Digital Angel Announces Agreement with Lenders to Reduce Warrant Overhang and Raise Capital
2008-07-24 07:00:00
Digital Angel Announces Agreement with Lenders to Reduce Warrant Overhang and Raise Capital
Company Realizes Approximately $2.5 Million in Warrant Exercise
Proceeds
SO. ST. PAUL, Minn.–(EMWNews)–Digital Angel (NASDAQ: DIGA), an advanced technology company in the
field of animal identification and emergency identification solutions,
announced today that it has entered into an agreement with certain of
its lenders wherein the Company agreed to re-price all outstanding
warrants held by such lenders in exchange for the immediate exercise of
the warrants.
On July 22, 2008, the Company entered into an Omnibus Amendment with
Laurus Master Fund, Ltd. and certain of its affiliated lenders. Under
the terms of the Amendment, among other things, the Company agreed to
reduce the exercise price of outstanding warrants to purchase an
aggregate of 6,225,782 shares of the Company’s
common stock previously issued to Laurus on condition that Laurus
exercise such warrants in full in cash within two business days. As an
inducement to Laurus, the exercise prices of the warrants were reduced
to $0.40 per share from exercise prices ranging from $0.70 to $2.41,
with a weighted average exercise price of $0.82. The Amendment also
restricts Laurus in the amount of warrant shares issued upon exercise of
the warrants that they can resell each month. On July 22, 2008, Laurus
exercised all the warrants to purchase an aggregate of 6,225,782 shares
for approximately $2.5 million in cash.
Lorraine M. Breece, Digital Angel’s Chief Financial Officer, noted,
“This transaction substantially reduces the warrant overhang in our
capital structure, while bringing in cash for working capital and
restructuring activities. As previously announced, we have identified
several restructuring activities that should have highly positive
internal rates of return and that should result in significant
improvement in our gross profit margins, once fully implemented.”
Joseph J. Grillo, Chief Executive Officer of Digital Angel, summarized,
“The agreement with Laurus should result in both financial and
operational benefits for the Company. We think it is a win-win for both
sides.”
About Digital Angel
Digital Angel (www.digitalangel.com)
is an advanced technology company in the field of animal identification
and emergency identification solutions. Digital Angel’s products are
utilized around the world in such applications as pet identification
using its patented, FDA-approved implantable microchip; livestock
identification and tracking using visual and radio frequency
identification (RFID) ear tags; and global positioning systems (GPS)
search and rescue beacons for use on aircraft, ships and boats, and by
adventure enthusiasts. Digital Angel is an approximately 48% stockholder
of VeriChip Corporation (NASDAQ: CHIP).
This press release contains certain “forward-looking”
statements (as such term is defined in the Private Securities Litigation
Reform Act of 1995). Forward-looking statements included in this press
release include, without limitation, those concerning expectations
regarding the expected benefits and uses of proceeds of the transaction,
and its impact on the Company’s financial
results and balance sheet. These forward-looking statements are
based on the Company’s current expectations and beliefs and are subject
to a number of risks, uncertainties and assumptions. Additional
information about these and other factors that could affect the
Company’s businesses is set forth in the Company’s Form 10-K under the
caption “Risk Factors” filed with the Securities and Exchange Commission
(“SEC”) on March 17, 2008, and subsequent filings with the SEC.
The Company undertakes no obligation to update or release any
revisions to these forward-looking statements to reflect events or
circumstances after the date of this statement or to reflect the
occurrence of unanticipated events, except as required by law.
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