GeneNews targets $2-million private placement

GeneNews (TSX:GEN) plans to sell in a non-brokered private placement up to 4,444,444 new shares of the company at a price of 45 cents each to raise up to $2-million.

Proceeds will be used for working capital, continued marketing of the ColonSentry test in Canada, and the commercial prelaunch of ColonSentry in the U.S., Europe and Asia, the company said in a statement.

GeneNews currently has 63.9 million shares outstanding.  It said that a labour-sponsored investment fund will subscribe for one-half of the private placement.  The fund currently controls a total 13.1% of GeneNews’ common stock. Arm’s-length parties are expected to take up the balance of the private placement.

The stock sale also gives existing debentureholders rights to convert into common stock at a 10% discount to the price of shares in the private placement.  More than 25% of the convertible debentures were purchased by GeneNews management and directors, and the company said no insiders will be electing to exercise their conversion rights.

Dr. Heiner Dreismann, lead director and interim CEO, said GeneNews is “pleased by the financial support that key shareholders have continued to provide to the company to support our commercialization efforts.”