Gemoscan Canada, Inc. Announces Proposed Acquisition and Financing
July 15 2013 - 5:35PM
Gemoscan Canada, Inc. ("Gemoscan" or the "Corporation") –
(TSX-V:GES) (MUN:1GE) wishes to announce that it has made an offer
to acquire a 100% interest in Physiomed Kennedy Inc. ("PKI"), which
operates a paramedical clinic in Toronto, Ontario (the
"Acquisition"). The purchase price has been negotiated on the basis
of a multiple of PKI's normalized earnings before interest, tax,
depreciation and amortization ("EBITDA") as at April 30, 2013 and
is subject to adjustment based on results as of April 30, 2014. The
consideration is to be paid as to 43.75% cash, 37.5% pursuant to a
debenture issued to the vendor (the "VTB") and 18.75% in shares of
Gemoscan priced upon the closing of the Acquisition. The VTB
shall bear interest at the rate of 8% per annum and shall have a
term of 24 months from the closing of the
Acquisition. Interest shall be paid monthly but no principal
payments are required until the due date.
Completion of the Acquisition is conditional on completion of
financing, the negotiation of a definitive agreement between the
parties and the receipt of all applicable regulatory approvals
including the approval of the TSX Venture Exchange.
Through a combination of organic growth and strategic
acquisitions Gemoscan is following through on its plans to emerge
as a leading platform in the quickly emerging retail based health
and wellness sector.
The acquisition of PKI will be one the stepping-stones intended
to drive incremental sales and profitability for the
Company. The acquisition of PKI and similar businesses in the
future is expected to be immediately accretive to Gemoscan while
presenting the Company with a captive distribution channel through
which to sell its current core offerings.
Scott Wilson, a director of Gemoscan, owns 50% of PKI through a
related company. As a result, the Acquisition is a related
party transaction as such term is defined in Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions ("MI 61-101"). The Acquisition is exempt
from the valuation and minority shareholder approval requirements
of MI 61-101 by reason of the exemptions contained in sections
5.5(a) and 5.7(1)(a) as the total consideration being received by
Mr. Wilson does not exceed 25% of Gemoscan's market
capitalization.
Financing
The Corporation and NorthStar Bancorp Limited ("Northstar") have
executed a binding term sheet to provide up to $1,500,000 in
secured convertible debentures (the "Debentures"). The
Debentures would be provided further to the Corporation's press
release dated March 18, 2013 pursuant to which it announced it had
entered into a financing facilitation agreement with Northstar,
whereby Northstar would provide up to $10,000,000 in financing. The
Debentures will bear interest at the rate of 10.75% per annum and
will have a term of 2 years. Interest only shall be payable
during the term with the principal due on the due date. The
Debentures will be convertible in the first year at the greater of
$0.20 and the 20 day average closing price less a 15% discount at
the time a notice of conversion is given. In the second year,
the minimum exercise price shall increase to $0.30. The
Debentures will be secured against the assets of the Corporation
and PKI upon the completion of the Acquisition. The use of
proceeds for the Debentures shall be as follows: (i) to repay
all outstanding secured debt of the Corporation; (ii) to fund the
cash portion of the purchase price for the Acquisition; and (iii)
for working capital. Phoenix Capital Partners Inc. ("Phoenix")
acted as the exclusive advisors for Gemoscan in arranging the
Debenture financing.
The Debenture financing remains subject to the completion of
formal agreements as well as the approval of the TSX Venture
Exchange.
About Gemoscan Canada, Inc.
Gemoscan is an industry leader in food intolerance management
and maintains a first-to-market position with Canada wide
distribution through select retail partners. Founded in 2003, using
its proprietary patented technology, Gemoscan develops, owns and
markets comprehensive food sensitivity and dietary management
solutions for consumers, including the HEMOCODE™ Food Intolerance
System and the MenuWise™ Food Intolerance Plan, personalized
naturopathically supervised nutritional programs that promote
well-being. Gemoscan is the first and only provider to
commercialize a food intolerance management solution directly to
consumers in partnership with retailers, and today offers the most
comprehensive services available.
Gemoscan Canada, Inc. trades its shares on the Toronto Venture
Exchange under the symbol GES and is quoted on the Munich,
Frankfurt and Stuttgart Stock Exchanges under the symbol 1GE.
About Phoenix Capital Partners Inc.
Phoenix Capital Partners Inc. is an independently owned
corporate financing boutique firm which serves the advisory,
transaction negotiation, and multiple financing needs of small and
medium-sized companies throughout Canada.
About NorthStar Bancorp Limited
NorthStar Bancorp Limited ('NBL') is a merchant banking firm
based in Toronto. NBL seeks investments in companies positioned for
substantial financial growth. Our objective is to create increased
shareholder value in our portfolio companies through our ability to
financially participate and facilitate their growth needs.
Forward-Looking Information
This news release contains certain "forward-looking
information". All statements, other than statements of historical
fact that address activities, events or developments that Gemoscan
believes, expects or anticipates will or may occur in the future.
These forward-looking statements reflect the current expectations
or beliefs of Gemoscan based on information currently available to
Gemoscan. Forward-looking statements are subject to a number of
signify cant risks and uncertainties and other factors that may
cause the actual results of Gemoscan to differ materially from
those discussed in the forward-looking statements, and even if such
actual results are realized or substantially realized, there can be
no assurance that they will have the expected consequences to, or
effects on Gemoscan. Any forward-looking statement speaks only as
of the date on which it is made and, except as may be required by
applicable securities laws, Gemoscan disclaims any intent or
obligation to update any forward-looking statement, whether as a
result of new information, future events or results or otherwise.
Although Gemoscan believes that the assumptions inherent in the
forward-looking statements are reasonable, forward-looking
statements are not guarantees of future performance and accordingly
undue reliance should not be put on such statements due to the
inherent uncertainty therein.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
CONTACT: Brian Kalish
Chief Executive Officer
Gemoscan Canada, Inc.
416.650.1200
bkalish@hemocode.com
www.gemoscan.com