Covalon Technologies Ltd.
TSX VENTURE : COV

Covalon Technologies Ltd.

March 22, 2006 15:22 ET

Covalon Announces Closing of $6.8 million Private Placement

MISSISSAUGA, ONTARIO--(CCNMatthews - March 22, 2006) -

(This Press Release is not for dissemination in the United States of America)

Covalon Technologies Ltd. (the "Corporation" or "Covalon") (TSX VENTURE:COV) is pleased to announce that it has closed today its previously announced private placement offering of 13,696,600 units (the "Units") at $0.50 per Unit for aggregate gross proceeds of $6,848,300. Each Unit consists of one common share and one common share purchase warrant. Each whole common share purchase warrant entitles the holder to purchase one additional common share of the Corporation at a price of $0.75 for a period of 18 months from the date of closing.

Octagon Capital Corporation acted as lead agent on behalf of a syndicate of Agents including Jennings Capital Inc. and Desjardins Securities Inc. The Agents purchased 5,000,000 Units on an underwritten basis for aggregate proceeds of $2,500,000. The Agents also placed 8,696,600 Units for additional gross proceeds of $4,348,300.

In addition, the Corporation issued to the Agents, as partial compensation for their services in connection with the offering, 1,095,728 compensation options that are exercisable for a period of up to 18 months from the date of closing. Each compensation option will allow the Agents to purchase one Unit at a price of $0.50 per Unit.

The proceeds will be used for general working capital and to accelerate the development of the Corporation's drug eluting vascular wraps, vascular grafts and cardiac tissue patch products.

Covalon Technologies Ltd. is a company with advanced medical products that has developed and patented advanced therapeutic biomaterials for wound care and surgical applications and coatings. Polymer chemistry and surface coating technology have been combined to create a range of time-release drug delivery platforms that are applied to many medical devices to treat many critical conditions. A variety of applications for these technologies have been identified and specific products have been developed. The products offer features and benefits providing solutions to many of the problems caused by current devices and their material properties which are used by most medical device manufacturers and suppliers. The problems include infection, poor biocompatibility, and microbial attachment.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved of the contents of this release.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Covalon Technologies Ltd.
    William Jackson
    CFO & COO
    (905) 568-8400
    (905) 568-5200 (FAX)
    www.covalon.com