Covalon Announces Non-Brokered Private Placement With Insiders Participating

MISSISSAUGA, ON, Aug. 16, 2013 /CNW/ - Covalon Technologies Ltd. (the "Company" or "Covalon") (TSXV: COV), an advanced medical technologies company, today announced that it intends to complete, subject to the approval of the TSX Venture Exchange, a non-brokered private placement comprised of 750 units (the "Units") at a price of $1,000 per Unit for gross proceeds of $750,000. Each Unit will consist of $1,000 principal amount of 12% senior secured convertible debenture (the "Debentures" and each a "Debenture") and 6,452 warrants (each, a "Warrant"). Proceeds of the private placement will be used by Covalon to fund the market launch of the Company's new products IV Clear™ and SurgiClear™ and for general working capital.

Each Debenture will be convertible at the holder's option into 6,452 common shares of the Company (the "Common Shares") at a conversion price of $0.155 at any time on or prior to the Maturity Date, which will be three years from the closing date. These conversion rights will be subject to standard anti-dilution provisions. The Debentures will bear interest at the rate of 12% per annum and will be direct secured obligations of the Company ranking senior to all indebtedness of the Company.  Interest will accrue and be added to the principal amount outstanding under the Debentures.  Each Warrant will entitle the holder thereof to acquire one Common Share at an exercise price of $0.155 at any time for a period of three years from the date of the Private Placement.  The Debentures and the Common Shares issuable upon conversion of the Debentures and exercise of the Warrants will be subject to a hold period of four months and one day following the closing date.

It is anticipated that insiders of the Company, including directors and officers will subscribe for up to 580 Units for gross proceeds of up to $580,000.  At the Company's Annual and Special Meeting of shareholders on June 13, 2013, approximately 99% of the represented Common Shares of disinterested shareholders approved a resolution allowing Abe Schwartz, the Chairman of the Board of Directors of the Company, to continue to financially support the Company by increasing his holdings in the Company, and thereby becoming a 'control person' as defined in the TSX Venture Exchange Corporate Finance Manual.  It is anticipated that Mr. Schwartz will subscribe for 356 Units for gross proceeds of $356,000.

No commission or finder's fee will be paid in connection with the private placement.  As Insiders will participate in the private placement, any such subscriptions will be considered to be related party transactions within the meaning of TSXV Policy 5.9 and Multilateral Instrument 61-101 ("MI 61-101"). The Company intends to rely on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(b) and 5.7(a) of MI 61-101 in respect of such Insider participation.

About Covalon
Covalon Technologies Ltd. researches, develops and commercializes new healthcare technologies that help save lives around the world. Covalon's patented technologies, products and services address the advanced healthcare needs of medical device companies, healthcare providers and individual consumers. Covalon's technologies are used to prevent, detect and manage medical conditions in specialty areas such as wound care, tissue repair, infection control, disease management, medical device coatings and biocompatibility. To learn more about Covalon, visit our website at www.covalon.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains forward-looking statements which reflect the Company's current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan, "estimate", "expect", "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. These forward-looking statements involve risk and uncertainties, including the difficulty in predicting product approvals, acceptance of and demands for new products, the impact of the products and pricing strategies of competitors, delays in developing and launching new products, the regulatory environment, fluctuations in operating results and other risks, any of which could cause results, performance, or achievements to differ materially from the results discussed or implied in the forward-looking statements. Many risks are inherent in the industry; others are more specific to the Company. Investors should consult the Company's ongoing quarterly filings for additional information on risks and uncertainties relating to these forward-looking statements. Investors should not place undue reliance on any forward-looking statements. The Company assumes no obligation to update or alter any forward-looking statements whether as a result of new information, further events or otherwise.

SOURCE Covalon Technologies Ltd.



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