GeneNews (TSX:GEN) has closed the first tranche of a private placement, consisting of the issuance of approximately 5.6 million common shares at a price of 10 cents each, for gross proceeds of approximately $560,000, to be used for working capital.
The company also has executed a term sheet with Alumina Partners for a second tranche, allowing GeneNews to draw down on $10-million (US) in structured, unsecured convertible notes, at the company’s option, in installments of $200,000 over a 24-month period.
The initial draws will be limited to $1-million within the first 120 days after closing and will be accelerated after that. The notes will have a term of one year from date of issue, with interest accrued and payable at 12% a year. The second tranche is expected to close in five-to-10 days.
Beginning 120 days after issue of each note, the issuer may convert all or part of the note into GeneNews common shares at a conversion price equal to a 25% discount to the five-day volume-weighted average price of the common stock on the date of conversion. The conversion will become mandatory under certain conditions.
GeneNews also continues to negotiate the issuance of up to a $2-million senior secured, collateralized convertible debenture as part of the offering. The company confirmed that the aggregate number of common shares issued in the offering would not exceed 50 million.
“We are very satisfied with the success of this private placement, which yielded us gross proceeds that surpassed our expectations,” executive chairman, James Howard-Tripp, said in a statement.
“These financings were structured to allow GeneNews to maximize its capital resources, while limiting the number of shares that the company offers. We intend to take full advantage of this opportunity, and make good use of these proceeds to advance GeneNews’ leadership position in advanced cancer diagnostics and personalized medicine,” he added.