Paragon Pharmacies Limited

Paragon Pharmacies Limited

May 03, 2007 16:31 ET

Paragon Pharmacies Limited Announces Closing of Financing With Canterbury Park Capital and Appointment of New Directors

KELOWNA, BRITISH COLUMBIA--(CCNMatthews - May 3, 2007) -


This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.


Paragon Pharmacies Limited ("Paragon" or the "Corporation") (PGN-TSXV) announced today that it has closed its previously announced financing (the "Canterbury Transaction") with Canterbury Park Capital L.P. and Canterbury Park Capital (U.S.) L.P. (collectively, "Canterbury" or the "Lender") for a combination of (i) $3,000,000 of units (the "Units") at a price of $0.80 per Unit and (ii) $20,000,000 of subordinated secured convertible debt with a 2 year term (the "Convertible Debt"), the proceeds of which will be used by Paragon to complete future acquisitions. Each Unit is comprised of one common share in the capital of the Corporation ("Common Share") and one-half of one Common Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant entitles the holder to acquire one Common Share for a period of 24 months from the closing date at an exercise price of $1.00 per Common Share. The Convertible Debt will pay interest at a rate of 15%, subject to adjustment in certain circumstances and will convert into Common Shares under certain circumstances, or at the option of the Lender, at a price of $0.8028 per Common Share. Interest may be paid in additional Common Shares from treasury based on the market price at the time, and additional interest may apply if acquisitions do not meet certain financial criteria. The securities issued pursuant to the Canterbury Transaction are subject to a four-month hold period expiring on September 3, 2007.

Paragon intends to use the net proceeds from the Canterbury Transaction for acquisitions, capital expenditures, and for general corporate purposes.

Craig Cameron, President and Chief Executive Officer of Paragon, stated "We are very excited about the future of Paragon as we continue to execute our business plan. With the closing of this transaction with Canterbury we are well positioned financially and have added individuals that we believe will contribute to the company's success".

Pursuant to the terms of previous agreements, on closing of the Canterbury Transaction certain alternative financing fees and commissions were paid to Versant Partners Inc. and Bieber Securities Inc.

Appointment of New Directors

Effective on closing of the Canterbury Transaction, as approved by shareholders on April 16, 2007, Daniel Friedman, Harold Milavsky, Eugene Siklos, Bob Silver and Denis Taillieu joined the Board of Directors and Jim Waters and Brent Herman resigned from the Board of Directors.

The following is a brief summary of the background of the five new members of the Board of Directors who join Craig Cameron, Charles Burgess, Bruce Moody, Allan McLeod and Reginald Hihn on the Board.

Daniel Friedman

Daniel Friedman has been a Managing Director of Canterbury Park Management Inc. since October 2005. From June, 2004 to June, 2005 Mr. Friedman was the President and Co-founder of Tetrem Capital Partners, an investment management firm. Mr. Friedman was the Executive Vice President of Assante Holdings Inc., a U.S. wealth management company responsible for overall management of Assante's U.S. operations. Prior to that he was Vice President of Assante Corporation from April, 2001 to September, 2002.

Harold Milavsky

Since 1993, Mr. Milavsky has been the Chairman and a director of Quantico Capital Corp., a private investment company. Mr. Milavsky is also currently a Director of the Saskatchewan Wheat Pool, PrimeWest Energy Trust and 13 investment trusts comprising the Citadel Group of Funds.

Eugene Siklos

Since May, 2006, Mr. Siklos has been a Managing Director of Canterbury Park Management Inc. From January, 2005 to May, 2006 Mr. Siklos was the Managing Director of Quantico Partners LP, a buyout firm. From January, 2002 to December, 2004, Mr. Siklos was the President of Clipper Advisors Inc. Previously, Mr. Siklos was an investment banker for 14 years, principally with Morgan Stanley in New York, where he was head of the firm's Food Retail and Drugstore Investment Banking practice.

Bob Silver

Since 1981, Mr. Silver has been the President and a co-owner of Western Glove Works Ltd., a private manufacturer and merchandiser of casual apparel. Mr. Silver is also the Co-owner and director of Beach Patrol Inc. (a California swimwear manufacturer) and Warehouse One (a retail clothing chain). Since November 30, 2001, Mr. Silver has served as a Director of FPCN General Partner Inc., the managing partner of FP Canadian Newspapers Limited Partnership and administrator of FP Newspapers Income Fund, a trust listed on the Toronto Stock Exchange.

Denis Taillieu

Mr. Taillieu is the Chief Financial Officer of Canterbury Park Management Inc. a position he has held since April, 2006. From November, 2003 to March, 2006, Mr. Taillieu was the Chief Financial Officer of Loring Ward International Inc., a US wealth management company spun off from Assante Corporation. From 1999 to 2003, Mr. Taillieu was the Chief Financial Officer of Assante Corporation.

National Instrument 62-103 Early Warning Information

After the acquisition of the securities referred to above, excluding Common Shares which may be paid as interest, Canterbury would be deemed to own approximately 30,537,805 Common Shares of Paragon representing approximately 40% of the issued and outstanding Common Shares, calculated as if the Warrants held by Canterbury were fully exercised and the Convertible Debt was fully converted.

Canterbury acquired the securities for investment purposes and may, depending on market and other conditions, increase or decrease its beneficial ownership, control or direction over securities of Paragon through market transactions, private agreements, treasury issuances, exercise of convertible securities or otherwise.

Paragon is headquartered in Kelowna, British Columbia and currently employs over 355 full and part time staff in its stores and offices. The Corporation currently owns and operates 18.5 retail pharmacies and 2 home healthcare stores in British Columbia, Alberta and Manitoba. Paragon also holds a minority ownership position in Catalyst Healthcare Ltd.

FORWARD-LOOKING STATEMENTS Certain information set forth in this document, including management's assessment of Paragon's future plans and operations, contain forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond these parties' control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Paragon's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Paragon will derive therefrom. Paragon disclaims any intention or obligation to update or review any forward-looking statements, whether as a result of new information, future events or otherwise.

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

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