position us for the growth we anticipate in the new year," Transgenomic President and CEO Paul Kinnon said in a statement. "We believe this revised equity structure is better aligned with our growth plans going forward."

Shares of Transgenomic were down more than 4 percent to $.90 in midday trading on the Nasdaq.