Upmarket Deal at $2.50 Per Share Saves Generex Biotechnology
Shareholders $14+ Million
Generex and Veneto Holdings
Re-Negotiate Acquisition from a $35 Million Total Consideration to
a $21 Million Stock-Only Transaction at $2.50 Per Share to Satisfy
Generex’ Obligations
MIRAMAR, FL -- March 29, 2019 -- InvestorsHub NewsWire --
Generex Biotechnology Corporation (www.generex.com) (OTCQB:
GNBT) (http://www.otcmarkets.com/stock/GNBT/quote) is proud to
announce that the company has successfully renegotiated a mutually
agreed upon purchase price for certain assets of Veneto Holdings.
As previously reported, on October 3, 2018, Generex affiliate
NuGenerex Distribution Solutions 2, LLC (“NuGenerex”) agreed to
purchase Veneto Group’s eight pharmacies, a wholesale pharmacy
purchasing company, and an in-network laboratory. In
consideration, NuGenerex executed and delivered to Veneto a
promissory note in the principal amount of US $15 Million (the
“First Tranche Note”). On November 1, 2018, NuGenerex completed the
acquisition of the balance of the Veneto Group operating assets,
consisting primarily of its management services organization (MSO)
business and two additional ancillary service companies. In
consideration of the sale, transfer, and assignment of those
assets, NuGenerex executed and delivered to Veneto a secured
promissory note in the principal amount of US $35 Million due
January 15, 2019. The note was guaranteed by Joseph Moscato, Chief
Executive officer of Generex, and retired and replaced the First
Tranche Note.
The acquisition of selected Veneto Group assets is now complete.
With this transaction, Generex, with the support of the Veneto
Board, has renegotiated the purchase price to $21 million in an
all-stock transaction at $2.50 per share, which equates to 8.4
million shares of GNBT Common Stock that will be paid from the
dividend share pool [*See Note] to satisfy the obligations of
Generex. The renegotiation centered around Generex’ continued
assessment of the business operations of the acquired assets,
including the evaluation of profitability, compliance with
regulatory requirements, and organizational performance.
Under the guidance of Terry Thompson, President of NuGenerex
Distribution Solutions (NDS) and Chief Operating Officer of
Generex, the company has reorganized the Veneto assets to focus on
building the MSO business and completely revamping the pharmacy
model to yield a better use of capital and to avoid continual
regulatory and contractual scrutiny from the established
regulators, wholesalers, PBM’s, and insurers. The revised strategy
is designed to be fully compliant with no direct pharmacy ownership
and replacement of brick and mortar pharmacies with a nationwide
network of contracted pharmacies to fulfil the business needs of
the company.
Mr. Thompson commented, “The Veneto MSO platform remains a very
powerful relationship engine with our investor physicians. We have
spent the past several months rationalizing the team and talent,
the products and services, and add on acquisitions.
Most importantly, we have hired top tier health law counsel
to keep us compliant and to continually review the health law and
compliance issues surrounding our strategy. We believe we have
cleared a runway to a successful acquisition strategy and organic
growth through sales of new products, diversifying our offerings,
and preparing for regional expansion. We finished a beta site roll
out of our new DME-IQ product with a large orthopedic center and
are calculating the results and preparing a proforma forecast to
assess our roll out plans. We are also getting closer to finalizing
our acquisitions in the surgical and biological space and are very
excited as to the cross-over opportunities in these products and
services. Other products on the horizon, such as our recently
acquired Olaregen Therapeutix Inc’s new world class product
Excellagen, which our podiatrists are keen to begin using, are
adding more value to our relationships. The Veneto assets and
physician relationships are at the core of our future
momentum.”
Joseph Moscato added, “The Veneto transaction is now completely
finalized with an up-market, all share deal that saves Generex
shareholders $14 million plus interest, eliminates the $20 million
promissory note and guarantees from the second tranche note, and
satisfies the company’s obligations for the acquisition. When we
make an acquisition, we have a deliberate, step-by-step process to
ensure that we build true value for our shareholders and investors.
We evaluate acquisition targets with multi-level due diligence,
companies are audited for financial, operational, and regulatory
compliance for the last several years, and the third step is an
operational performance evaluation through a quarter. When we find
deficiencies in any area, we renegotiate the deal to reflect the
true value of the acquired business. Since the acquisition was made
at the beginning of November, Terry Thompson, our Chief Legal
Counsel, Anthony Crisci, Esq., CPA, and the team at NDS have done
an incredible job in reorganizing the business to establish a
foundation of operational excellence to grow the MSO model through
geographic expansion and the introduction of DME-IQ, as well as
through the distribution of medical, surgical, and biologic
products of Generex subsidiaries through the network. With the
quarterly report filed this week, we will now focus on closing our
next acquisitions Pantheon Medical, MediSource Partners, and Fuse
Medical in the coming weeks.”
[*Note: As previously reported, the Generex pool shares were
created by Directors and major shareholders for the benefit of
Generex, and these shares are already in the market and factored
into today's stock price.]
About Generex Biotechnology Corp.
Generex Biotechnology is an integrated healthcare holding
company with end-to-end solutions for patient-centric care from
rapid diagnosis through delivery of personalized therapies. Generex
is building a new kind of healthcare company that extends beyond
traditional models providing support to physicians in an MSO
network, and ongoing relationships with patients to improve the
patient experience and access to optimal care.
In addition to advancing a legacy portfolio of immune-oncology
assets, medical devices, and diagnostics, the Company is focused on
an acquisition strategy of strategic businesses that complement
existing assets and provide immediate sources of revenue and
working capital. Recent acquisitions include a management services
organization, a network of pharmacies, clinical laboratory, and
medical device companies with new and approved products.
Our newly formed, wholly-owned subsidiary, NuGenerex
Distribution Solutions (NDS), integrates our MSO network with a
pharmacy network, clinical diagnostic lab, durable medical
equipment company (DME-IQ) and dedicated call center.
Cautionary Note Regarding Forward-Looking
Statements
This release and oral statements made from time to time by
Generex representatives in respect to the same subject matter may
contain "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
can be identified by introductory words such as "expects," "plan,"
"believes," "will," "achieve," "anticipate," "would," "should,"
"subject to" or words of similar meaning, and by the fact that they
do not relate strictly to historical or current facts.
Forward-looking statements frequently are used in discussing
potential product applications, potential collaborations, product
development activities, clinical studies, regulatory submissions
and approvals, and similar operating matters. Many factors may
cause actual results to differ from forward-looking statements,
including inaccurate assumptions and a broad variety of risks and
uncertainties, some of which are known and others of which are not
known. Known risks and uncertainties include those identified from
time to time in the reports filed by Generex with the Securities
and Exchange Commission, which should be considered together with
any forward-looking statement. No forward-looking statement is a
guarantee of future results or events, and one should avoid placing
undue reliance on such statements. Generex undertakes no obligation
to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
Generex claims the protection of the safe harbor for
forward-looking statements that is contained in the Private
Securities Litigation Reform Act.
Generex Contact:
Generex Biotechnology Corporation
Joseph Moscato
646-599-6222
Todd Falls
1-800-391-6755 Extension 222
investor@generex.com
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