LAB Research announces new $10M equity line facility with Dutchess Opportunity Cayman Fund

Jun 29 2010

Agreement provides financial flexibility, allowing company to access capital at its discretion

LAB Research Inc. ("LAB Research" or the "Company") (TSX: LRI), a Canadian-based global non-clinical contract research organization, today announced it has entered into an agreement providing for an Equity Line Facility (ELF) with Dutchess Opportunity Cayman Fund Ltd., a fund managed by Dutchess Capital Management, II LLC. Under the terms of the ELF, Dutchess has committed to provide up to $10 million of capital during the next two years, at LAB Research's discretion, through the subscription of newly issued common shares.

"This new equity line facility gives us a flexible and inexpensive access to capital to support our growth initiatives." said Luc Mainville, President and Chief Executive Officer of the Company. "By demonstrating access to capital and the sequential improvement of our financial performance we are sending a clear and positive message to our clients and financial stakeholders".

The Company can draw on Dutchess' commitment by sending draw down notices from time to time. Each draw down notice is subject to a maximum amount, as well as a minimum price, below which the Company will not issue shares to Dutchess. Subject to the applicable minimum price, the common shares will be issued at a predetermined discount of 3% to the prevailing share price. The Company is restricted from issuing shares under a draw down to the extent such shares would result in Dutchess and its affiliates owning more than 9.9% of the issued and outstanding shares of the Company. The maximum number of shares that the Company can issue under the agreement is limited to the lower of 13,177,686 of the Company common shares and 25% of the Company's issued and outstanding common shares at any given time.

The ELF remains subject to certain conditions precedent, including the filing of a base shelf prospectus with the Canadian securities authorities. The agreement can be terminated at any time by the Company without the payment of any additional fees.

In connection with the ELF, the Company will file a preliminary short form base shelf prospectus with the securities authorities in each of the provinces of Canada. This filing will allow the Company to qualify the shares issued under the ELF and make offerings of common shares, preferred shares, debt securities, warrants, units or combinations thereof for an amount of up to $25 million during the next 25 months.