regulated information / inside information -
Celyad Oncology SA (“Celyad” or the “Company”) today announced that
it has obtained commitments from an affiliate of Fortress
Investment Group (such affiliate, “Fortress”), Tolefi SA
(“Tolefi”), and other historical shareholders to subscribe to a
capital increase of approximately EUR 9,800,000. The capital
increase will take place at a subscription price of EUR 0.52 per
share, which represents a 5% discount to the 30-day volume weighted
average price (VWAP) of the shares on 23 August 2023.
The Company intends to use the net proceeds from
the private placement to fund research and development expenses, to
advance the current pipeline of preclinical CAR-T candidates, to
discover and develop additional preclinical product candidates
using its proprietary non-gene edited short hairpin RNA (shRNA)
technology platform, as well as for working capital, other general
corporate purposes, and the enhancement of the Company’s
intellectual property.
Georges Rawadi, CEO of Celyad, declared: “I am
extremely grateful for the unwavering support of our historical
shareholders, who have once again demonstrated their commitment to
our vision and the transformative potential of our CAR-T cell
approach. We believe this private placement will provide us with
the necessary financial resources to advance our innovative targets
and proprietary CAR-T engineering platform. We believe we are well
positioned to continue pioneering groundbreaking therapies that
hold immense promise for patients in need.”
On or around 4 September 2023, subject to
satisfaction of customary closing conditions, 3,930,770 new shares
will be issued for a total amount of EUR 2,044,000 within the
framework of the company’s authorized capital with cancellation of
the preferential subscription rights of the other existing
shareholders in favour of Fortress, Tolefi and other historical
shareholders, and the board of directors will co-opt an affiliate
of Fortress, represented by Michel Lussier, to replace Mel
Management, represented by Michel Lussier, as member of the board
of directors. Fortress has committed to subscribe for an amount of
EUR 756,500 and Tolefi has committed to subscribe for an amount of
approximately EUR 1,000,000 in this first capital increase. As a
result of such subscriptions and the concurrent subscriptions by
other historical shareholders, Fortress will hold 29.99% of the
Company’s share capital and Tolefi will hold approximately 16% of
the Company’s share capital.
Subsequently, the board of directors will
convene an extraordinary shareholders’ meeting before year end to
resolve to issue an additional 14,903,846 new shares for a total
amount of EUR 7,750,000, with cancellation of the preferential
subscription rights of the other existing shareholders in favour of
Fortress.
Fortress has committed to subscribe for an
additional amount of EUR 7,750,000 in this second capital increase,
subject to approval by the extraordinary shareholders’ meeting by a
majority of at least 75% of the votes cast (whereby Fortress cannot
participate in the voting) at a meeting where at least 50% of the
Company’s share capital (excluding shares held by Fortress) is
present or represented. Following and subject to the extraordinary
shareholders’ meeting approving the cancellation of preferential
subscription rights and the issue of shares to these shareholders,
Fortress is expected to hold approximately 55% of the Company’s
shares. Pursuant to article 52 of the Royal Decree of 27 April 2007
on takeover bids, Fortress will be exempted from the obligation to
launch a mandatory takeover bid for the remainder of the company’s
shares, notwithstanding its crossing of the 30% threshold, since
the acquisition of voting securities will be made within the
context of subscribing to a capital increase of a company facing
difficulties within the meaning of article 7:228 of the BCCA
(“alarm bell procedure”), as determined by the shareholders’
meeting. For more information, reference is made to the board
report and auditor report that will be published shortly, together
with the convocation of the extraordinary shareholders’ meeting in
accordance with article 7:179, 7:191 and 7:193 of the Belgian Code
of Companies and Associations (BCCA).
The Company believes that following the close of
the private placement and subject to approval by the extraordinary
shareholders’ meeting of the second tranche subscribed by Fortress,
its existing cash and cash equivalents should be sufficient, based
on the current scope of activities, to fund its anticipated
operating expenses and capital expenditure requirements until end
of Q4 2024.
In the framework of this investment, Fortress
and the Company have entered into a subscription agreement and will
enter into an amended and restated shareholders’ rights agreement,
which amends and restates the existing shareholders’ rights
agreement dated 2 December 2021. Pursuant to the amended and
restated shareholders’ rights agreement, Fortress will be subject
to a customary lock-up obligation for 45 days. Furthermore,
Fortress will benefit from a right of first offer on any new
indebtedness to be incurred by Celyad and, as long as Fortress
holds at least 10% of the shares of the Company, a right to
purchase its pro rata portion of any new equity securities to be
issued by the Company. Further, pursuant to the shareholders’
rights agreement, for so long as Fortress holds a majority of the
Company’s shares, it will have the right to nominate a number of
directors representing a majority of Celyad’s board of directors.
As long as Fortress holds at least 30% of the Company’s shares, it
will have the right to nominate a number of candidates to Celyad’s
board of directors equal to the greater of (i) four and (ii) a
percentage of the board members equal to its ownership percentage
rounded up to the nearest whole number (but not a majority). As
long as Fortress holds at least 10% of the Company’s shares, it
will have the right to nominate three directors to Celyad’s board
of directors. In addition, as long as Fortress holds 10% or more of
the Company’s shares, certain intellectual property transactions
and certain amendments to the Company’s articles of association or
other transactions affecting Fortress’ rights will be subject to
its approval. Pursuant to the subscription agreement, Fortress will
benefit from certain representations and warranties of the
Company.
As part of Tolefi’s investment, Tolefi and the
Company have entered into a subscription agreement and will enter
into a shareholders’ rights agreement. Pursuant to the
shareholders’ rights agreement, Tolefi will be subject to a
customary lock-up obligation for 45 days. Pursuant to the
shareholders’ rights agreement, for so long as Tolefi holds at
least 5% of the Company’s shares, it will benefit from a right to
participate with respect to its pro rata portion of any new
indebtedness to be incurred by Celyad from Fortress and a right to
purchase its pro rata portion of any new equity securities to be
issued by Celyad. As long as Tolefi holds at least 5% of the
shares, it will have the right to nominate one director to Celyad’s
board of directors. In addition, for a period of up to seven years,
as long as Tolefi holds 5% or more of the Company’s shares, Tolefi
may request that certain board decisions (such as the use of
authorized capital, certain intellectual property transactions,
certain indebtedness or off balance sheet transactions and certain
acquisitions) be subject to a 72.5% board majority for approval.
Pursuant to the subscription agreement, Tolefi will benefit from
certain representations and warranties of the Company.
The Company considers that both Fortress and
Tolefi qualify, separately, as a related party of the Company in
accordance with IAS 24.9. In this context, the board of directors
applied Article 7:97 of the BCCA, which requires, among other
things, the intervention of a committee of independent directors to
give an opinion to the board of directors. The conclusions of the
committee’s opinion is as follows: “The Committee has assessed the
envisaged Transaction in light of the criteria included in article
7:97 of the BCCA and concluded, in view of the Company’s financial
situation and cash flow requirements, after considering and
examining alternative funding options and taking into account the
interest of all stakeholders, that the expected advantages of the
Transaction outweigh the expected disadvantages thereof, which
leads to the conclusion that the Transaction is to the advantage
and in the interest of the Company. The Transaction is in line with
the Company’s strategic policy and is not manifestly unreasonable
and the Committee affirms its positive advice in relation to the
Transaction”. The directors concerned by the transaction did not
participate in the deliberations or votes. In light of the
Company’s limited cash runway, the board of directors believes that
the envisaged capital increase is in the best interests of the
Company and its stakeholders because, if completed, the capital
increase will enable the Company to strengthen its balance sheet,
improve its cash position in the very short term and support the
continuation of the activities of the Company. In accordance with
article 7:97 of the BCCA, the Company’s auditor has issued a report
on the accounting and financial information contained in the
committee’s opinion and the board minutes approving the related
party transaction. The auditor’s conclusion in this respect is as
follows: “Based on our assessment, nothing has come to our
attention that causes us to believe that the accounting and
financial information – included in the advice of the committee of
independent directors dated August 24, 2023 and in the minutes of
the Board of Directors dated August 24, 2023 justifying the
proposed transactions - is not fair and sufficient in all material
respects with regard to the information available to us within the
scope of our mission. Our mission was carried out solely within the
framework of the requirements of article 7:97 BCCA and our report
cannot be used for any other purposes.”
Important Notices
This press release is for information purposes
only and shall not constitute an offer to buy, sell, issue, or
subscribe for, or the solicitation of an offer to buy, sell, issue,
or subscribe for any securities, nor shall there be any offer,
solicitation or sale of securities in any jurisdiction in which
such offer, solicitation or sale would be unauthorised or unlawful
prior to registration or qualification under the securities laws of
any such jurisdiction. Any failure to comply with these
restrictions may constitute a violation of the securities law of
any such jurisdiction.
The securities to be issued in connection with
the private placement will not be registered under the United
States Securities Act of 1933, as amended (the “Securities
Act”) or with any applicable state securities laws of any
state or other jurisdiction of the United States and may not be
offered or sold in the United States absent registration under the
Securities Act or an applicable exemption from such registration
requirements. The Company has agreed to customary registration
rights covering the resale of the ordinary shares sold in the
private placement. Any offering of the securities under a resale
registration statement will only be by means of a prospectus.
About Celyad
Celyad Oncology is a biotechnology company
focused on the discovery and development of innovative technologies
chimeric antigen receptor (CAR) T-cell therapies. The Company is
focusing on opportunities to fully harness the true potential of
its proprietary technology platforms and intellectual property and
support the development of next-generation CAR T candidates in
solid tumors and hematological malignancies. Celyad Oncology is
based in Mont-Saint-Guibert, Belgium and New York, NY. For more
information, please visit www.celyad.com.
Forward-Looking Statement
This release may contain forward-looking
statements, within the meaning of applicable securities laws,
including the Private Securities Litigation Reform Act of 1995, as
amended, including, without limitation, statements regarding
beliefs about and expectations for the Company’s future business
plans, statements regarding the Company’s plans to raise additional
capital, and statements regarding the private placement. The words
“will,” “potential,” “continue,” “target,” “project,” “should” and
similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. Any forward-looking statements in this
release are based on management’s current expectations and beliefs
and are subject to a number of known and unknown risks,
uncertainties and important factors which might cause actual
events, results, financial condition, performance or achievements
of Celyad Oncology to differ materially from those expressed or
implied by such forward-looking statements. Such risks and
uncertainties include, without limitation, risks related to the
material uncertainty about the Company’s ability to continue as a
going concern; the Company’s ability to realize the expected
benefits of its updated strategic business model; the Company’s
ability to develop its IP assets and enter into partnerships with
outside parties; the Company’s ability to enforce its patents and
other IP rights; the possibility that the Company may infringe on
the patents or IP rights of others and be required to defend
against patent or other IP rights suits; the possibility that the
Company may not successfully defend itself against claims of patent
infringement or other IP rights suits, which could result in
substantial claims for damages against the Company; the possibility
that the Company may become involved in lawsuits to protect or
enforce its patents, which could be expensive, time-consuming, and
unsuccessful; the Company’s ability to protect its IP rights
throughout the world; the potential for patents held by the Company
to be found invalid or unenforceable; and other risks identified in
Celyad Oncology’s U.S. Securities and Exchange Commission (SEC)
filings and reports, including in the latest Annual Report on Form
20-F filed with the SEC and subsequent filings and reports by
Celyad Oncology. These forward-looking statements speak only as of
the date of publication of this document and Celyad Oncology’s
actual results may differ materially from those expressed or
implied by these forward-looking statements. Celyad Oncology
expressly disclaims any obligation to update any such
forward-looking statements in this document to reflect any change
in its expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based,
unless required by law or regulation.
Contact information
Investor Contact: |
Media Contact: |
David Georges VP Finance and Administration
investors@celyad.com |
Caroline Lonez R&D Communications and Business Development
communications@celyad.com |
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