Market Overview

UPDATE: Merus Labs Announces Aggregate C$21M Financing Transactions


Merus Labs
International Inc. (NASDAQ: MSLI) is pleased to announce today that the Company has entered into
a private placement subscription agreement to issue $10 million of
Series A convertible preferred shares (the "Series A Preferred
Shares") to a large Canadian institutional investor. Concurrent with
this transaction, Merus has also signed a letter agreement to acquire
a new corporation to be incorporated by Dacha Strategic Metals Inc.
("Dacha") (TSX VENTURE: DSM) which upon closing will have
approximately $11 million in cash and no other assets or liabilities
in exchange for Merus common shares. The $21 million in proceeds from
the two financing transactions are expected to be used by the Company
for future acquisition opportunities as well as for general corporate

"These financing transactions will result in a substantial increase
in capital available for product deals going forward as the Company
executes on its acquisition strategy," said Elie Farah, President and
CEO of Merus Labs International Inc.

The $10 million Series A Preferred Shares will pay a dividend of 8%
per annum, subject to adjustment if the Company does not redeem after
October 31, 2019. At any time at the option of the holder, the Series
A Preferred Shares may be converted into the Company's common shares
at a conversion price of $2.20 per share. The Series A Preferred
Shares are redeemable at the option of the Company at any time after
October 31, 2019. The Series A Preferred Shares are also redeemable
by the Company at any time in the event of a change of control
subject to payment of a change of control premium. The Series A
Preferred Shares are only redeemable by the holder if the Company
does not complete a product acquisition transaction by December 31,
2014. The transaction is expected to close on July 11, 2014, subject
to TSX and NASDAQ approval.

The letter agreement with Dacha contemplates that Dacha will convert
its current liquid assets into cash and cash equivalents and
contribute the proceeds to a new corporation to be incorporated by
Dacha. This subsidiary will have not less than $11 million in cash
and no other assets or liabilities when acquired by Merus. The
purchase price will equal the total value of the cash held by the
newly incorporated subsidiary and will be paid for by the issuance to
Dacha of Merus common shares valued at $1.70 per share, subject to
certain purchase price adjustments. Dacha will be granted certain
equity participation rights and will be paid a transaction
structuring fee of 3.5%, which will be paid by the issuance of Merus
common shares on closing. The transaction is subject to certain
conditions to closing, including completion of due diligence,
approval of the TSX, NASDAQ and the TSX Venture exchanges and Dacha
shareholder approval. Dacha's management and directors unanimously
support the transaction. The acquisition is expected to close on or
before August 15, 2014.

Posted-In: News Financing Press Releases


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