Spectral Diagnostics announces Proposed Offering of up to $18.2 million
TORONTO, June 11, 2014 /CNW/ - Spectral Diagnostics Inc. (TSX: SDI) (OTC QX:
DIAGF) (the "Corporation") today announced it has entered into agreements for
a non-brokered private placement of up to $18.2 million (the "Proposed
"We are very pleased to have reached agreement with certain of our existing
investors for this substantial financing at market, without the need for a
price discount or warrants, and with terms fair to all shareholders," stated
Anthony Businskas, Executive Vice President and CFO of Spectral. "This
financing, and the continued support of our major shareholders, positions us
well and gives us great confidence that we should have the necessary funds to
successfully complete our EUPHRATES clinical trial," continued Mr. Businskas.
The Corporation intends to use the net proceeds of the Proposed Offering to
fund its EUPHRATES clinical development program for PMX, its lead theranostics
product for the treatment of severe sepsis with septic shock and for working
capital and general corporate purposes.
The Proposed Offering is comprised of a Tranche "A" component and a Tranche
"B" component. The Tranche "A" component is comprised of 45,051,186 common
shares of the Corporation ("Shares") at a subscription price of $0.293 per
Share (being the 20 day volume weighted average trading price of the Shares on
the TSX for the 20 day period ending June 6, 2014, the day the Proposed
Offering was priced) for aggregate proceeds of $13.2 million, of which (a)
17,064,846 Shares, for aggregate proceeds of $5 million, are proposed to be
sold by the Corporation to its lead investor Toray Industries, Inc. ("Toray")
pursuant to a private placement agreement between the Corporation and Toray
(the "Toray Private Placement Agreement"); (b) 18,259,382 Shares, for
aggregate proceeds of $5.35 million, are proposed to be sold by the
Corporation to other insiders pursuant to subscription agreements entered into
between the Corporation and such investors; and (c) 9,726,958 Shares, for
aggregate proceeds of $2.85 million, are proposed to be sold by the
Corporation to other investors pursuant to subscription agreements entered
into between the Corporation and such investors.
The Tranche "B" component of the Proposed Offering is comprised of additional
Shares to be sold to Toray by the Corporation of up to $5 million, if, as and
when the Corporation exercises the right (the "Call Right"), granted by Toray
to the Corporation in the Toray Private Placement Agreement, exercisable by
written notice given by the Corporation to Toray at any time on or after March
1, 2015 until March 15, 2015, to require Toray to purchase from the
Corporation, at a subsequent closing to occur on April 1, 2015, up to that
number of Shares as is determined by dividing the Call Right amount exercised
(up to the $5 million), as applicable, by the volume weighted average trading
price of the Shares on the TSX for the 20 trading days ending on the business
day prior to the day the Call Right is exercised. The Shares to be sold to
Toray in Tranche "B" will only be sold if the Corporation exercises the Call
In total, an aggregate of 35,324,228 Shares, for aggregate proceeds of
$10,350,000, are proposed to be sold by the Corporation to insiders in Tranche
A of the Proposed Offering. The number of Shares sold to insiders in Tranche
B of the Offering will depend on whether the Corporation exercises the Call
Right, and if so, for what amount, and will also depend on the market price of
the Shares at the time the Call Right is exercised.
In connection with the Proposed Offering, the board of directors (the "Board")
of the Corporation engaged Koger Valuations Inc. ("Koger") to consider the
fairness of the Proposed Offering. After the completion of its review and
analysis, Koger delivered its opinion to the Board and concluded that the
Proposed Offering is fair, from a financial point of view, to the
disinterested shareholders of the Corporation, based upon and subject to the
various assumptions, limitations, qualifications and other considerations set
forth in the fairness opinion.
The Proposed Offering is subject to certain conditions including, but not
limited to, the receipt of all necessary regulatory and other approvals,
including the approval of the Toronto Stock Exchange. Given the participation
of insiders of the Corporation in the Proposed Offering, the completion of the
Proposed Offering is also subject to the approval of disinterested
shareholders of the Corporation at a special meeting called for July 22, 2014
(the "Special Meeting"). The record date for the Special Meeting has been set
at June 18, 2014. Subject to obtaining all of the foregoing approvals, the
Proposed Offering is scheduled to close shortly after the Special Meeting.
All shareholders are encouraged to read the management information circular of
the Corporation with respect to the Proposed Offering, which is expected to be
mailed to shareholders of record on or about June 24, 2014 and will be
available on SEDAR at www.sedar.com. The Board has unanimously recommended
that shareholders vote FOR the Proposed Offering. Further details of the
Proposed Offering are also contained in the Toray Private Placement Agreement
and the other subscription agreements, copies and forms of which have been
filed on SEDAR.
Shorecrest Group has been retained as the proxy solicitation agent for the
Special Meeting. For questions or assistance, please contact Shorecrest
toll-free at 1-888-637-5789, locally at 647-931-7454 or by email at
About Spectral Diagnostics
Spectral is a Phase III company seeking U.S. FDA approval for its lead
theranostics product for the treatment of severe sepsis with septic shock. PMX
is a therapeutic hemoperfusion device that removes endotoxin, which can cause
sepsis, from the bloodstream. Directed by the Company's Endotoxin Activity
Assay (EAA™), the only FDA cleared diagnostic for the risk of developing
sepsis. Spectral's EUPHRATES trial is the world's only active and most
innovative Phase III study in the area of septic shock.
PMX has been approved for therapeutic use in Japan and Europe, and has been
used safely and effectively on more than 100,000 patients to date. In March
2009, Spectral obtained the exclusive development and commercial rights in the
U.S. for PMX, and in November 2010, signed an exclusive distribution agreement
for this product in Canada. Approximately 350,000 patients are diagnosed with
severe sepsis and septic shock in North America each year, representing a
greater than $2 billion market opportunity for Spectral.
Spectral is listed on the Toronto Stock Exchange under the symbol SDI, and on
the OTCQX under the symbol DIAGF. For more information please visit
Information in this news release that is not current or historical factual
information may constitute forward looking information within the meaning of
securities laws. Implicit in this information, particularly in respect of the
future outlook of Spectral and anticipated events or results, are assumptions
based on beliefs of Spectral's senior management as well as information
currently available to it. While these assumptions were considered reasonable
by Spectral at the time of preparation, they may prove to be incorrect.
Readers are cautioned that actual results are subject to a number of risks and
uncertainties, including the availability of funds and resources to pursue R&D
projects, the successful and timely completion of clinical studies, the
ability of Spectral to take advantage of business opportunities in the
biomedical industry, the granting of necessary approvals by regulatory
authorities as well as general economic, market and business conditions, and
could differ materially from what is currently expected.
The TSX has not reviewed and does not accept responsibility for the adequacy
or accuracy of this statement.
SOURCE Spectral Diagnostics Inc.
Spectral Diagnostics Inc.
Anthony Businskas Executive Vice President and CFO 416-626-3233 ext. 2200
Adam Peeler Investor Relations 416-815-0700 ext. 225 firstname.lastname@example.org
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