Genesis Worldwide Inc.
TSX : GWI

Genesis Worldwide Inc.

May 13, 2009 17:06 ET

Genesis Worldwide Announces Proposed Private Placement of $1,500,000 Cdn. Principal Amount Secured Convertible Debenture

MISSISSAUGA, ONTARIO--(Marketwire - May 13, 2009) - Genesis Worldwide Inc. ("Genesis" or the "Corporation"), (TSX:GWI), a leading provider of 'green' structural building products and technology in the light steel structural products industry, announces that it is proposing to complete a private placement of $1,500,000 Cdn. principal amount of secured convertible debentures (the "Debentures") with the proceeds thereof to be used for working capital purposes. It is anticipated that the Debentures will be issued to Codding Enterprises, L.P. ("Codding") as to $1,200,000 Cdn. principal amount, Bradley Baker as to $50,000 Cdn. principal amount, Codding Baker Investments Inc. as to $25,000 Cdn. principal amount, the Constance L. Codding Trust as to $25,000 principal amount, the Baker Family Trust as to $25,000 Cdn. principal amount and an arm's length party as to $175,000 Cdn. principal amount. The Debentures will mature eighteen months following their issuance, bear simple interest at the rate of 10% per annum (payable on the earlier of conversion or maturity) and be convertible, at any time, at the option of the holders into an aggregate of 6,198,347 common shares of the Corporation at a conversion price of $0.242 Cdn. per share, subject to standard anti-dilution provisions. The common shares of the Corporation issuable upon the conversion of the Debentures will represent approximately 20.01% of the 30,982,858 currently issued and outstanding common shares of the Corporation on a non-diluted basis.

The Debentures will be secured by a general security interest in all of the assets of Genesis which will rank subsequent to the security interest previously granted by Genesis to its secured lender and pari passu with the security interest securing the $1,534,742 Cdn. principal amount secured convertible debenture (the "Original Debenture") of the Corporation currently held by Codding. The Debentures will automatically convert into common shares of the Corporation at a conversion price of $0.242 Cdn. per share, subject to standard anti-dilution provisions, if the Corporation completes an equity financing or financings raising aggregate gross proceeds of $1,500,000 Cdn. or greater.

In addition to the Original Debenture, which is currently convertible into 6,341,909 common shares of the Corporation, Codding is also the registered and beneficial holder of 1,051,400 common shares in the capital of the Corporation. Prior to the private placement, assuming only the conversion of the Original Debenture, Codding would hold an aggregate of 7,393,309 common shares of the Corporation representing approximately 19.81% of the issued and outstanding common shares of the Corporation. Following the issuance to Codding of $1,200,000 Cdn. principal amount of the Debentures, on a partially-diluted basis, assuming only the conversion of the Original Debenture and all of the Debentures, Codding would beneficially own 12,351,987 common shares of Genesis, representing approximately 28.38% of the issued and outstanding shares of Genesis (on such partially-diluted basis). Codding currently has two representatives on the board of directors of the Corporation, being Bradley E. Baker and Richard E. Pope.

Bradley Baker, the CEO of Codding and a director of Genesis, exercises control or direction over the securities of Genesis held by Codding, and will also exercise control or direction over the securities of Genesis owned by Codding Baker Investments Inc., the Constance L. Codding Trust and the Baker Family Trust. As a result, following the completion of the private placement, on a partially-diluted basis, assuming only the conversion of the Original Debenture and all of the Debentures, Bradley Baker will exercise control or direction over an additional 516,526 common shares of Genesis, representing approximately 1.20% of the issued and outstanding shares of Genesis (on such partially-diluted basis).

The private placement is subject to the approval of the Toronto Stock Exchange (the "TSX") and, since the private placement is expected to provide for the issuance to insiders of the Corporation of greater than 10% of the number of common shares of the Corporation which are outstanding, the rules of the TSX require that the Corporation obtain approval of the private placement from the holders of a majority of the voting shares of the Corporation, excluding the votes attached to the shares of the Corporation held by Codding and its associates and affiliates. However, the rules of the TSX provide for an exemption from the requirement to convene a shareholders meeting for such purposes if approval of the private placement is obtained in writing from shareholders holding a majority of the voting shares of the Corporation, excluding Codding and its associates and affiliates, and the Corporation intends to rely on this exemption in connection with the private placement.

Due to the fact that Bradley Baker, Codding, and certain other entities, the securities owned by which are subject to the control and direction of Bradley Baker, are anticipated to subscribe for Debentures, the private placement will be a "related party transaction" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Corporation will rely on the exemptions from the valuation and minority approval requirements of MI 61-101 contained in paragraph (a) of Section 5.5 and paragraph (a) of Section 5.7, respectively of MI 61-101 as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the private placement will exceed 25% of the Corporation's market capitalization.

The closing of the private placement is anticipated to occur on or as soon as is practicable after May 21, 2009, as the Corporation requires the working capital that will be provided by the proceeds of the private placement.

About Genesis Worldwide Inc.

Genesis is a leading provider of green light steel structural building products, systems and technology targeted at the global commercial, residential and institutional building sectors. Genesis delivers customized turnkey structural solutions including innovative light steel products, software packages, industrial equipment, training programs, professional services and support. Headquartered in the Greater Toronto Area in Ontario, Canada, Genesis has established a network of partners with engineering, manufacturing and distribution operations in Canada, the United States, the Middle East, Eastern Europe and Russia. For additional information about the Company, visit www.genesisworldwide.com.

Caution Regarding Forward Looking Information

Certain statements in this press release which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements") and are made pursuant to the "safe harbour" provisions of such laws. Statements related to the Corporation's projected revenues, earnings, growth rates, performance, business prospects and opportunities are forward-looking statements, as are any statements relating to future events, conditions or circumstances. The use of terms such as "may", "will", "should", "plan", "believes", "predict", "potential", "anticipate", "expect", "project", "target", "estimate", "continue" and similar terms are intended to assist in identification of these forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities. These assumptions, although considered reasonable by the Corporation at the time of preparation, may prove to be incorrect.

Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance or achievements of the Corporation to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements.

Many factors could cause the actual results of the Corporation to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements, including, without limitation, those factors discussed under the heading "Risk Factors" in the Corporation's most recent Annual Information Form ("AIF"), a copy of which is available on SEDAR at www.sedar.com. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and, except required by law, the Corporation does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.

Contact Information

  • Genesis Worldwide Inc.
    Catherine Smyth
    Manager, Investor Relations
    (905) 285-9909, ext. 302