Warnex has entered into an agreement with a private company to sell its wholly-owned analytical services division, which provides pharmaceutical and biotechnology companies with a variety of quality control services, including chemistry, chromatography, microbiology, method development and validation, and stability studies. Closing of this transaction will take place upon the execution of definitive documentation, which is expected to occur on or about January 15, 2012
In consideration of the sale of the Analytical Services division, Warnex will receive $400,000 in cash, a cash payment equal to the working capital of the division on the closing date, estimated to be approximately $700,000, a 15% passive equity interest in the purchaser and other valuable consideration.
Following the completion of this transaction, all of the operations of the analytical services division will be centralized at Warnex's Neopharm Blainville facility, with Warnex's lease obligations for that portion of such facility currently occupied by the division being assumed by the purchaser. Warnex will provide certain transitional services to the purchaser in order to ensure the orderly transfer of this division. The purchaser has stated its intention to significantly enhance the current operations of the analytical services division.
Warnex intends to use the proceeds from this transaction to further reduce its long-term debt and for working capital purposes.
"This transaction is consistent with our strategic plan and the commitment we made to reduce long-term debt. It also allows us to retain substantial upside in the analytical services business that we pioneered," said Michael Singer, chairman of the executive committee of the board of directors.