NEW YORK (GenomeWeb News) – Warnex today announced it has completed the sale of its Analytical Services division to Neopharm Labs.
The deal had an effective date of April 2 and provides Warnex with C$300,000 (US$303,616) in cash proceeds. Under the transaction's terms, Neopharm assumes certain specific undisclosed liabilities related to the division. Subject to certain conditions, Warnex will have the right to terminate the lease for its Laval, Quebec facilities, which are owned by an affiliate of Neopharm, prior to the current expiry date of the lease.
Neopharm assumes all of Warnex's lease obligations for its Blainville, Quebec facility and will consolidate operations of the Analytical Services division at that location, excluding the stability chambers and related activities and some special projects, which will continue to be performed out of Laval.
Neopharm is providing employment to about 90 employees of the division, Warnex said.
It added that proceeds from the sale will go toward working capital and outstanding debt reduction.
Warnex originally announced the sale in December, though it did not reveal the buyer then. The deal was valued at the time at C$1.1 million. In February, Warnex suspended the deal claiming that Neopharm failed to fulfill certain obligations under its terms.
Warnex and Neopharm then initiated legal action against each other. Today, Warnex said that all legal proceedings by both parties have been terminated.
Michael Singer, chairman of Warnex's board, said in a statement that the company has been "working diligently" to improve its balance sheet and strategic outlook, and the sale of the Analytical Services division is a "key step in this process." As a result of the sale, Warnex can concentrate on its core Bioanalytical Services division, which will be Warnex's sole focus moving ahead.
Late last week, Warnex signed a new credit facility with Accord Financial. It received initial funding that enabled it to repay the entirety of the C$975,947 in principal amount of debentures held by Persistence Capital.
Also, the firm's shares were delisted from the Toronto Stock Exchange yesterday and now trade on the TSX Venture Exchange.