PharmaGap investee SC Stormont to convert debentures

2009-02-11 09:09 ET - News Release

Mr. Robert McInnis reports

PHARMAGAP ANNOUNCES RECEIPT OF NOTICE OF CONVERSION OF CONVERTIBLE DEBENTURES

PharmaGap Inc. has received notice from SC Stormont Holdings Inc., holder of 98.5 per cent of the company's outstanding convertible secured debentures, that Stormont intends to exercise the conversion rights in the debentures to convert to common shares and warrants of the company on or prior to the Feb. 26, 2009, maturity date.

Total principal and interest owed to Stormont as at the expected conversion date of Feb. 25, 2009,

will be $4,116,556. Of this amount, $3,128,633 would convert at a price of 13 cents into 24,066,408 common shares, and $557,461 would convert at a price of 13 cents into 4,288,157 common shares and 4,288,157 warrants with an exercise price of 19.5 cents, expiring Feb. 26, 2009. In addition, $123,415 would convert at a price of 17.5 cents into 705,226 common shares and 705,226 warrants with an exercise price of 26.25 cents, expiring Feb. 26, 2009. Finally, $307,047 would convert into common shares and warrants at a conversion price equal to the market price for PharmaGap shares at the time of conversion, and assuming a market price of 10 cents on the conversion date, 3,070,468 common shares and 3,070,468 warrants with an exercise price of 15 cents and an expiry date of June 10, 2009, would be issued. A total of approximately 32,130,259 common shares and 8,063,851 warrants would be issued.

In accordance with their terms, conversion of debentures held by third parties in the amount of $61,537 will be triggered by the Stormont conversion. These debentures will convert into approximately 351,642 common shares and 351,642 common share purchase warrants with an exercise price of 26.25 cents per common share and a two-year term.

Following conversion, there are expected to be approximately 77,884,233 common shares outstanding, of which Stormont would Assuming exercise of all outstanding warrants following conversion,

there would be approximately 97,859,324 common shares outstanding,

of which Stormont would then hold approximately 43,056,972, or approximately 44 per cent.

Robert McInnis, president and chief executive officer of the company, stated, "I am pleased that Stormont continues to support and recognize the long-term value in PharmaGap by electing to convert its convertible debenture position into a permanent equity position in the company."

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