Pediapharm Inc.
TSX VENTURE : PDP

Pediapharm Inc.

March 10, 2015 08:15 ET

Pediapharm Inc. Announces Private Placement of Senior Secured Convertible Debentures

MONTREAL, QUÉBEC--(Marketwired - March 10, 2015) -

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Pediapharm Inc. (TSX VENTURE:PDP) ("Pediapharm" or the "Company") is pleased to announce that it has entered into an agreement with Bloom Burton & Co Limited ("Bloom Burton") to complete a private placement (the "Offering") of up to $5,000,000 principal amount secured, convertible debentures of the Company (the "Debentures"). The Debentures will mature four (4) years from the date of issue, will bear interest at a rate of 12% per annum paid quarterly in cash and will be fully secured by the assets of the Company. The principal amount of the Debentures shall be convertible at any time at the option of the holder into common shares of the Company (the "Common Shares") at a price of $0.45 per Common Share (the "Conversion Price"), and upon giving effect to such conversion, all accrued and unpaid interest will be paid in full within 60 days. The Debentures will automatically convert into Common Shares at the Conversion Price if during any 20 consecutive trading days, the Common Shares trade at a volume weighted average price of at least $0.60 on a total cumulative volume of not less than two million shares. The Company may at any time after the second anniversary of the date of issue, and prior to maturity, repay the principal amount subject to an early repayment fee of 2% of the principal amount repaid.

Concurrent with the issuance of the Debentures, the Company will issue, to each subscriber under the Offering, share purchase warrants ("Warrants") to purchase Common Shares equal to 20% of the principal amount of Debentures subscribed for by such subscriber divided by $0.33. Each such Warrant shall be exercisable at a price of $0.33 per Common Share for a period of four years from the date of issuance.

The Bloom Burton Healthcare Structure Lending Fund II LP ("Bloom Burton Fund") has agreed to purchase $2,000,000 principal amount of Debentures pursuant to the Offering. Pediapharm is pleased to announce it has also reached an additional verbal commitment of $2,000,000, bringing the total verbal commitments to $4,000,000. All proceeds raised from Bloom Burton Fund and certain other specified investors of an aggregate of up to $3,000,000 principal amount of Debentures, shall be exempt from commission (the "Excluded Proceeds"). The Company has agreed to pay Bloom Burton a cash commission of 6% of the principal amount raised under the Offering in excess of the Excluded Proceeds. Bloom Burton shall also be granted broker warrants to purchase up to 6% of the principal amount raised under the Offering in excess of the Excluded Proceeds divided by $0.33, with each warrant entitling the holder to purchase one Common Share at a price of $0.33 per Common Share for a period of two years from the closing of the Offering.

The net proceeds from the Offering will be used for present and new growth opportunities of the Company, as well as general working capital.

The Offering is subject to the approval of the TSX Venture Exchange. Pursuant to applicable securities laws, all securities issued pursuant to the Offering will be subject to a hold period of four months plus one day following the closing of the Offering.

About Pediapharm Inc.

Pediapharm is the only Canadian specialty pharmaceutical company dedicated to serving the needs of the pediatric community. Its mission is to bring to the Canadian market the latest innovative pediatric products with the objective to improve the health and the well-being of children in Canada. Since its debut in 2008, Pediapharm has entered into numerous commercial agreements with partners from Canada and other countries around the world. The Company's innovative portfolio of commercialized products includes NYDA®, a breakthrough treatment for head lice; Pediapharm Naproxen Suspension, the only prescription NSAID available in Canada; EpiCeram®, a non-steroid emulsion for eczema; KoolEffect® which reduces the symptoms of fever; and VapoLyptus®, a soothing vapour patch of Eucalyptus and Camphor.

Neither TSX Venture nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture) accepts responsibility for the adequacy or accuracy of this release.

The securities of Pediapharm being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties, including without limitation, statements pertaining to the closing of the Offering including Pediapharm's ability to obtain necessary approvals from the TSX Venture Exchange and the intended use by the Company of the net proceeds of the Offering. Actual results may differ materially. Pediapharm will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Pediapharm.

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