TORONTO, Nov. 13, 2013 (GLOBE NEWSWIRE) -- GeneNews Limited ("GeneNews" or the "Company") (TSX:GEN) announces that pursuant to a one-time conversion opportunity (the "Conversion Opportunity"), holders of outstanding convertible debentures of the Company (the "Convertible Debentures") may convert the principal amount of their Convertible Debentures, together with accrued and unpaid interest thereon (the "Conversion Amount"), into common shares of the Company ("Common Shares") as of December 18, 2013, at a price per Common Share equal to 90% of the five (5) day volume weighted average price of the Common Shares on the Toronto Stock Exchange (the "TSX") for the period ending on December 11, 2013.
Additionally, in the event that a Convertible Debenture holder elects to convert all of its Convertible Debentures as at December 18, 2013, the Conversion Amount payable will be increased by the difference between the accrued and unpaid interest of the Convertible Debentures as at the maturity date thereof and the accrued and unpaid interest thereon as at December 18, 2013. Certain Convertible Debentures holders who (i) hold Convertible Debentures with a maturity date of November 12, 2015; (ii) elect to convert all of their Convertible Debentures as at December 18, 2013; and (iii) hold warrants which were issued at the time their Convertible Debentures were issued (the "Related Warrants"), will have the term of their Related Warrants extended by a period of 18 months.
As at December 18, 2013, insiders of the Company will hold an aggregate principal amount of $863,590 Convertible Debentures which represents 27.5% of the total principal amount of the Convertible Debentures of $3,141,443. The total principal amount and accrued interest owing on the Convertible Debentures to December 18, 2013 will be $5,189,244 and the principal amount and accrued interest owing on the Convertible Debentures to December 18, 2013 held by insiders of the Company will be $1,491,719.90 or 28.7% of this total amount.
The Conversion Opportunity is subject to the approval of the requisite number of holders of the Convertible Debentures to an amendment to the Convertible Debentures (the "Debenture Amendment").
The Conversion Opportunity and extension of Related Warrants is subject to TSX approval. Approval is subject to the Company fulfilling all requirements of the TSX, including obtaining approval of the shareholders of the Company to allow the Company to issue more than 25% of the currently issued and outstanding Common Shares of 33,744,883. In addition, the dilution calculation for the impact of the Conversion must include the aggregate of 16,790,994 warrants (issuable into 2,938,424 Common Shares) which were issued at the time the Convertible Debentures were issued.
Shareholders will consider this matter at a special meeting of shareholders to be held at 10:00 am EST on December 16, 2013, at Fasken Martineau DuMoulin LLP, 333 Bay Street, Toronto, Ontario. A notice of meeting and information circular will be mailed to registered shareholders and non-objecting beneficial owners of GeneNews in the near future.
The Company has determined that while the Conversion Opportunity may be a related party transaction pursuant to Multilateral Instrument 61-101 – Special Transactions ("MI 61-101") as certain related parties hold Convertible Debentures, the Company is not required to obtain a formal valuation under subsection 5.4(1) of MI 61-101 for the Conversion Opportunity. In addition, the exemption from the minority approval requirement provided for under subsection 5.7(1)(a) of MI 61-101 can be relied on as neither the fair market value of the Convertible Debentures held by related parties nor the fair market value of the consideration paid for such Convertible Debentures exceeds 25% of the Company's market capitalization.
About GeneNews
GeneNews is a company focused on developing and commercializing proprietary molecular diagnostic tests for the early detection of diseases and personalized health management, with a primary focus on cancer-related indications. GeneNews' first product, ColonSentry®, is the world's first blood test to assess an individual's current risk for colorectal cancer. GeneNews' common shares trade on the Toronto Stock Exchange under the symbol 'GEN'. More information on GeneNews and ColonSentry®, can be found at www.GeneNews.com or www.ColonSentry.com.
Forward-Looking Statements
This press release contains forward-looking statements, which reflect the Company's current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein including as a result of the shareholders of the Company not approving the issuance of Common Shares in connection with the Conversion Opportunity; holders of Convertible Debentures not approving the Debenture Amendment; or a change in the trading price of the Common Shares. Investors should consult the Company's ongoing quarterly filings, annual information form and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. The Company disclaims any obligation to update these forward-looking statements.