TIDMSALV
RNS Number : 6796X
SalvaRx Group plc
14 August 2018
SalvaRx Group plc
("SalvaRx" or the "Company")
Proposed disposal of interest in SalvaRx Limited
Demerger of Consideration Shares
SalvaRx Group plc (AIM: SALV), a biotechnology company focused
on discovering and developing immunotherapies for cancer, announces
that it has entered into a conditional sale agreement (the "Sale
Agreement") for the disposal of its interest in SalvaRx Limited,
its 94.2 per cent. owned subsidiary, to Portage Biotech Inc.
("Portage"), a company listed on the Canadian Securities Exchange
("CSE") for a consideration of US$67.5 million (the
"Consideration"), to be satisfied by the issue of 757,943,784 new
shares in Portage (the "Consideration Shares") (the
"Disposal").
Concurrent with the Disposal, it is proposed that not less than
656,399,142 of the Consideration Shares (the "Demerger Shares")
will be transferred to Shareholders on a pro-rata basis, as
explained below (the "Demerger"). Of the balance of the
Consideration Shares, it is proposed that 40,692,698 Consideration
Shares will be transferred to Option Holders in consideration of
the purchase of their Redemption Options (the "Option Redemption")
(as explained below), and up to 60,851,944 Consideration Shares
will be retained by the Company.
The Company will be seeking the approval of Shareholders to
undertake the Disposal and the Demerger at the 2018 AGM, which will
be scheduled shortly.
Highlights
-- Consideration Shares valued at approximately US$75.8 million,
representing a premium of over 250% to the current market valuation
of SalvaRx*
-- Shareholders who continue to hold SalvaRx shares will also
receive 18 Demerger Shares (i.e. Portage shares) for every share in
SalvaRx held on the Demerger Record Date, equivalent to
approximately US$1.80* per SalvaRx share
-- Portage has existing interests in four promising biotech
companies and cash resources of approximately US$7.3 million which
will be used to fund the ongoing development of the portfolio of
oncology assets owned by SalvaRx Limited
-- Portage has a history of creating value for its shareholders
- one of its portfolio companies, Biohaven Pharmaceutical Holding
Company Ltd ("Biohaven") (NYSE:BHVN), was the second largest
biotech IPO on NASDAQ in 2017. Portage subsequently announced a
distribution in specie of its stock in Biohaven to its
shareholders
-- Portage intends to utilise the SalvaRx Limited management
team, including Ian Walters, MD, CEO of SalvaRx, who is also on the
board of Portage, to support the development of its expanded
portfolio of immuno-oncology assets
-- The Disposal and the Demerger constitute a fundamental change
of business under the AIM Rules and will result in the Company
becoming an AIM Rule 15 cash shell
-- Following the Disposal and the Demerger, Ian Walters, Kam
Shah, Richard Armstrong and Colin Weinberg shall each resign as
directors of the Company and it is proposed that Denham Eke will be
appointed to the Board
*Based on the Portage share price of US$0.10 (being the price of
the last trade on the OTC on 10 August 2018, the last practicable
trading date on the OTC prior to announcement of the Disposal)
Given the relatively disappointing performance of the Company's
share price on AIM, the Directors have determined that the Disposal
and the Demerger is the best way to unlock and maximise value for
Shareholders without causing dilution through raising additional
funds at a price which they believe does not reflect the value of
the Company's underlying assets.
Ian Walters, CEO of SalvaRx, said: "I am pleased to sign a deal
to sell our assets to Portage and at the same time crystallise
value for the Company's shareholders. Given Portage's recent
success and strong balance sheet, I believe it will be well placed
to fund the assets of SalvaRx Limited through the next set of
milestones."
Declan Doogan, CEO of Portage, commented "We are excited about
acquiring an additional portfolio of immuno-oncology assets. The
SalvaRx team has assembled a diverse group of pharmaceutical
products, and has demonstrated success in getting new products into
the clinic. We have made an early investment in Stimunity, another
Immuno-oncology platform, which is very complementary to SalvaRx's
products. With the combined team, we hope to accelerate the
timeline to the clinic for these new drugs, and see if we can
repeat the success achieved with Biohaven."
The Disposal, which is also subject to approval by Portage
shareholders, constitutes a reverse takeover of Portage (as the
number of Consideration Shares exceeds 100 per cent. of the current
issued share capital of Portage). The Portage shareholder circular
is required to be reviewed by the CSE and therefore the transaction
timetable, including the timing of the Company's 2018 AGM, cannot
yet be confirmed. On completion of the CSE review, both Portage and
the Company will publish their respective shareholder circulars and
a further announcement will be made by the Company.
On completion of (and subject to) the Demerger, the Company has
also approved the proposed purchase of, in aggregate, 2,767,470
vested and unvested options and warrants (the "Redemption Options")
outstanding as at the date of execution of the Sale Agreement, in
consideration of the transfer to relevant holders of, in aggregate,
40,692,698 Consideration Shares received by the Company on
completion of the Disposal (in each case, the consideration is
equal to the value of the Redemption Options based on the
respective exercise price of each Redemption Option). The
Redemption Options comprise all of the outstanding options and
warrants of the Company other than options held by Mr James Mellon
(the Chairman of the Company), Dr Greg Bailey (a Non-Executive
Director of the Company), Northland (the Company's nominated
adviser) and Cornhill Capital Ltd.
Related Party Transactions
The Disposal constitutes a related party transaction for the
purposes of Rule 13 of the AIM Rules due to the commonality in
ownership structure and boards of Portage and the Company.
Accordingly, having consulted with the Company's nominated adviser,
the independent directors (for the purposes of the Disposal
comprising Richard Armstrong and Colin Weinberg) consider the terms
of the Disposal to be fair and reasonable so far as Shareholders
are concerned. Further details of the Disposal and the related
party transaction considerations are set out in the Appendix
below.
The proposed Option Redemption is also a related party
transaction under Rule 13 of the AIM Rules. Mr Mellon and Dr Bailey
are deemed to be independent directors for the purposes of the
Option Redemption as their options are not being redeemed. Each of
Mr Mellon and Dr Bailey confirm that, having consulted with the
Company's nominated adviser, the terms of the Option Redemption are
fair and reasonable so far as Shareholders are concerned. A summary
of the Redemption Options, and the terms of the purchase by the
Company, as well as more detail on the considerations of the
independent directors with regards to AIM Rule 13, are set out in
the Appendix below.
Defined terms used in this announcement are set out at the end
of the announcement.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Enquiries
SalvaRx Group plc
Ian B. Walters, MD (Chief Executive) Tel: +1 203 441
5451
Northland Capital Partners Limited Tel: +44 (0) 20
Nominated Adviser and Broker 3861 6625
Matthew Johnson / Edward Hutton
(Corporate Finance)
Vadim Alexandre (Corporate Broking)
APPIX
The following information is extracted without material
adjustment from the draft circular to be sent to Shareholders
following completion of the CSE review, as explained above. All
dates and times are provisional and will be confirmed on the
publication of the circular. Capitalised terms used in the summary
below are defined at the end of this announcement.
1. Introduction
SalvaRx Group Plc is a drug development company focused on
cancer immunotherapy and complementary areas of oncology. Following
a group restructuring conducted in March 2017, all investments and
business interests of the Company are held by SalvaRx Limited
("Target"), the Company's 94.2 per cent. owned subsidiary.
On 14 August 2018, the Company announced that it had entered
into a conditional Sale Agreement for the disposal of its 94.2 per
cent. interest in Target to Portage Biotech Inc. ("Portage"), in
consideration of US$67.5 million, to be satisfied by Portage
issuing and allotting 757,943,784 new Portage Shares (the
"Consideration Shares") to the Company. The Sale Agreement includes
the following Conditions Precedent:
(i) Portage issuing and allotting the Consideration Shares to the Company;
(ii) receipt of the Portage Approval;
(iii) receipt of the Rule 15 Approval;
(iv) completion of the Demerger.
Concurrent with the Disposal (and as a condition of the Sale
Agreement), the Company will complete the Demerger, whereby not
less than 656,399,142 of the Consideration Shares (the "Demerger
Shares") will be distributed to Qualifying Shareholders on a
pro-rata basis, as explained below (the number of Demerger Shares
increasing by 18 Portage Shares for each new Ordinary Share issued
by the Company on exercise of a Warrant prior to the Demerger
Record Date).
The Demerger of the Consideration Shares is a condition of the
Sale Agreement. Accordingly Shareholders are required to approve
the Demerger as a condition of approving the Disposal (should they
wish to do so). In particular, in relation to the Demerger,
Shareholders are required to approve:
a) the Company undertaking the Share Split, pursuant to which
(i) Qualifying Shareholders will receive one Redeemable Share for
each Ordinary Share recorded against their name in the Shareholder
Register on the Demerger Record Date and (ii) each Qualifying
Shareholder shall continue to hold the same number of Ordinary
Shares of the same nominal value per share; and
b) immediately following the Share Split, the Company redeeming
all Redeemable Shares and, in consideration for the Redemption, the
Company shall transfer the Demerger Shares to Qualifying
Shareholders on the basis of eighteen (18) Demerger Shares for each
Redeemable Share held.
Portage is seeking the authority of its shareholders at the
Portage Meeting of Shareholders to consolidate its issued and to be
issued share capital by a ratio of up to 120:1 Portage Shares at a
future date which currently remains to be determined (the "Portage
Consolidation"). The Portage Consolidation, if approved and
implemented by the Portage board, would result in an adjustment to
any Demerger Shares on the effective date of the Portage
Consolidation. Further details in relation to the Portage
Consolidation are set out in the Portage Shareholder Circular,
which will be available for Shareholders to download, without
charge, at the following web addresses on the date of
publication:
https://www.portagebiotech.com/investors/shareholder-circular.html.
https://thecse.com/en/listings/life-sciences/portage-biotech-inc
At the Portage Share Price, the Disposal valued the Company's
interest in Target at US$67.5 million. As at the close of trading
on 19 March 2018, the value of Portage Shares on the OTC was
US$0.087. The "A" Independent Directors and the Portage Independent
Director agreed to use US$0.089 as the implied value of Portage
Shares for the purpose of the proposed Disposal, reflecting share
prices and volumes of trading on this date. The closing price of
Portage Shares on the OTC on 10 August 2018 (being the last
practicable trading date prior to announcement of the Disposal by
the Company) was US$0.10, valuing the Consideration Shares at
approximately US$75,794,000. As at close of trading on 10 August
2018 the last recorded trading price of Portage Shares on CSE was
US$0.105 and was, therefore, marginally higher than the closing
price for Portage Shares on OTC on 10 August 2018. On 10 August
2018, the market capitalisation of the Company at the Exchange Rate
was approximately US$21,046,000.
As at the date of this Document, there are 3,182,828 Options
over Ordinary Shares issued and outstanding and held by directors,
management, consultants, advisers and other persons who have
contributed to the growth of the Company. The Board has proposed,
subject to completion of the Disposal and the Demerger, to allow
all Option Holders other than Mr James Mellon (the Chairman of the
Company), Dr Greg Bailey (a Non-Executive Director of the Company),
Northland (the Company's nominated adviser) and Cornhill Capital
Ltd to sell back a total of 2,767,470 vested and unvested Options
to the Company (the "Redemption Options"). In consideration, the
Company would transfer to each Option Holder such number of
Consideration Shares (each transferred at an implied price equal to
the Portage Share Price) as reflected the value of the Redemption
Options (over and above the respective exercise prices) based on
the Per Share Consideration Value. Each of Mr Mellon and Dr Bailey
shall continue to hold their Options in accordance with their terms
following completion of the Disposal and the Demerger. Northland
and Cornhill Capital Ltd are free, at their election, to exercise
the Warrants held in their name prior to the Demerger Redemption
Date or at a future date.
Subject to completion of the proposed acquisition of the
Redemption Options by the Company, it is proposed that the Company
cancel all Redemption Options irrevocably. In aggregate, to acquire
100 per cent. of outstanding Redemption Options, the Company would
be required to transfer 40,692,698 Consideration Shares to Option
Holders (the "Option Redemption Shares"). A summary of the proposed
Option Purchase Agreements and the number of Portage Shares each
Option Holder will receive is set out at paragraph 8 below.
The Company proposes to retain up to 60,851,944 Consideration
Shares in aggregate to provide liquidity and working capital
following completion of the Disposal (the "Retained Shares"). The
number of Retained Shares shall decrease by 18 Portage Shares for
each new Ordinary Share issued by the Company on exercise of a
Warrant prior to the Demerger Record Date. At the Portage Share
Price, and on the basis that no further Ordinary Shares are issued,
the Retained Shares are valued at approximately US$5,416,000
(GBP4,185,000 at the Exchange Rate). Based on the closing price of
Portage Shares on the OTC on 10 August 2018 (being the last
practicable trading date prior to announcement of the Disposal by
the Company), the Retained Shares have a current market value of
approximately US$6,085,000 (GBP4,703,000 at the Exchange Rate).
The Disposal and the Demerger are both subject to the Rule 15
Approval, and the Disposal is also subject to the Portage
Approval.
Given the relatively disappointing share price of the Company's
shares on AIM, the Directors have determined that the Disposal and
the Demerger is the best way to unlock and maximise value for
Shareholders without causing dilution through raising additional
funds at a price which the Directors believe does not reflect the
value of the Company's underlying assets. The Company is,
therefore, seeking the approval of Shareholders to undertake the
Disposal and the Demerger at the 2018 AGM.
The Disposal and the Demerger will constitute a fundamental
change of business under Rule 15 of the AIM Rules. On completion of
the Disposal and the Demerger, the Company would therefore be
classified as an AIM Rule 15 cash shell and as such will be
required to make an acquisition or acquisitions which constitutes a
reverse takeover under AIM Rule 14 (including seeking re-admission
as an investing company (as defined under the AIM Rules)) on or
before the date falling six months from completion of the Disposal
and the Demerger or be re-admitted to trading on AIM as an
investing company under the AIM Rules (which requires the raising
of at least GBP6 million) failing which, the Company's Ordinary
Shares would then be suspended from trading on AIM pursuant to AIM
Rule 40. Admission to trading on AIM would be cancelled six months
from the date of suspension should the reason for the suspension
not have been rectified.
The purpose of this Document is to:
-- set out the background and reasons for the Disposal and the Demerger;
-- explain why the Board believes that the Disposal and the
Demerger are in the best interests of Shareholders as a whole;
-- explain how the Disposal and the Demerger will impact the Company;
-- explain the Option Redemption by the Company;
-- explain the resolutions to be put to Shareholders at the AGM
of the Company to be held on [17 September] 2018;
-- explain how Shareholders can deal in their Demerger Shares; and
-- set out the US securities law restrictions on all
Shareholders and the safe-keeping arrangements approved by the
Company in relation to US Shareholders.
2. Background and Reasons for the Disposal and Demerger
The Directors anticipate that Target will require significant
funding over the next several years to support the businesses
forming part of its portfolio, to develop clinical proof of concept
in cancer immunotherapies and, in addition, to undertake further
investments in and/or acquisitions of businesses which are
complementary to the Target Portfolio.
The current value of the Company's Ordinary Shares on the AIM
Market does not, in the opinion of the Directors, reflect the true
value of the Target Portfolio. Despite the Company undergoing a
restructuring exercise in March 2017 resulting in all investments
being transferred to Target, the Company has not been able to
secure additional third party funding for the Target Portfolio, or
for new businesses and/or investment opportunities, at a valuation
which the Directors consider acceptable for Shareholders. Any
funding proposals which the Company has received are at valuations
that cause significant dilution to Shareholders.
Given the difficulty in funding the Target Portfolio (and
potential new acquisition or investment opportunities) the Board
executed the LOI and commissioned the Valuation Report. The
Valuation Report, by PharmaVentures, provided a range of valuations
for the Target Portfolio of between US$67,000,000 and
US$188,000,000 (or between approximately GBP51,777,000 and
GBP145,286,000 at the Exchange Rate).
Following receipt of the Valuation Report, the "A" Independent
Directors negotiated with the Portage Independent Director and
agreed the terms of the Sale Agreement. This included a review by
the "A" Independent Directors of the Portage Portfolio, its current
and future value.
Portage has a history of creating value for its shareholders.
One of its portfolio companies, Biohaven Pharmaceutical Holding
Company Ltd (NYSE: BHVN) ("Biohaven") was the second largest
biotech IPO on NYSE in 2017, generating gross proceeds of
approximately US$193.5 million from the fundraising. On 24 January
2018, Portage announced a distribution in specie of its stock in
Biohaven to its shareholders.
The "A" Independent Directors believe that the terms of the
Disposal and the Demerger enable Shareholders to realise the value
of the Target Portfolio without significant dilution caused by
equity fundraising directly by the Company. In addition, as the
Consideration is to be satisfied by issue of the Consideration
Shares, Shareholders may retain their interest in the Target
Portfolio (through their resultant interest in Portage following
completion of the Demerger).
3. Financial Information on Portage
Portage recently published its: (a) audited consolidated
financial statements for the years ended 31 March 2018 and 31 March
2017; and (b) annual report in Form F-20 for the year ended 31
March 2018. The audited accounts of Portage for the period to 31
March 2018 are hereby incorporated by reference and are available
for Shareholders to download, without charge, at the following web
addresses:
https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00008656
http://thecse.com/en/listings/life-sciences/portage-biotech-inc
Shareholders can also view historic financial information and
reports relating to Portage, by going to the 'financial and
regulatory reports' section of the Portage website, located at the
follow web address:
https://www.portagebiotech.com/investors/financial-and-regulatory-reports.html
For the financial year ended 31 March 2018, Portage had net
operating costs of approximately US$2.3 million and realised gain
on disposal of investment of US$126 million resulting in net income
of US$124 million compared to an operating cost of US$36 million
and a net loss of US$0.6 million in the year ended 31 March 2017.
Portage had net assets of approximately US$9.6 million as at 31
March 2018 of which cash on hand was US$7.5 million.
A significant decline in overall expenses during the fiscal year
2018 compared to prior years was mainly due to non-consolidation of
Biohaven. There was also a slow-down in development activities at
PPL and EyGen during the fiscal year 2018 compared to prior years
as Portage sought to raise the funds needed to complete potential
IND filings and partnership possibilities with other pharmaceutical
companies.
During the fiscal year 2018, Portage distributed 6,102,730
shares of Biohaven held by it as an investment to its shareholders
on a pro-rata basis as a dividend and sold 236,770 shares of
Biohaven in the open market for an average price of US$30.79 per
share for total proceeds of approximately US$7.3 million.
Portage invested US$950,000 by way of a convertible note in iOx
and acquired an equity interest in an associate, Stimunity SAS, for
approximately US$681,000.
The directors of Portage believe that Portage and the Portage
Portfolio are well placed for strong growth in the coming years and
beyond, as a result of the track record and strength of the
team.
Portage's investment of US$7 million in Biohaven between the
years 2014 and 2016, and guidance from Portage Directors, led to
the second largest biotech IPO on the Nasdaq Stock Exchange in
2017. Portage's investment in Biohaven was worth in excess of
US$100 million at the time of the IPO in 2017, and has almost
doubled since then. Biohaven is now worth approximately US$1.3
billion, and Portage distributed the majority of these gains (as
outlined above) to its shareholders and sold some of these shares
to fuel the growth of the next round of companies. Portage has
provided seed capital to four other biotech companies, and will
seek to evaluate new opportunities with the help of Target's CEO,
Dr Ian Walters.
Due to their track record and the company's cash reserves, the
Portage management is confident in their ability to further support
the development of Target and the Target Portfolio.
4. Summary of the Sale Agreement
The Company, James Mellon, Dr Greg Bailey and Portage have
entered into the Sale Agreement, pursuant to which the Company,
James Mellon and Dr Greg Bailey have together agreed to sell to
Portage the entire issued share capital of Target. Mr Mellon and
Dr. Bailey each hold 2,000 shares of Target representing in
aggregate approximately 5.8 per cent. of Target's issued shares.
Accordingly each of Mr Mellon and Dr. Bailey shall receive
23,563,141 Portage Shares as consideration for the disposal of
their interest in Target subject to approval of the proposed
Disposal.
The Sale Agreement is conditional upon the satisfaction of
certain Conditions Precedent, including inter alia: (i) Portage
issuing and allotting the Consideration Shares to the Company; (ii)
receipt of the Portage Approval; (iii) receipt of the Rule 15
Approval; and (iv) approval of the Demerger.
The Conditions Precedent under the Sale Agreement are required
to be satisfied by no later than the date falling 60 days from the
day immediately following the execution of the Sale Agreement.
Under the Sale Agreement, the Company, James Mellon, Dr Bailey
and Portage have each provided basic title and capacity warranties,
and the Company is providing other limited warranties in relation
to Target relating to such matters as their solvency, certain
accounting and financial information, litigation and disputes.
5. Demerger
The Demerger is to be undertaken immediately following
completion of the Disposal. The only condition to the Demerger is
completion of the Disposal (the "Demerger Condition"). The Demerger
is a contractual obligation of the Sale Agreement.
Subject to the satisfaction of the Demerger Condition, the
Demerger shall result in:
(i) Adoption of new memorandum and articles
the New Articles will be adopted by the Company
setting out the rights of
Shareholders and the Company
in relation to a new class
of Redeemable Shares
(ii) Share Split Each Qualifying Shareholder
will be allotted one Redeemable
Share for every Ordinary Share
recorded against their name
in the Shareholder Register
as at the Demerger Record
Date (1)
(iii) Redemption immediately following the
of Redeemable Shares allotment of the Redeemable
Shares (in accordance with
(ii)), the Company shall redeem
all Redeemable Shares in accordance
with the New Articles
(iv) Transfer of the Redemption of the Redeemable
Portage Shares Shares, will be satisfied
by the Company transferring
to each Qualifying Shareholder
18 Demerger Shares per each
Redeemable Share recorded
against their name in the
Shareholder Register as at
the Demerger Record Date (2)
Notes:
(1) Qualifying Shareholders will not receive
a share certificate in respect of their Redeemable
Shares.
(2) At the Portage Share Price of US$0.089 (based
on a valuation of US$25 million as agreed by
the parties on the date of the LOI), this will
constitute a distribution to Qualifying Shareholders
of approximately US$1.60 per Ordinary Share.
Subject to Applicable Restrictions, Qualifying Shareholders will
receive their pro-rata entitlement to Demerger Shares in
certificated form, and will have to make arrangements with their
own broker to dematerialise certificates should they so wish.
Further details regarding the dematerialisation of Portage Shares
is set out at paragraph 6.
The Redeemable Shares issued pursuant to the Share Split shall
be subject to the following rights and restrictions: (a)
non-voting; (b) non-transferrable other than to the Company; and
(c) the Company has a right to redeem the Redeemable Shares at any
time, in its absolute discretion on such terms as it sees fit. The
Redeemable Shares will not be admitted to trading on AIM or on any
other exchange or trading platform.
All Ordinary Shares shall be subject to the same rights and
restrictions as under the existing articles of association and will
continue to be traded on AIM.
6. Rights of Demerger Shares, Applicable Restrictions and Safe-Keeping Custody Arrangements
Applicable Restrictions
For a period of six months from the date of the Demerger (the
"Restricted Period"), Demerger Shares (a) are not permitted to be
held by, transferred to, or in any way benefit (whether by way of
legal, beneficial or economic ownership or control), any person,
company, limited partnership or other undertaking, who or which is
a US national or otherwise domiciled or resident anywhere in the US
or holds a US passport (a "US Person"); and (b) may not be traded
on the OTC market or any other trading platform in the United
States (including by Shareholders resident or domiciled in the
United Kingdom) ((a) and (b) together the "Applicable
Restrictions")). It is illegal for any Demerger Share to be
distributed in any way by any Shareholder into the United States
for the duration of the Restricted Period.
Any purported transfer in breach of the Applicable Restrictions
will be rejected by the Company, Portage and TSX Trust.
During the Restricted Period, the Demerger Shares may be traded
by any non-US Person (such as a Shareholder resident or domiciled
in the United Kingdom), other than "Control Persons" (as defined
under Canadian securities laws, if any), through the facilities of
the CSE.
All Demerger Shares will carry the following legend:
"FOR A PERIOD OF SIX MONTHS FROM THE DATE OF ISSUE BY THE
COMPANY (THE "RESTRICTED PERIOD"), THE SECURITIES REPRESENTED
HEREBY ARE NOT PERMITTED TO BE HELD BY, TRANSFERRED TO, OR IN ANY
WAY BENEFIT (WHETHER BY WAY OF LEGAL, BENEFICIAL OR ECONOMIC
OWNERSHIP OR CONTROL), ANY PERSON, COMPANY, LIMITED PARTNERSHIP OR
OTHER UNDERTAKING, WHO OR WHICH IS A US NATIONAL OR OTHERWISE
DOMICILED OR RESIDENT ANYWHERE IN THE US OR HOLDS A US PASSPORT.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMED
(THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. DURING THE
RESTRICTED PERIOD, THESE SECURITIES (A) ARE NOT PERMITTED TO TRADE
THROUGH THE FACILITIES OF ANY STOCK EXCHANGE OR QUOTATION SYSTEM IN
THE UNITED STATES (B) MAY ONLY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED OUTSIDE THE UNITED STATES IN CONFORMITY WITH RULE 904
OF REGULATION S UNDER THE 1933 ACT, (C) IN CONFORMITY WITH AN
EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, IF AVAILABLE, AND
IN CONFORMITY WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) IN
A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT
OR ANY APPLICABLE STATE LAWS AND REGULATIONS, GOVERNING THE OFFER
AND SALE OF SECURITIES.
SUBJECT TO COMPLIANCE WITH APPLICABLE CANADIAN SECURITIES LAWS,
THE SECURITIES REPRESENTED HEREBY MAY BE FREELY TRADED BY ANY
NON-US PERSON THROUGH THE FACILITIES OF THE CSE OR ANY OTHER
CANADIAN STOCK EXCHANGE UPON WHICH THE SECURITIES BECOME
LISTED."
Safe-Keeping and Custody Arrangements
To ensure compliance with Applicable Restrictions (including but
not limited to the restrictions under the Securities Act)
Qualifying Shareholders who are US Shareholders will not receive
their Demerger Shares and will be prohibited from dealing in
Demerger Shares for the duration of the Restricted Period. Under
the terms of the New Articles, consideration paid by the Company on
redemption of the Redeemed Shares can be held in escrow, or subject
to safe-keeping custody arrangements on such terms and for such
period as the Company determines in its sole discretion.
The Company has accordingly agreed to the appointment of the
Custodian who shall hold in custody all Demerger Shares which
cannot be held by a US Person for the duration of the Restricted
Period. US Shareholders will not accordingly receive possession or
have entitlement to Demerger Shares until expiry of the Restricted
Period. Portage has approved the appointment of the Custodian and
the arrangements to ensure its continued compliance with the
Securities Act and will direct its transfer agent to send relevant
share certificates directly to the Custodian on completion of the
Demerger.
For further details regarding the safe-keeping custody
arrangements US Shareholders should contact the Custodian directly
by email to michael.corcoran@hilldickinson.com.
Rights of Demerger Shares
In addition to the Applicable Restrictions, the Demerger Shares
received by Shareholders of the Company will be subject to the
following rights and restrictions:
(i) Rights on Voting: each Demerger Share shall entitle the
holder to one vote per Demerger Share on any resolution put to the
shareholders of Portage.
(ii) Rights on Income: each Demerger Share confers an equal
right to participate in any dividend declared by Portage.
(iii) Rights in the event of a winding-up of the Company: in the
event of a winding up and a distribution of assets, each Demerger
Share shall have equal rights with regard to the distribution of
the surplus assets of Portage.
(iv) Rights on Transfers: the Demerger Shares are transferrable
provided that the transfer is made pursuant to an appropriate
instrument of transfer, subject to the memorandum and articles of
Portage.
(v) Rights of Pre-emption (first refusal): in respect of any
future issue by Portage of any equity securities, rights of
pre-emption under BVI Companies Act 2004 do not apply to
Portage.
Subject to approval of the Disposal and the Demerger, it is
expected that share certificates representing the Demerger Shares
will be posted by not later than [1 October] 2018.
The CSE is a junior stock market in Canada and is not widely
traded by investors in the UK. A number of UK-based brokers do,
however, offer a trading platform for investors to dematerialise
their Demerger Shares (should they wish to do so) and deal in
Portage Shares electronically. Shareholders wishing to hold their
Demerger Shares in dematerialised form should, in the first
instance, speak to their existing broker to see whether they
provide this service. If they do not provide this service
Shareholders should contact other brokers.
7. The Company's operations following the Disposal and the Demerger
The Disposal and the Demerger, if approved, will result in the
divestment of substantially all of the Company's existing business,
assets and investments. Thereafter, the Company will be classified
as an AIM Rule 15 cash shell and as such will be required to make
an acquisition or acquisitions which constitutes a reverse takeover
under AIM Rule 14 (including seeking re-admission as an investing
company (as defined under the AIM Rules)) on or before the date
falling six months from completion of the Disposal or be
re-admitted to trading on AIM as an investing company under the AIM
Rules (which requires the raising of at least GBP6 million) failing
which, the Ordinary Shares would then be suspended from trading on
AIM pursuant to AIM Rule 40. Admission to trading on AIM would be
cancelled six months from the date of suspension should the reason
for the suspension not have been rectified.
On 26 June 2018, Jim Mellon (via Galloway Limited) and Dr Greg
Bailey each agreed to loan US$500,000 to the Company (the
"Shareholder Loans") to fund the operational activities and the
investments of the Company. The Shareholder Loans are required to
be repaid by the Company within twelve months (the "Loan Term")
from the date of the loan and shall accrue interest at a rate of 7
per cent. per annum in the first twelve months. If the Shareholder
Loans are not repaid within twelve months, the interest rate shall
be increased to 18 per cent. per annum. Unless new debt or equity
funding is available to the Company during the Loan Term, it is
expected that the Shareholder Loans will be repaid prior to expiry
of the Loan Term out of the proceeds of sale of some or all of the
Retained Shares.
In the event that the Disposal is approved, the Directors will
ensure that steps are taken to minimise the Company's costs and to
preserve capital.
It has been agreed that Dr Ian Walters, Kam Shah, Richard
Armstrong and Colin Weinberg shall each resign as Directors of the
Company with immediate effect from the conclusion of the AGM. By
recommendation of the Board, Denham Eke shall stand for appointment
as a director of the Company at the AGM. A biography for Denham Eke
is set out in paragraph 9. As from the conclusion of the AGM, the
Company shall have no independent directors and the Company is
therefore seeking to identify and to appoint at least one
independent non-executive director to serve on the Company's board
of directors. The Company will release an announcement reporting on
the progress with regard to such an appointment or appointments in
due course.
In addition to the Shareholder Loans and the fees of Directors,
the Company will otherwise be required to meet its general
overheads and the costs of maintaining a listing of the Company's
shares on AIM.
The remaining assets of the Company will be its cash reserves of
approximately US$200,000 (after allowing for the estimated costs of
this transaction) and up to 60,851,944 Retained Shares worth
approximately US$5,416,000 at the Portage Share Price (GBP4,185,000
at the Exchange Rate). The number of Retained Shares shall decrease
by 18 Portage Shares (US$1.60 at the Portage Share Price) for each
new Ordinary Share issued by the Company on exercise of a Warrant
prior to the Demerger Record Date.
The Company's available resources to undertake an evaluation of
and to complete a reverse takeover will depend upon the value of
the Retained Shares (to the extent they continue to be held by the
Company at such time) and its existing cash reserves. In the event
that the cash reserves and any value realised from the Retained
Shares are insufficient to undertake a reverse takeover, the
Directors may seek further funding, including by a further issue of
Ordinary Shares.
8. Company Options, Warrants and the Option Redemption
There are 3,182,828 Options over Ordinary Shares outstanding as
at the date of this Document. The Options have been granted to the
directors, management team, consultants and to certain advisers of
the Company during the period from 29 April 2015 to 23 March
2016.
The table below provides a summary of the Options currently in
issue:
Name of Option Holder Date of Exercise Number Number
Grant Price of vested of unvested
Options Options
---------------------------- ------------ --------- ----------- -------------
Richard Armstrong 29.04.2015 23.2p 86,231 -
---------------------------- ------------ --------- ----------- -------------
Colin Weinberg 29.04.2015 23.2p 86,231 -
---------------------------- ------------ --------- ----------- -------------
Catalyst Corporate
Consultants Limited 29.04.2015 23.2p 86, 231 -
---------------------------- ------------ --------- ----------- -------------
Jim Mellon 31.07.2015 23.2p 86,231 -
---------------------------- ------------ --------- ----------- -------------
Dr Greg Bailey 31.07.2015 23.2p 86,231 -
---------------------------- ------------ --------- ----------- -------------
Northland Capital Partners
Limited 22.03.2016 71p 182,333 -
---------------------------- ------------ --------- ----------- -------------
Cornhill Capital Ltd 22.03.2016 35.5p 60,563 -
---------------------------- ------------ --------- ----------- -------------
Anthony Chow 22.03.2016 35.5 p 243,110 121,556
---------------------------- ------------ --------- ----------- -------------
Declan Doogan 22.03.2016 35.5 p 243,110 121,556
---------------------------- ------------ --------- ----------- -------------
Alexander Pickett 22.03.2016 35.5 p 243,110 121,556
---------------------------- ------------ --------- ----------- -------------
Kam Shah 22.03.2016 35.5 p 243,110 121,556
---------------------------- ------------ --------- ----------- -------------
Dr Ian Walters * 22.03.2016 35.5 p 285,857 142,929
---------------------------- ------------ --------- ----------- -------------
Robert Kramer ** 22.03.2016 35.5p 171,109 85,555
---------------------------- ------------ --------- ----------- -------------
Catalyst Corporate
Consultants Limited 22.03.2016 35.5 p 121,555 60,778
---------------------------- ------------ --------- ----------- -------------
Richard Armstrong 22.03.2016 35.5p 60,776 30,389
---------------------------- ------------ --------- ----------- -------------
Colin Weinberg 22.03.2016 35.5 p 60,776 30,389
---------------------------- ------------ --------- ----------- -------------
Totals: 2,346,564 836,264
------------------------------------------ --------- ----------- -------------
Total Options: 3,182,828
------------------------------------------ --------- --------------------------
*granted to his personal services company Value Driven Drug
Solutions LLC
**granted to his personal services company RA Kramer Consulting
LLC
As at the date of this Document, 2,346,654 Options have vested.
A total of 836,264 Options will vest on the third anniversary of
the RTO Admission.
The table below summarises the number of Redemption Options held
by each Option Holder and the number of Option Redemption Shares it
is proposed each Option Holder will receive, in accordance with the
terms of the proposed Option Purchase Agreements:
Name of Option Redemption Implied US$ Option Redemption
Holder Options gain on Redemption Shares
Options based
on value of
Consideration
Shares on
Diluted Basis
---------------------- ----------- -------------------- ------------------
Richard Armstrong 177,396 US$243,202 2,730,871
---------------------- ----------- -------------------- ------------------
Colin Weinberg 177,396 US$243,202 2,730,871
---------------------- ----------- -------------------- ------------------
Catalyst Corporate
Consultants Limited 268,564 US$361,251 4,056,417
---------------------- ----------- -------------------- ------------------
Anthony Chow 364,666 US$472,187 5,302,094
---------------------- ----------- -------------------- ------------------
Declan Doogan 364,666 US$472,187 5,302,094
---------------------- ----------- -------------------- ------------------
Alexander Pickett 364,666 US$472,187 5,302,094
---------------------- ----------- -------------------- ------------------
Kam Shah 364,666 US$472,187 5,302,094
---------------------- ----------- -------------------- ------------------
Dr Ian Walters* 428,786 US$555,213 6,234,373
---------------------- ----------- -------------------- ------------------
Robert Kramer** 256,664 US$332,341 3,731,789
---------------------- ----------- -------------------- ------------------
Totals: 2,767,470 US$3,623,959 40,692,698
---------------------- ----------- -------------------- ------------------
*granted to his personal services company Value Driven Drug
Solutions LLC
**granted to his personal services company RA Kramer Consulting
LLC
Should Northland and/or Cornhill Capital Ltd. exercise some or
all of the Warrants prior to the Demerger Record Date, the new
Ordinary Shares issued to them would be eligible for the Demerger
and the number of Retained Shares would decrease by 18 Portage
Shares for each new Ordinary Share issued by the Company.
Safe-Keeping and Custody Arrangements
To ensure compliance with Applicable Restrictions (including but
not limited to the restrictions under the Securities Act) it is
proposed that Option Holders who are US Shareholder will not
receive their Option Redemption Shares and will be prohibited from
dealing in their Option Redemption Shares for the duration of the
Restricted Period. Under the terms of the proposed Option Purchase
Agreement, consideration paid by the Company on redemption of the
Option Redemption Shares to US Shareholders can be held in escrow,
or subject to safe-keeping custody arrangements on such terms and
for such period as the Company determines in its sole
discretion.
The Company has accordingly agreed to the appointment of the
Custodian who shall, subject to completion of the Option
Redemption, hold in custody all Option Redemption Shares which
cannot be held by a US Person for the duration of the Restricted
Period. Option Holders who are US Persons will not accordingly
receive possession or have entitlement to Option Redemption Shares
until expiry of the Restricted Period. Portage has approved the
appointment of the Custodian and the arrangements to ensure its
continued compliance with the Securities Act and will direct its
transfer agent to send relevant share certificates directly to the
Custodian on completion of the Option Redemption.
For further details regarding the safe-keeping custody
arrangements, affected Option Holders should contact the Custodian
directly by email to michael.corcoran@hilldickinson.com.
If and when issued, all Option Redemption Shares will carry the
legend described in paragraph 6 of this Document.
9. 2018 AGM
Resolution 1 - Receiving the Financial Statements and Reports
for 2017
Shareholders are being asked to receive the financial statements
of the Company for the year ended 31 December 2017 (including the
Directors' and auditors' reports thereon).
Resolution 2 - Appointment of a Director and Note on Retirement
of Directors
In accordance with the Current Articles and corporate governance
policy, one third of the Directors are required to stand for
re-election by rotation at every annual general meeting.
On this occasion, Kamlesh Shah and Dr Ian Walters have agreed to
retire by rotation but not to offer themselves for re-appointment
at the AGM. Richard Armstrong and Colin Weinberg will also retire
as directors of the Company with effect from the conclusion of the
annual general meeting.
The Board are therefore proposing the appointment of Denham Eke
as the chief financial officer and as a director of the Company at
the AGM in accordance with article 88 of the Current Articles. The
board of directors following the AGM will be constituted by James
Mellon, Dr Greg Bailey and, if elected, Denham Eke. A biography for
Denham Eke is set out below.
Biography - Denham Eke
Denham Eke is the Managing Director of Burnbrae Group Limited, a
private international asset management company. He began his career
in stockbroking with Sheppards & Chase before moving into
corporate planning for Hogg Robinson plc, a major multinational
insurance broker. He is a director of many years' standing of both
public and private companies involved in the financial services,
property, mining, and manufacturing sectors. He is chairman of
Webis Holdings PLC, chief executive officer of Manx Financial Group
PLC, chief finance officer of Port Erin Biopharma Investments
Limited, and a non-executive director of Billing Services Group
Limited - all quoted on the London AIM market. Mr Eke is also a
non-executive director of Juvenescence Ltd., a life science and
artificial intelligence company focussed on advancements in the
field of longevity.
Resolution 3 - Appointment of Auditors and Determination of
their Remuneration
The Company is required to appoint or re-appoint auditors at
each general meeting at which financial statements are presented.
It is proposed that RSM UK Audit LLP be re-appointed as the
Company's auditors, and to authorise the Board to determine their
remuneration.
Resolution 4 - Disapplication of pre-emption rights
Article 4.2 of the Company's Current Articles and Article 4.2 of
the New Articles contain pre-emption rights that require all shares
which the Company proposes to allot for cash to be first offered to
existing Shareholders in proportion to existing shareholdings,
unless a special resolution is passed to dis-apply such rights.
Such rights do not apply to an issue otherwise than for cash, such
as an issue in consideration of an acquisition.
It is proposed that the Directors be authorised to allot for
cash, on a non-pre-emptive basis, ordinary shares in the capital of
the Company for an aggregate par value of up to GBP500,000, as if
the pre-emption rights of the Shareholders contained in Current
Articles and the New Articles did not apply to such allotment(s),
such authority to expire (unless and to the extent previously
revoked, varied or renewed by the Company in a general meeting) at
the conclusion of the next annual general meeting of the Company.
The purpose of this special resolution is to give the Directors the
flexibility to take advantage of specific investment and funding
opportunities as they arise, without the need to revert to
Shareholders for further approval.
Resolution 5 - Adoption of New Articles
Resolution 5 which will be proposed as a special resolution is
to approve the adoption of the New Articles in substitution and to
the exclusion of the Current Articles.
Resolution 6 - Disposal and Demerger
Resolution 6 which will be proposed as a special resolution, and
which is conditional on the passing of Resolution 5, is to approve:
(i) the Disposal in accordance with the terms of the Sale Agreement
and as required under Rule 15 of the AIM Rules; (ii) the Share
Split, resulting in the creation of the Redeemable Shares; and
(iii) the redemption of the Redeemable Shares by the Company in
consideration for the transfer of the Demerger Shares to
Shareholders.
Resolution 7 - Redemption of Options
Resolution 7 which will be proposed as a special resolution and
which is conditional on the passing of Resolutions 5 and 6 is to
approve and authorise the directors of the Company to redeem the
Redemption Options and, in consideration of the Redemption,
transfer to Option Holders the Option Redemption Shares.
10. Recommendations
The Board considers that the resolutions to be proposed at the
AGM are in the best interests of Shareholders as a whole. In
relation to the Rule 15 Approval and the Demerger Resolution, for
the reasons set out in paragraph 2 and following the process
undertaken by the Board, the Board is of the view that the
proposals are in the best interests of Shareholders.
Accordingly, the Board recommends that Shareholders vote in
favour of the Resolutions to be proposed at the AGM as they intend
to do in respect of their own beneficial holdings of 26,748,320
Ordinary Shares in aggregate representing 73.35 per cent. of the
current issued share capital of the Company.
11. Undertakings
The Company has received signed irrevocable undertakings from
James Mellon and Dr Greg Bailey, Shareholders holding, in aggregate
26,640,582 Ordinary Shares as at the date of this Document and
which together represents 73.06 per cent. of the current issued
ordinary share capital of the Company, confirming that they shall
vote in favour of all Resolutions being proposed at the AGM.
On the basis of the signed irrevocable undertakings from
Shareholders, it is likely that the Resolutions put to the AGM will
be approved.
12. Related Party Transactions
The Disposal
The Disposal is a related party transaction under Rule 13 of the
AIM Rules by virtue of the commonality in the share ownership
structure and management boards of Portage and the Company.
The Directors of the Company hold the following positions on the
senior management board of Portage: (i) Dr Greg Bailey, Chairman;
(ii) Kam Shah, Chief Financial Officer; (iii) Jim Mellon, Director;
and (iv) Dr Ian Walters, Director.
As at the date of this Document, Dr Greg Bailey and Jim Mellon,
respectively, hold a legal and beneficial interest in approximately
23.92 per cent. and 16.38 per cent. of the issued share capital of
Portage, and are also vendors under the Sale Agreement in relation
to their personal holdings of shares in Target. Shareholders should
also be aware that the Acquisition constitutes a related party
transaction for Portage under Canadian securities legislation and
as such, approval is required from a majority of the disinterested
Portage shareholders. Portage shares held by Messrs. Bailey and
Mellon will therefore not be eligible to vote on the Portage
Approval.
Kam Shah and Dr Ian Walters each hold a minority interest of
less than 3 per cent. of the issued share capital of Portage, as at
the date of this Document.
Accordingly, Richard Armstrong, and Colin Weinberg, being the
"A" Independent Directors for the purposes of AIM Rule 13, having
consulted with Northland, the Company's Nominated Adviser, consider
that the terms of the Disposal are fair and reasonable insofar as
all Shareholders are concerned. In particular, it is noted that the
value of the Disposal values the Target Portfolio at substantially
more than the Company's valuation on the AIM Market on 13 August
2018, the date before the announcement by the Company of the terms
of the Disposal.
The Option Redemption
The Option Redemption is a related party transaction under Rule
13 of the AIM Rules.
Mr James Mellon and Dr Greg Bailey are deemed to be independent
directors for the purposes of the Option Redemption as their
Options are not being redeemed. Mr James Mellon and Dr Greg Bailey,
being the "B" Independent Directors for the purposes of AIM Rule
13, having consulted with Northland, the Company's Nominated
Adviser, consider that the terms of the Option Redemption are fair
and reasonable insofar as the Shareholders are concerned,
particularly noting:
(a) key management and consultants who hold Redemption Options
are to transfer to Portage (subject to completion of the
transaction) to continue to operate the Target Portfolio and are
standing down from their respective duties with the Company on
completion. During the course of negotiations with Portage it was
made clear that the services of such parties were required for the
continued development of the Target Portfolio and the value of
their respective Options should be respected (as the burden of
rewarding each individual for past endeavour should not rest with
Portage and was the responsibility of the Company);
(b) as holders of Redemption Options will not be involved in the
day-to-day operations and management of the Company following
completion of the Disposal, the "B" Independent Directors do not
believe that it will be beneficial to Shareholders as a whole for
such holders to exercise their options to be eligible to receive
Demerger Shares (given the likelihood that such holders will
dispose of their Ordinary Shares post-transaction which would have
a negative impact on the Company's share price); and
(c) the advice of the Company's UK legal counsel that the
existing option holders would not be compensated in the event of a
transfer of assets by the Company as a distribution in specie
(thereby reducing the value of the Company's assets and its net
asset value per share) under the terms of the existing option
arrangements, and that it was common for option schemes in the UK
to provide for terms to be adjusted or to permit a "cashless
exercise" in such circumstances (and in this regard the "B"
Independent Directors considered the terms of the existing option
arrangements to be unfair as management and consultants and
advisers were not protected where assets were transferred by the
Company as a distribution in specie).
DEFINITIONS
The following definitions apply throughout this Document unless
the context requires otherwise:
""A" Independent Director" Colin Weinberg and Richard
Armstrong, being the independent
directors of the Company
for the purpose of the Disposal,
being a related party transaction
pursuant to Rule 13 of the
AIM Rules
"Acquisition" the proposed acquisition
of a 94.2 per cent. interest
in Target by Portage from
the Company in accordance
with the terms of the Sale
Agreement
"AGM" or "2018 AGM" the 2018 annual general
meeting of shareholders
to be held at 6.00 p.m.
on [17 September] 2018,
notice of which is set out
at Part III of this Document,
or any adjournment of that
meeting
"AIM" the AIM Market operated
by the London Stock Exchange
"AIM Rules" together the AIM Rules for
Companies, the AIM Rules
for Nominated Advisers and
the AIM Dis-ciplinary Procedures
and Appeals Handbook as
published from time to time
"Applicable Restrictions" any restrictions on Shareholders
under the Securities Act
(as more particularly set
out at paragraph 6 of this
Document)
"Articles Resolution" the resolution numbered
5 set out in the Notice
in relation to the approval
and adoption of the New
Articles
""B" Independent Director" James Mellon and Dr Greg
Bailey, being independent
directors of the Company
for the purpose of the Option
Redemption, being a related
party transaction pursuant
to Rule 13 of the AIM Rules
"BVI" the British Virgin Islands
"Company" SalvaRx Group Plc, a company
incorporated and domiciled
in the Isle of Man with
Company Number 000258V
"Conditions Precedent" the conditions precedent
to the Disposal by the Company,
and the Acquisition by Portage,
set out in the Sale Agreement
and as more particularly
set out at paragraph 4 of
this Document
"Consideration" US$67.5 million to be satisfied
by the issue of the Consideration
Shares
"Consideration Shares" 757,943,784 Portage Shares,
issued as fully paid shares
at an implied price per
share equal to the Portage
Share Price
"CREST" the computerised settlement
system used to facilitate
the transfer of title to
shares in uncertificated
form
"CSE" the Canadian Securities
Exchange
"CREST Regulations" the Uncertificated Securities
Regulations 2006 (SD No.
743/06 of the Isle of Man
"Current Articles" the current Articles of
Association of the Company
as at the date of this Document
"Custodian" Hill Dickinson LLP, the
Company's UK legal counsel
"Demerger" together the proposed Share
Split and Redemption in
accordance with the Demerger
Resolution to be considered
and, if thought fit, approved
by Shareholders at the AGM
"Demerger Record Date" [6.00 p.m.] on [17 September]
2018
"Demerger Resolution" the resolution numbered
6 in paragraph 9 in this
Document
"Demerger Shares" not less than 656,399,142
Portage Shares, to be distributed
to Shareholders, as part
of the Demerger (such figure
increasing by 18 Portage
Shares for each new Ordinary
Share issued by the Company
on exercise of any outstanding
Warrants prior to the Demerger
Record Date)
"Diluted Basis" the Existing Ordinary Shares,
plus 2,767,470 Ordinary
Shares in respect of the
notional exercise of the
Redemption Options
"Directors" or the the directors of the Company
"Board" whose names are set out
on page 11 of Part I of
this Document
"Disposal" the proposed sale by the
Company of its 94.2 per
cent. interest in Target
to Portage in accordance
with the terms of the Sale
Agreement
"Document" this document
"Euroclear" Euroclear UK & Ireland Limited,
a company incorporated in
England and Wales and the
operator of CREST
"Exchange Rate" GBP1: US$1.294, being the
Sterling / US Dollar exchange
rate as published by The
Financial Times, London,
on 7 August 2018 as at 3.00
p.m.
"Existing Ordinary the 36,466,619 Ordinary
Shares" Shares of the Company in
issue at the date of this
Document
"EyGen" EyGen Limited, a company
incorporated and registered
in the BVI
"Form of Proxy" the form of proxy for use
by the Shareholders in connection
with the AGM
"Group" the Company and its subsidiary
undertaking at the date
of this Document
"Intensity" Intensity Therapeutics Inc.,
a company incorporated and
domiciled in Delaware, USA
"Immunova" Immunova LLC, a company
incorporated and domiciled
in Delaware, USA
"IOM" the Isle of Man
"IOM Law" the Companies Act 2006,
of the IOM as amended from
time to time
"iOx" IOX Therapeutics Ltd, a
company incorporated and
registered in England and
Wales with company number
09430782
"LOI" the non-binding letter of
intent between the Company
and Portage in relation
to the Disposal dated 19
March 2018
"Nekonal" Nekonal SARL, a company
incorporated in Luxembourg,
focused on developing antibodies
for autoimmune diseases
"Nekonal Oncology" Nekonal Oncology Ltd, a
company incorporated and
registered in the BVI
"New Articles" subject to approval of the
Resolutions, the new memorandum
and articles of association
to be adopted by the Company
at the AGM
"Northland" Northland Capital Partners
Limited, the Company's Nominated
Adviser as at the date of
this Document
"Notice" the notice of the AGM set
out at the end of this Document
"NYSE" the New York Stock Exchange
"Option Holders" the holders of Redemption
Options as set out at paragraph
8 of this Document
"Option Purchase Agreement" the proposed agreements
between the Option Holders
and the Company in connection
with the Option Redemption,
which agreements shall be
signed with relevant Option
Holders following this announcement
of the terms of the proposed
Disposal and Demerger
"Option Redemption" the proposed buy-back of
the Redemption Options from
Option Holders in consideration
of the transfer of the Option
Redemption Shares as set
out at paragraph 8 of this
Document
"Option Redemption 40,692,698 Portage Shares
Shares" which are proposed to be
transferred to the Option
Holders (excluding Mr James
Mellon, Dr Greg Bailey,
Northland and Cornhill Capital
Ltd) in consideration of
the Option Redemption
"Options" all options and warrants
over Ordinary Shares outstanding
as at the date of this Document
and more particularly set
out at paragraph 8 of this
Document
"Ordinary Shares" the ordinary shares of the
Company having a nominal
value of 2.5 pence each
"OTC" the stock market operated
in the USA by the OTC Markets
Group
"Overseas Shareholders" Shareholders with registered
addresses outside the UK
or who are incorporated
in, registered in or otherwise
resident or located in,
countries outside the UK
"Per Share Consideration US$1.75 per Ordinary Share,
Value" being the value of the Consideration
on a per Ordinary Share
basis (after allowing for
the notional exercise of
the Redemption Options)
"PGL" Portage Glasgow Limited,
a company incorporated in
Scotland with company number
SC583928
"PharmaVentures" PharmaVentures Limited,
a company incorporated and
registered in England and
Wales with registered number
03419584 and having its
registered office at Triumph
House, Parkway Court, Oxford
Business Park, Oxford OX4
2JY
"Portage" Portage Biotech Inc., a
company incorporated and
domiciled in the BVI with
company registration no.
1784969
"Portage Approval" approval of the Acquisition
by a majority of the disinterested
Portage shareholders at
the Portage Meeting of Shareholders
"Portage Independent Steven Mintz (for the purpose
Director" of the Acquisition)
"Portage Meeting of the 2018 annual general
Shareholders" meeting of Portage for the
purpose of, inter alia,
considering and if thought
fit approving the proposed
Acquisition
"Portage Portfolio" the portfolio of investments,
subsidiaries and interests
of Portage
"Portage Shareholder the circular to Portage
Circular" shareholders dated [--]
2018 setting out the reasons
for, and terms of, the Acquisition,
and including notice of
the Portage Meeting of Shareholders
"Portage Share Price" US$0.089, being the implied
valuation of each Portage
share agreed between the
parties on 19 March 2018,
being the date of the LOI
(giving an aggregate value
for Portage of approximately
US$25 million)
"Portage Shares" the common shares in the
issued share capital of
Portage of no par value,
which shares are traded
on the CSE and the OTC
"PPL" Portage Pharmaceuticals
Limited, a company incorporated
in the BVI
"Prohibited Territories" Australia, Canada, Japan,
the Republic of South Africa
and the US
"PSL" Portage Services Ltd, a
company incorporated in
Ontario, Canada
"Qualifying Shareholders" Shareholders of the Company
recorded on the Shareholder
Register on the Demerger
Record Date
"Redeemable Shares" subject to approval of the
Share Split Resolution at
the AGM, the redeemable
shares of no par value each
in the Company, with the
rights set out in the New
Articles
"Redemption" subject to approval of the
Resolutions, the redemption
of all Redeemable Shares
by the Company at the Redemption
Time in consideration of
the transfer to shareholders
of not less than 656,399,142
Demerger Shares in aggregate
(such figure increasing
by 18 Portage Shares for
each new Ordinary Share
issued by the Company on
exercise of a Warrant prior
to the Demerger Record Date)
"Redemption Options" Options (including warrants)
over a total of 2,767,470
new Ordinary Shares outstanding
as at the date of this Document
(being all of the outstanding
Options other than 86,231
Options held by Mr James
Mellon; 86,231 Options held
by Dr Greg Bailey; 182,333
Options held by Northland;
and 60,563 Options held
by Cornhill Capital Ltd),
as more particularly set
out at paragraph 8 of this
Document
"Redemption Time" immediately following the
approval of the Resolutions
"Resolutions" the resolutions set out
in the Notice to be proposed
at the AGM
"Restricted Period" the period of six months
from the date of completion
of the Demerger
"Retained Shares" up to 60,851,944 Portage
Shares to be retained by
the Company following completion
of the Demerger and Option
Redemption, such figure
decreasing by 18 Portage
Shares for each new Ordinary
Share issued by the Company
on exercise of a Warrant
prior to the Demerger Record
Date)
"Rift" Rift Biotherapeutics Inc.,
a company incorporated and
registered in Delaware,
USA
"RTO Admission" the re-admission of the
Ordinary Shares of the Company
to trading on AIM on 22
March 2016
"Rule 15 Approval" approval by Shareholders
of the disposal by the Company
of its interest in Target
(pursuant to Rule 15 of
the AIM Rules)
"Sale Agreement" the conditional sale agreement
between the Company, James
Mellon, Dr Greg Bailey and
Portage dated 13 August
2018 setting out the terms
of the Disposal and Acquisition,
and the Conditions Precedent
to the transaction
"Saugatuck" Saugatuck Therapeutics Ltd,
a company incorporated and
registered in the BVI
"Securities Act" the United States Securities
Act of 1933, as amended,
and the rules and regulations
promulgated thereunder
"Sentien" Sentien Biotechnologies
Inc., a company incorporated
and registered in Delaware,
USA
"Shareholder Loans" the aggregate loan of US$1m
from James Mellon (via Galloway
Limited) and Dr Greg Bailey
to the Company
"Shareholder Register" the register of members
of the Company
"Shareholders" holders of Ordinary Shares
in the Company
"Share Split" the allotment of one Redeemable
Share for each Ordinary
Share in issue as at the
Demerger Record Date
"Share Split Resolution" the resolution numbered
6 in paragraph 9
"Stimunity" Stimunity S.A. a company
incorporated and registered
in Paris, France
"Target" SalvaRx Limited, a company
incorporated and registered
in the BVI with Company
Registration Number 1873006
"Target Portfolio" the portfolio of investments
and interests held by Target
as at the date of this Document
"TSX Trust" TSX Trust Company, being
the registrar and transfer
agent of Portage
"uncertificated" or recorded on the Shareholder
"in uncertificated Register as being held in
form" uncertificated form in CREST,
entitlement to which, by
virtue of the CREST Regulations,
may be transferred by means
of CREST
"US Person" a US Person under the definition
set out in Regulation S
of the Securities Act
"US Shareholders" any person, company, limited
partnership or other undertaking,
deemed to be a US Person
"Valuation Report" the independent valuation
report prepared by PharmaVentures
in relation to the Target
Portfolio dated 23 July
2018, jointly commissioned
by the Company and Portage
in accordance with the terms
of the LOI
"Warrants" outstanding warrants held
by Northland and Cornhill
Capital Ltd as at the date
of this Document (more particularly
set out at paragraph 8 of
this Document)
GLOSSARY OF TECHNICAL TERMS
"cell agonists" a substance that can bind
to a receptor and activate
a physiological response
"CPP" cell permeable peptide
"IMM47" an invariant Natural Killer
T-cell agonist with a 4 member
carbon head structure
"IMM60" an invariant Natural Killer
T-cell agonist with a 6 member
carbon head structure
"iNKT" invariant Natural Killer
T-cell
"IND" investigational new drug
"Nanolipogel" or "NLG" Proprietary formulation from
Yale that utilizes lipids
and nanoparticles to encapsulate
drugs with different properties
and release them slowly in
the body
"Phase I study" first stage of testing in
healthy volunteers
"Phase II study" clinical trials in a small
number of patients (usually
20-30) to determine safety
and efficacy of a new medicine
"Phase III study" the final stage of clinical
trials prior to seeking regulatory
approval, to determine efficacy
and safety in a large number
of patients (usually several
hundred)
"T-cell" Type of immune cell that
can attack pathogen or cancer
cell
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCLXLLFVVFZBBX
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August 14, 2018 02:01 ET (06:01 GMT)
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