LAB Research closes rights offering and secures $14.2 million
Toronto Stock Exchange Symbol: LRI
LAVAL, QC, Sept. 30 /CNW Telbec/ - LAB Research Inc. ("LAB Research" or the "Company") (TSX: LRI), a Canadian-based global non-clinical contract research organization, today announced the successful closing of its previously announced rights offering (the "Rights Offering") for total gross proceeds of $14.2 million.
A total of 34.6 million common shares of the Company were issued as part of the transaction including 18.3 million common shares issued to the Solidarity Fund QFL (the "Fund"). Following the closing of the Rights Offering, the Fund's ownership position in LAB Research common shares has increased from 18% to 41%. Pursuant to an agreement between the Company and the Fund and subject to maintaining a predetermined ownership position, the Fund will be able to nominate two individuals on LAB Research's Board of Directors. The total issued and outstanding common shares of the Company now add up to 52.7 million.
The net proceeds of the Rights Offering will be used i) for the repayment of a bridge loan from the Fund for $0.5 million; ii) to complete the installation of inhalation toxicology equipment for our Canadian site for $2.4 million; and iii) to reduce the Company's long-term debt in Canada by $5 million. The remainder of the proceeds will be used for working capital purposes.
"We are extremely pleased with the interest demonstrated towards our Rights Offering. The success of the transaction demonstrates the favourable market reaction to the progress made by LAB Research in addressing all issues that negatively impacted our Company over the last 12 months. The closing of the Rights Offering also confirms the good standing of our Canadian bank covenants. With the Rights Offering almost fully subscribed, we now have sufficient liquidities to start accelerating the deleveraging of our balance sheet and finance our growing operations as activity is picking up in each of our three sites." commented Mr. Luc Mainville, President and Chief Executive Officer of LAB Research. "We are now better positioned than ever to reap the full rewards of the recently completed sites and services expansions." added Mr. Mainville.
Following the closing of the Rights Offering, the Company will proceed with the issuance of 2.5 million options to staff, management and Board of Directors representing 7.1% of the common shares issued in the Rights Offering. The option grant aims at ensuring the proper incentive program to key participants in the future growth of the Company.
About LAB Research Inc.:
LAB Research is a Canadian global non-clinical contract research organization that provides contract research services to the pharmaceutical, biotechnology, agro-chemical, petro-chemical and industrial markets. LAB Research supports the development of its customers' products from three state-of-the-art facilities located in Canada, Denmark and Hungary.
LAB Research's shares trade on the TSX under the symbol "LRI", with 52.7 million shares outstanding.
This news release contains certain forward-looking statements that reflect the current views and/or expectations of LAB Research Inc. with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly.