Pediapharm Inc. Announces Completion of Private Placement of Senior Secured Convertible Debentures and Warrants

MONTREAL, QUÉBEC--(Marketwired - March 31, 2015) -

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Pediapharm Inc. (TSX VENTURE:PDP) ("Pediapharm" or the "Company") is pleased to announce that it has closed its previously announced private placement (the "Offering") of secured, convertible debentures of the Company (the "Debentures") and share purchase warrants of the Company (the "Warrants").

The Offering consisted of: (i) a brokered offering of an aggregate of $4,975,000 principal amount of Debentures and 3,014,850 Warrants through Bloom Burton & Co. Limited (the "Agent") as agent (the "Brokered Offering"), and (ii) a non-brokered offering of an aggregate of $525,000 principal amount of Debentures and 318,150 Warrants (the "Non-Brokered Offering"). The aggregate gross proceeds raised pursuant to the Offering was $5,500,000.

"The Company now has the means to execute on the opportunities in its pipeline consisting of six agreements signed in the last 12 months, including the recently announced acquisition of Naproxen suspension in the United States and the agreement signed in December 2014 with Uriach for the exclusive Canadian rights for Rupatadine. This financing will also allow us to consider new opportunities while fueling the growth of the recently launched Pediapharm Naproxen suspension in Canada" stated Sylvain Chretien, President and CEO of Pediapharm. "We are very pleased to have the continued support of institutional investors including Bloom Burton Healthcare Structured Lending Fund, Knight Therapeutics Inc. and Senvest Capital Inc, as these lenders are involved in the health care industry and have significant experience in the specialty pharmaceutical space" concluded Mr. Chretien.

The Debentures mature four (4) years from the date of issue, bear interest at a rate of 12% per annum paid quarterly in cash, and are fully secured by the assets of the Company. The principal amount of the Debentures is convertible at any time at the option of the holder into common shares of the Company (the "Common Shares") at a price of $0.45 per Common Share (the "Conversion Price"), and upon giving effect to such conversion, all accrued and unpaid interest will be paid in full within 60 days. The Debentures will automatically convert into Common Shares at the Conversion Price if during any 20 consecutive trading days, the Common Shares trade at a volume weighted average price of at least $0.60 on a total cumulative volume of not less than two million shares. The Company may at any time after the second anniversary of the date of issue, and prior to maturity, repay the principal amount subject to an early repayment fee of 2% of the principal amount repaid.

Each Warrant issued pursuant to the Offering is exercisable at a price of $0.33 per Common Share until March 30, 2019.

In connection with the Brokered Offering, the Company paid the Agent a cash commission of $118,500 and also granted the Agent 359,091 broker warrants, with each such broker warrant entitling the holder to purchase one Common Share at a price of $0.33 per Common Share until March 30, 2017.

The net proceeds from the Offering will be used for present and new growth opportunities of the Company, as well as general working capital.

Pursuant to applicable securities laws, all securities issued pursuant to the Offering are subject to a hold period of four months plus one day following the closing of the Offering.

About Pediapharm Inc.

Pediapharm is the only Canadian specialty pharmaceutical company dedicated to serving the needs of the pediatric community. Its mission is to bring to the Canadian market the latest innovative pediatric products with the objective to improve the health and the well-being of children in Canada. Since its debut in 2008, Pediapharm has entered into numerous commercial agreements with partners from Canada and other countries around the world. The Company's innovative portfolio of commercialized products includes NYDA®, a breakthrough treatment for head lice; Pediapharm Naproxen Suspension, the only prescription NSAID available in Canada; EpiCeram®, a non-steroid emulsion for eczema; KoolEffect® which reduces the symptoms of fever; and VapoLyptus®, a soothing vapour patch of Eucalyptus and Camphor.

Neither TSX Venture nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture) accepts responsibility for the adequacy or accuracy of this release.

The securities of Pediapharm being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties, including without limitation, statements pertaining to the closing of the Offering including the intended use by the Company of the net proceeds of the Offering. Actual results may differ materially. Pediapharm will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Pediapharm.