RNS Number:6500S
Peerless Technology Group PLC
28 November 2003
For publication in the United Kingdom only. Not for release, publication or
distribution, directly or indirectly, in any other jurisdiction, including the
United States of America, Australia, Canada, Japan, or the Republic of Ireland
or their respective territories or possessions.
PEERLESS TECHNOLOGY GROUP PLC
('Peerless' or 'the Company')
Proposed Acquisition of Alliance Pharmaceuticals Ltd
Placing and Open Offer of 22,914,736 new Ordinary Shares at 16p per share
and Vendor Placing of 2,085,264 Consideration Shares
#7.5 million Convertible Loan Stock Placing
Underwritten by Numis Securities Limited
Change of Name to Alliance Pharma PLC
__________________________________________________________________________________
Peerless Technology Group plc today announces its intention to acquire Alliance
Pharmaceuticals Limited ("Alliance Pharmaceuticals" or "Alliance") for a
consideration of 72,916,667 new ordinary shares in Peerless and #1,333,333 in
cash, a transaction which will constitute a reverse takeover under the AIM
Rules. The transaction values Alliance at #16.67 million at the closing
mid-market price of 20p for a Peerless ordinary share on 27 November 2003 (the
last dealing day before this announcement). The Company is undertaking a
placing and an open offer to raise approximately #11.17 million before expenses.
The Placing comprises a placing and open offer of Ordinary Shares to raise
#3.67 million (before expenses) at 16p per share and a #7.5 million placing of
8% Convertible Loan Stock, convertible at a price of 21p per share. In
addition, under a Vendor Placing, 2,085,264 Consideration Shares have been
conditionally placed at the Issue Price for cash to raise #0.33 million on
behalf of certain of the Alliance Shareholders.
The Placings have been underwritten by Numis Securities Limited. Navigatorltd
Limited acted as financial adviser to Alliance.
The principal activity of Alliance is the development, marketing and
distribution of pharmaceutical products. Alliance Pharmaceuticals owns or
shares the rights to twenty-three branded pharmaceutical products and is
currently exploring several opportunities to expand the range. The majority of
Alliance's product acquisitions have been funded by structured bank debt.
Currently, Alliance's products are prescribed in the treatment of a wide range
of conditions and include brands used in the prevention of heart disease, in
Parkinson's disease, in nasal infections, in the treatment of dermatological
conditions and in childbirth. Alliance's sales are mainly prescription driven.
Products are distributed to hospitals directly and to pharmaceutical wholesalers
who service retail pharmacies with their prescription requirements.
In addition to a portfolio of established brands, Alliance has a pipeline of
late-stage development projects and products which, are expected to make a
significant contribution to turnover within three to four years.
KEY POINTS
The Reverse Takeover and Capital Raising:
* Agreed reverse takeover of AIM listed Peerless Technology Group plc
* Raising #11.17 million via institutional placings and an open offer,
of which #7.5 million is in Convertible Loan Stock and the remainder
in Ordinary Shares
* Funds raised will be used to provide working capital for product
development and marketing and to repay part of Alliance's bank debt
* The Company is to be re-named Alliance Pharma plc
Background on Alliance Pharmaceuticals:
* An acquisitive, rapidly growing speciality pharmaceutical company
* Existing portfolio of mature niche pharmaceutical products
* Additional late-stage development projects with substantial
potential - expected by Alliance to achieve regulatory approval within
three years
* Balance between a portfolio of low risk, mature and cash generative
brands and a pipeline of high potential development projects
* Experienced management team many of whom have held senior management
positions in blue chip pharma
* Record of successful acquisition negotiation - four deals in the
last three years
* Plans in place to expand product range and enter new markets
John Dawson, Chairman and CEO of Alliance Pharmaceuticals commented:
"A great opportunity exists for us to grow a substantial pharmaceutical company
that specialises in the manufacture and supply of smaller-volume niche products.
We also intend to become the licensing partner of choice for overseas research
and development companies seeking a UK or European marketing distributor.
The new funds raised and the profile of an AIM quote will enable us to pursue
both these opportunities and to develop further our successful business model.
At Alliance, we look forward eagerly to the next stage in our development as a
well-resourced public company."
ENQUIRIES
Alliance Pharmaceuticals Ltd Numis Securities Limited
John Dawson John Harrison
Managing Director 020 7776 1500
0124 970 5102
Beattie Financial
Ann Marie Wilkinson/James Chandler
020 7398 3300
None of the Ordinary Shares, the New Ordinary Shares or the Stock have been, nor
will be, registered in the United States of America under the United States
Securities Act of 1933, as amended, or the securities laws of any state of the
United States of America or under the securities laws of Canada, Australia, the
Republic of Ireland or Japan and they may not, subject to certain exceptions, be
offered or sold directly or indirectly within the United States of America,
Canada, Australia, the Republic of Ireland or Japan or to, or for the account or
benefit of US persons (as defined in Regulation S under the US Securities Act of
1933) or any national, citizen or resident of Canada, Australia, the Republic of
Ireland or Japan. This announcement does not constitute an offer to sell or
issue or the solicitation of an offer to buy or subscribe for Ordinary Shares,
New Ordinary Shares or Stock in any jurisdiction in which such offers or
solicitations are unlawful.
This announcement has been approved for the purposes of Section 21 of the
Financial Services and Markets Act 2000 by Numis Securities Limited, which is
authorised by The Financial Services Authority Limited to act for Peerless
Technology Group Plc in connection with the Placings and Open Offer and will not
be responsible to anyone other than Peerless Technology Group Plc for providing
the protections afforded to customers of Numis Securities Limited, or for
providing advice in relation to the Acquisition or the Placings and Open Offer.
The Directors and Proposed Directors of Peerless Technology Group Plc are the
persons responsible for the information contained in this announcement. To the
best of the knowledge and belief of the Directors and Proposed Directors (who
have taken all reasonable care to ensure that such is the case) the information
contained in this announcement is in accordance with the facts and does not omit
anything likely to affect the import of such information. This summary should
be read in conjunction with the full text of the following announcement which
follows.
For publication in the United Kingdom only. Not for release, publication or
distribution, directly or indirectly, in any other jurisdiction, including the
United States of America, Australia, Canada, Japan or the Republic of Ireland or
their respective territories or possessions. Please refer to the definitions at
the end of this document.
PEERLESS TECHNOLOGY GROUP PLC
('Peerless' or 'the Company')
Proposed Acquisition of Alliance Pharmaceuticals Ltd
Placing and Open Offer of 22,914,736 new Ordinary Shares at 16p per share
and Vendor Placing of 2,085,264 Consideration Shares
#7.5 million Convertible Loan Stock Placing
Underwritten by Numis Securities Limited
Change of Name to Alliance Pharma PLC
___________________________________________________________________________________
INTRODUCTION
The Board of Peerless Technology Group plc announced today that the Company has
conditionally agreed to acquire the entire issued and to be issued share capital
of Alliance Pharmaceuticals Limited in consideration of the issue of 72,916,667
new Ordinary Shares, in the Company. The Company has also agreed to purchase
from BoS the BoS Warrant for a cash payment of #1,333,333, to be funded out of
its existing resources. The principal activity of Alliance Pharmaceuticals is
the development, marketing and distribution of pharmaceutical products. The
Acquisition follows the approval by Peerless shareholders at an Extraordinary
General Meeting on 20 June 2003 to extend, without limit, the sectors in which
the Company may invest. As at 27 November 2003 (the latest practicable date
prior to the publication of this document) the closing mid-market price for an
Ordinary Share in the Company was 20p, valuing Alliance at #16.67 million
(including the cash payment of #1,333,333 in relation to the BoS Warrant).
In order to fund future development and to provide working capital going
forwards, the Company proposes to raise approximately #11.17 million gross
(#9.49 million net of expenses) by way of the Placings (excluding the Vendor
Placing) and the Open Offer. Under the Placings (excluding the Vendor Placing)
and the Open Offer, 22,914,736 New Issue Shares have been conditionally placed
at 16p per share and all of the #7.50 million nominal of Convertible Loan Stock
has been conditionally placed at par. In addition, under the Vendor Placing,
2,085,264 Consideration Shares (being all the Vendor Placing Shares) have been
conditionally placed at the Issue Price for cash on behalf of certain of the
Alliance Shareholders and the Excluded Shareholders in order to fund their
proportion of the costs associated with the Proposals and associated events for
a total of approximately #0.33 million.
All of the Vendor Placing Shares and the Convertible Loan Stock have been
conditionally placed firm. Of the New Issue Shares, 15,433,486 have been
conditionally placed firm. The remaining 7,481,250 New Issue Shares have been
conditionally placed subject to clawback to satisfy valid applications under the
Open Offer. The Placings and the Open Offer have been arranged and underwritten
by Numis Securities.
The New Ordinary Shares, when issued, will represent approximately 86.50 per
cent. of the Enlarged Share Capital. The maximum number of Ordinary Shares
which would arise on full conversion of the Convertible Loan Stock is 35,714,285
which would represent 24.38 per cent. of the Enlarged Share Capital, as diluted
on conversion.
Following Completion, the Alliance Shareholders will together hold Ordinary
Shares representing approximately, 63.70 per cent. of the Enlarged Share Capital
and Excluded Shareholders will together hold approximately 0.23 per cent.
Because the Concert Party, comprising the Alliance Shareholders, will own more
than 30 per cent. of the Enlarged Share Capital the Company is seeking a waiver
of Rule 9 of the City Code, which would otherwise require the Concert Party to
offer to acquire those Ordinary Shares it does not own.
In view of the size of Alliance relative to the Company, the Acquisition will
constitute a reverse takeover of Peerless under the AIM Rules and therefore
requires the prior approval of Shareholders at an Extraordinary General Meeting.
It is proposed that the name of the Company be changed to Alliance Pharma plc
and the accounting reference date be changed from 31 December to 28 February.
The Board considers the Proposals to be in the best interests of the Company and
Shareholders as a whole and are recommending shareholders vote in favour of the
Resolutions at the EGM, which is being convened for 22 December 2003.
BACKGROUND TO AND REASONS FOR THE PROPOSALS
Peerless was formed on 26 June 2001 and in November that year raised
approximately #2.29 million after expenses by means of a placing of Ordinary
Shares, which were admitted to trading on AIM on 20 November 2001.
In the Peerless admission document dated 8 November 2001, the Company's strategy
was described as being to seek to identify and acquire businesses that are able
to exploit the opportunities presented by the overlap between the technology and
media sectors. On 23 May 2003, a letter was written to shareholders explaining
that, despite a number of negotiations, the Company had not identified any
businesses thought suitable for acquisition or investment on appropriate terms
within the original intended sectors. At an extraordinary general meeting of
Shareholders on 20 June 2003 the Shareholders resolved that the Directors should
have the authority to extend without limit the range of companies, businesses
and sectors within which the Company would be at liberty to invest in or make
acquisitions.
The Board believes that Alliance Pharmaceuticals represents a suitable
acquisition target for fulfilment of the Company's current strategy and
satisfies the Company's current investment criteria. Consequent upon and
effective from completion of the Acquisition, it is intended that the nature,
strategy and investment criteria of the Company will be classified for the
purposes of the AIM Rules as a holding company and not an investing company.
ALLIANCE PHARMACEUTICALS LIMITED
Overview
Alliance was founded in 1996 by its current managing director, John Dawson, and
commenced trading in 1998. The business plan of Alliance envisaged the
acquisition of the manufacturing, sales and distribution rights to
pharmaceutical products that offered strong niche market opportunities but
lacked the ultimate potential sales volume to attract or maintain the interest
of the major pharmaceutical companies. The plan called for the establishment of
a low cost operation, staffed by individuals with large pharmaceutical company
experience, which would out-source the more capital-intensive aspects of the
pharmaceutical supply process.
It was John Dawson's intention to establish as a first stage a profitable, cash
generative base for Alliance by the acquisition of the rights to mature
established brands before entering the planned second stage of the evolution of
the business. The second stage envisaged, as well as continuing expansion of
the portfolio of mature products, the addition of pharmaceutical products that
were new to the UK market, either by acquisition or by entering into partnership
with those who had developed them. These new products that were likely to have
been developed by smaller research and development companies and that had
already recently gained regulatory approval or products that were already
marketed in other territories or for other indications and which required only
the final stages of development and regulatory approval (for which Alliance
would apply) to be marketed in the UK and, where appropriate, the rest of the
European Union. By this method he intended to follow a low risk strategy,
within which Alliance would benefit from the established regular cash flow of
mature products and once that had been established, from the prospect of the
greatly enhanced turnover and margins that he considered were available from new
products.
The cash generative nature of the established brands to be acquired by Alliance
facilitated the negotiation of debt finance from BoS, which has provided all
acquisition funding from August 2001 to date. Alliance made several
acquisitions in 1999, which were funded from management equity, on-going cash
flow and an invoice-discounting scheme through Lloyds TSB, which was later
subsumed into the BoS financing arrangements.
Financial Information on Alliance Pharmaceuticals
In the five years since Alliance commenced trading it has grown to a position
where it either owns the rights to or has the right to market twenty-three
branded pharmaceutical products, and generated a turnover of #8.33 million and
an audited profit after interest, but before tax and all intangible amortisation
of #0.67 million in the year to 28 February 2003.
This profit has been reduced by the #339,000 profit and loss effect of the
restatement of a Euro denominated loan at the prevailing exchange rate on 28
February 2003 as required by SSAP 20, and by the #150,000 write-off of Lysovir
stock, an anti-viral influenza treatment which has suffered from low sales as a
result of the absence of an influenza epidemic over the last three years and in
respect of which the 'shelf-life' expires in May 2004.
The profit has been achieved with a staff of twelve and an out-sourcing system
from various sources that provides production, distribution, formulation
development, a field sales force and clinical trial facilities.
A number of the products have entered the Alliance marketing portfolio in the
recent past and their annual sales level is not fully reflected in the turnover
figure for the year ended 28 February 2003. Based on unaudited management
figures for the eight months to 31 October 2003, Alliance's turnover for the
year to 28 February 2004 is expected to be approximately#10.3 million. Future
sales are expected to develop from the existing reported level by organic
growth, by the acquisition of further established brands and by the acquisition
or development and launch of carefully selected new unmarketed products.
A summary of the key profit and loss figures is set out below:
2001 2002 2003
#'000 #'000 #'000
Turnover 6,117 6,342 8,327
Profit pre tax, pre item (1) below and pre-amortisation 335 589 1,158
(1) Euro denominated loan restatement & stock write-off - - (489)
Amortisation (209) (415) (1,400)
Profit/(Loss) pre-tax 126 174 (731)
The Alliance Pharmaceuticals Business Case
John Dawson gained more than twenty-five years' experience in the
pharmaceuticals industry, including appointments with Ciba-Geigy and Sandoz,
before founding Alliance Pharmaceuticals. During that time, he formed the view
that a substantial opportunity existed to form a pharmaceuticals company that
both specialised in the manufacture and supply of smaller volume niche products
and could become a licensing partner of choice for overseas research and
development companies seeking a UK/European marketing distributor. His belief
was that a low cost, low risk business could be established by the formation of
a small team of well qualified people experienced in working for large companies
in the pharmaceuticals sector, who could satisfy the core skills of management
and control, whilst outsourcing the more standardised functions to establish
service providers. By this method he hoped to create a company that was both
flexible and less capital intensive than a conventional structure.
Many of the products of the type envisaged by John Dawson to be suitable
candidates for acquisition had established market positions and largely
predictable cash generative qualities. Despite these attributes, it was
believed that the larger company owners of some of the products would be
prepared to sell or licence the rights to those products for a consideration
that enabled a lower overhead business to make significant profit from their
manufacture and distribution.
On 16 September 1996, John Dawson founded Alliance Pharmaceuticals to put into
action his business theory. From the inception of the business, Alliance has
invested heavily in market research and industry statistical information from
which it can assess the business case for potential product acquisitions and the
modelling of the likely effect of debt-financed acquisitions on the Company.
Acquisition and Product History
In April 1998, as its first transaction, Alliance entered into a 'fostering'
arrangement with Novartis (a company formed in 1997 by the merger of Swiss
companies Ciba-Geigy and Sandoz) in respect of sixteen brands. Under a typical
"fostering" arrangement, the licensor retains the intellectual property rights
to the products and the licensee takes over the marketing and distribution, with
the improved performance being allocated between the parties. Of the sixteen
brands originally fostered, eleven remain so, since three brands were divested
to third parties by Novartis after Alliance declined their outright acquisition
and two brands were acquired outright by Alliance in October 2001.
In January 1999, Alliance entered into its first conventional acquisition
transaction being the acquisition of the right to four brands for the treatment
variously of nasal infections, psoriasis and Parkinson's disease, from Bioglan
Labs Ltd. In August 2001, Alliance acquired the rights to Distamine, a
specialist product for use in rheumatoid arthritis and in Wilson's Disease, from
Eli Lilly and Company. In October 2001 the acquisitions of Symmetrel, used in
the treatment of Parkinson's disease, and Slow-K, used for potassium
deficiencies, were made from Novartis. In April 2002, Alliance acquired two
cream products used in the treatment of dry skin and eczema from Procter &
Gamble. In September 2002, Alliance undertook its most substantial transaction
to date when it acquired the rights to Nu-Seals aspirin, used in differing dose
levels for the treatment of pain and more importantly for the prevention of
heart disease, from Eli Lilly and Company. The total of the consideration for
these five acquisition transactions was #17.7 million.
Funding
Alliance has only entered into transactions and associated borrowings when the
predictable cash flow would cover the financing cost with a comfortable margin
for profit. Except in the case of the Bioglan acquisition, all acquisitions
have been made for cash and funding in each case has been provided by debt under
a structure of term loans, mezzanine debt and subordinated loan stock negotiated
with BoS. Three term loans (the "BoS Term Loans") totalling #10.865 million
were entered into over the period from October 2001 to September 2002, of which
#9.20 million was outstanding at 31 August 2003. In addition, in September
2002, BoS provided #2.50 million of mezzanine debt by way of a facility which,
as subsequently amended, is to be repaid in 2009 and 2010. BoS has also agreed,
conditionally upon the Acquisition taking place, to provide a further #1.61
million term loan facility to Alliance for general corporate purposes which is
repayable in 2008 and 2009. This facility includes #0.21 million to finance the
payment of the signature fee in connection with the Zimycan transaction referred
to below.
In September 2002, Alliance issued subordinated loan stock to BoS in the amount
of #4.5 million (the "BoS Loan Stock") under the terms of which BoS was granted
the BoS Warrant pursuant to which BoS became entitled to between 12.5 per cent.
and 20 per cent. of the equity in Alliance in the event that Alliance's shares
are sold or are admitted to trading on a public exchange. The acquisition of
Alliance by Peerless in return for shares in Peerless will be deemed to fulfil
this condition. As a result, under the terms of the BoS Warrant prior to
Completion, BoS would have become entitled to subscribe for Alliance shares
comprising 12.5% of the equity in Alliance. In the event that the Company had
offered to acquire such Alliance shares on the same terms as it is offering to
Alliance Shareholders, it would have offered to BoS New Ordinary Shares of an
aggregate value (computed on the basis of the Issue Price) of #1.67 million.
However, BoS has agreed to dispose of, and the Company has agreed to acquire as
part of the Acquisition, its entitlement to subscribe for shares of Alliance
pursuant to the BoS Warrant for a discounted consideration of #1,333,333,
payable in cash.
Contemporaneously with Completion, it is intended that the BoS Loan Stock will
be repaid in full, leaving the BoS Term Loans and the BoS Mezzanine Debt
outstanding to BoS. In addition, it is intended that at Completion, Alliance
will pay in advance the premium payable on redemption of the BoS Mezzanine Debt.
As at 31 October 2003, the BoS Term Loan and the BoS Mezzanine Debt totalled
#11.70 million.
From Completion the interest rate margin payable over LIBOR or EURIBOR as
appropriate for #1.65 million of BoS Term Loans will reduce from 3.5 per cent.
to 2.5 per cent. and the interest rate margin payable over LIBOR for the BoS
Mezzanine Debt will reduce from 6 per cent. to 5 per cent.
The Company has entered into hedging arrangements with BoS in respect of the BoS
Term Loans which have the effect of fixing the interest base rate on #5.7
million of these loans to a weighted average rate of 4.09 per cent. per annum
until November 2005 and on #4.2 million of these loans to a base rate of 5 per
cent per annum until October 2007.
The Current Portfolio
Alliance's sales are mainly prescription driven. Alliance distributes to
hospitals directly and to pharmaceutical wholesalers who service both retail and
hospital pharmacies with their prescription requirements.
The current Alliance Pharmaceuticals portfolio and the relative turnover
contributions of the major brands are set out below:
Brand and Application First Launched Gross Sales Percentage of Current Percentage of
in UK in Year to Gross Sales annualised Current
28 February in Year to Sales(iv) Annualised Gross
2003 28 February 2003 (# millions) Sales
(# millions)
Nu-Seals 1994(i) 1.4 17.3% 3.1 30.1%
For prevention of
heart disease
Syntocinon & 1956 2.2 27.2% 2.7 26.2%
Syntometrine
For use in childbirth
Symmetrel 1970 1.0 12.3% 1.1 10.7%
For use in
Parkinson's Disease
Naseptin 1959 0.7 8.6% 0.8 7.8%
For use in nasal
infections
Slow-K 1965 0.6 7.4% 0.6 5.8%
For use in potassium
deficiencies
Aquadrate & Alphaderm 1974 0.5 6.2% 0.6 5.8%
For use in eczema &
dry skin conditions
Remaining 15 - 1.7 21.0% 1.4 13.6%
Brands(ii)
Totals 8.1(iii) 100.0% 10.3(iv) 100.0%
(i) Low dose for cardiovascular disease.
(ii) These include standard specialist hospital products such as
Deseril (methysergide for resistant migraine). Metopirone (metyrapone for
Cushing's Syndrome), Rogitine (phentolamine to detect phaeochromocytoma) and
Synacthen (tetracosactrin - a standard test for adrenocortical insufficiency)
(iii) In the year ended 28 February 2003 Alliance Pharmaceuticals had
other income from non-core activities totalling #0.2 million giving a total
turnover for the year ended 28 February 2003 of #8.3 million.
(iv) Based upon unaudited management figures for the eight months ended
31 October 2003
Products which are fully acquired, as opposed to fostered, deliver a much higher
margin and, following the acquisitions of Distamine, Symmetrel and Slow-K in
2001, Alliance's margins earned from acquired products exceeded those from
fostered products. Now just over 85 per cent. of Alliance's gross margin comes
from products for which it has acquired the intellectual property rights. In
the period from the first 'fostering' arrangement to date, Alliance's gross
margin has more than doubled from some 24 per cent. to in excess of 50 per cent.
The products marketed by Alliance continue to achieve sales in line with budget
and the expectations of the Alliance Directors. Over the eight months to 31
October 2003, sales of Nu-Seals in Ireland, the largest selling product in the
Alliance range, increased by 29 per cent. on a like-for-like basis compared with
the equivalent period in the previous year, when the brand was not owned by
Alliance. Over the same eight month period, sales of Symmetrel and Syntocinon/
Syntometrine have increased by 15 per cent. and 10 per cent. respectively on a
like-for-like basis when compared to the equivalent period in 2002.
Future Plans and Alliance's Intentions Regarding the Company
The Alliance Pharmaceuticals Directors consider that the first stage of the
original Alliance Pharmaceuticals business plan has succeeded to the extent
necessary to implement the second stage, whilst continuing to explore
opportunities to acquire further mature brands. Alliance Pharmaceuticals is
currently exploring several opportunities to expand the product range and thus
turnover.
a) The Alliance Pharmaceuticals Directors believe that a number of clear
and attractive opportunities exist and are available to them to increase sales
by the acquisition of further established brands. Such opportunities do not yet
represent any concrete proposals and related enquiries have not progressed
beyond a preliminary stage.
b) Beyond the normal distribution process, in which established brands
that have been acquired have been supplied in the most efficient manner
available to Alliance Pharmaceuticals, Alliance Pharmaceuticals has undertaken
only limited marketing activity. The Alliance Pharmaceuticals Directors believe
that Alliance Pharmaceuticals has now reached the size and stage of development
where resources could and should be deployed in this area and that the resultant
expenditure would increase sales and profitability in the longer term.
c) The Alliance Pharmaceuticals Directors also consider that attractive
margins could be achieved by entering selected niche areas of the hospital
generics supply market.
d) All of the products currently supplied by Alliance Pharmaceuticals,
except for Lysovir have been acquired from their previous owners as mature
products with market history in the UK. The Alliance Pharmaceuticals Directors
have identified a number of other opportunities that are in a late stage of
development, albeit close to market, and which the Alliance Pharmaceuticals
Directors believe are likely to achieve regulatory approval over the next 2-3
years. The Alliance Pharmaceuticals Directors believe that several of these new
products have the potential to provide substantial profit margins. Amongst
others, Alliance Pharmaceuticals is currently evaluating opportunities in the
areas of dermatology, women's health and sleep abnormalities. In respect of one
such opportunity in the area of dermatology, Alliance Pharmaceuticals has
entered into an agreement to market a new product, Zimycan, on behalf of its
developers and owners.
The most substantial of the late stage development opportunities, both in terms
of potential sales and probable expenditure on development and marketing, is in
the area of sleep abnormality. The Alliance Pharmaceuticals Directors believe
that following Completion, the Alliance will have sufficient funding, from
capital and internally generated cash flow, to develop this substantial project
to the point of marketing when a decision would be taken as to the method of
funding the marketing process. At that stage, the alternatives available to
Alliance are likely to include out-licensing marketing and field force
expenditure in return for a royalty on sales or raising funds from capital
markets to cover marketing expenditure.
The Alliance Pharmaceuticals Directors believe that whilst Alliance
Pharmaceuticals's current level of operating profit is attractive and the
pursuit of the opportunities described earlier can be achieved with minimal
increase in overheads and is likely to increase turnover, the potential of the
opportunities contained in the subsequent paragraphs is substantially greater.
Following Completion, as well as continuing with the acquisition of mature
pharmaceutical brands (subject to the availability of appropriate financing),
the Proposed Directors intend to increase Alliance's marketing activities and to
pursue some or all of the opportunities described above. The Proposed Directors
believe that the profitability of the business of Alliance and the Company will
be impacted in the short term by the increase in overheads attributable to its
planned marketing expenditure and that these could rise by #0.9 million during
the year ending 28 February 2004 and by a further #1.8 million in the
year-ending 28 February 2005. This increase in overheads would be likely to
pre-date any associated rise in turnover by two years; the Proposed Directors
also believe that, by the financial year ending 28 February 2007, the
contribution to turnover emanating from the opportunities described could
approach 50 per cent. of the total turnover of Alliance in that financial year.
The Proposed Directors also intend that other mature pharmaceutical brands
acquired in the future be funded by debt subject to the Group's borrowing limits
and availability of finance.
Placing and Open Offer
Under the Placing and Open Offer Agreement, Numis Securities has agreed to use
reasonable endeavours to place with institutional and other investors 22,914,736
New Issue Shares subject, in the case of 7,481,250 such shares, to clawback to
satisfy entitlements under the Open Offer, in each case at the Issue Price. The
Placings and the Open Offer have been arranged and fully underwritten by Numis
Securities.
Qualifying Shareholders are being given the opportunity to subscribe for the
Open Offer Shares at a price of 16 pence per Open Offer Share payable in full in
cash on application, free from all commissions and expenses on the basis of:
1 Open Offer Share for every 2 Existing Ordinary Shares
held by them at the close of business on the Record Date, and so in proportion
for any other number of Existing Ordinary Shares then held.
Fractional entitlements to Open Offer Shares will not be issued to Qualifying
Shareholders and no cash payments will be made in lieu of fractional
entitlements. Accordingly, the entitlements of Qualifying Shareholders will be
rounded down to the nearest whole number of Open Offer Shares. Any fractional
entitlements arising under the Open Offer will be aggregated and allotted to
Numis Securities, as underwriter, (or such other person(s) as Numis Securities
may procure) for the benefit of the Company. Qualifying Shareholders may apply
for any number of Open Offer Shares up to, but not more than, their guaranteed
pro rata entitlement to Open Offer Shares.
The Open Offer Shares will be issued credited as fully paid and will rank pari
passu in all respects with the Existing Ordinary Shares, including the right to
receive dividends and other distributions declared or paid thereon following
Admission. They will be issued free from all liens, charges and encumbrances.
The Placings and the Open Offer are conditional, inter alia, upon:
(a) the passing of the Resolutions at the EGM;
(b) the Placing and Open Offer Agreement becoming unconditional, save
only for the condition relating to Admission, by not later than 23 December 2003
(or such later date, being no later than 5 January 2004, as the Company and
Numis Securities may agree) and that agreement not having been terminated in
accordance with its terms; and
(c) Admission.
Qualifying Shareholders should be aware that the Open Offer is not a rights
issue. Qualifying Shareholders' entitlements under the Open Offer are not
transferable unless to satisfy bona fide market claims in relation to purchases
of existing Ordinary Shares through the market prior to the date upon which the
Existing Ordinary Shares were marked "ex" the entitlement to the Open Offer by
the London Stock Exchange.
The Application Form is not a document of title and can not be traded.
Qualifying Shareholders should be aware that under the Open Offer, unlike in a
rights issue, the Open Offer Shares not applied for under the Open Offer will
not be sold in the market or placed for the benefit of Qualifying Shareholders
who do not apply for them under the Open Offer, but will be allotted to Numis
Securities as underwriter or such other person(s) as Numis Securities may
procure pursuant to the Placing and Open Offer Agreement.
The terms of the Open Offer will be contained in the letter to Qualifying
Shareholders from Numis set out in Part III of the Prospectus. The Open Offer
will close at 3.00 p.m. on 19 December 2003. In order to be valid, completed
Application Forms and payment in full for the Open Shares applied for must be
received by Capital IRG plc, Corporate Actions, PO Box 166, The Registry, 34
Beckenham Road, Beckenham, Kent BR3 4TH by no later than 3.00 p.m. on 19
December 2003.
PRINCIPAL TERMS OF THE ACQUISITION
Pursuant to the Share Purchase Agreements, Peerless has conditionally agreed to
acquire all the issued and to be issued share capital of Alliance
Pharmaceuticals (being 30,899,318 B ordinary shares of 1p each), for a
consideration to be satisfied by the allotment and issue by Peerless to the
Alliance Shareholders and the Excluded Shareholders of Consideration Shares.
The Consideration Shares include the Vendor Placing Shares. Peerless has also
conditionally agreed to acquire the BoS Warrant from BoS in consideration of a
cash payment of #1,333,333 to BoS, such payment to be funded out of the
Company's own resources.
The New Issue Shares will rank pari passu in all respects with the Existing
Ordinary Shares and shall have the same rights as the Existing Ordinary Shares
regarding voting, dividends return of capital on winding up and redemption (and
variation of such rights).
The Acquisition is conditional, inter alia, on:
a) The passing of the Resolutions to be proposed at the EGM;
b) The Placing and Open Offer Agreement becoming unconditional in all
respects other than as to any condition therein as to completion of the Share
Purchase Agreement; and
c) Admission
Failure to satisfy any of the conditions referred to above will result in both
the Share Purchase Agreements not becoming unconditional in which case Admission
may not occur and the Proposals will not be implemented. Under the Principal
Agreement and a tax deed, certain of the Alliance Pharmaceuticals Shareholders
have given the Company representations, warranties and indemnities (subject to
certain limitations) relating, inter alia, to the business of Alliance
Pharmaceuticals. Under the Principal Agreement, BoS has given limited
warranties as to title and related matters.
USE OF PEERLESS CAPITAL AND THE PROCEEDS OF THE PLACINGS AND OPEN OFFER
It is proposed that the net proceeds of the New Issue Shares and the Company's
existing cash assets (following the payment by the Company to BoS of #1,333,333
in consideration for the acquisition by the Company of the BoS Warrant) will be
deployed in pursuit of Alliance's business plans. As at 30 June 2003, the
Company had a cash balance of #2.2 million and unaudited net assets of #2.2
million.
ALLIANCE PHARMACEUTICALS PERSONNEL
Set out below are details of the Directors and key personnel of Alliance
Pharmaceuticals.
John Dawson, Managing Director - Pharmacist, MSc Finance.
John (aged 54) has 32 years experience in the pharmaceutical industry including
posts at Swiss multi-national companies Ciba-Geigy and Sandoz. He worked at
Ciba-Geigy from 1970 to 1984 fulfilling roles as a formulation and production
pharmacist, in the stores despatch division, as a medical representative, in
various headquarters marketing assignments and as manager of the cardiovascular
therapeutic division. John joined Sandoz Pharmaceuticals in 1984 and was
planning and administration manager before becoming Director of Finance and
Administration in 1991 and Deputy Managing Director in 1995. In 1997 he left to
concentrate fully on Alliance.
Anthony Booley, Sales & Marketing Director - BSc Physiology, MBA, Chartered
Marketer
Tony (aged 46) has 23 years experience in the pharmaceutical and healthcare
industry including posts at multinationals Leo Pharma, GlaxoWellcome and Getinge
Industrier AB. Tony joined the industry in 1980 as a medical representative for
Leo. In 1982 he joined Wellcome becoming marketing executive in 1983. By 1987
he was product group manager responsible for the company's blockbuster brand
Zovirax and became business information manager in 1990. Between 1991 and 1995
Tony worked internationally as marketing manager based in Bombay, India and then
with responsibility for all marketing and business development activities in the
Middle East and Africa. During 1995 Tony left GlaxoWellcome to join Pegasus
Airwave as corporate head of marketing and commercial development. In 1998 this
business was successfully sold to the Getinge Industrier AB group. During 1998
he joined Alliance.
Stella Dawson (aka Sam Madden), Technical and Regulatory Director - BSc Biochem/
Toxicol, MSc Biopharmacy
Sam (aged 48) was initially recruited by Sandoz Pharmaceuticals in 1979 to work
on the review of medicines and also handled new chemical entities. She was
promoted to Registration Manager in 1984. In 1988 Sam left to join Abbott
Laboratories Ltd as the Regulatory Affairs Manager. She was responsible for all
regulatory issues on devices, pharmaceuticals and nutritional products, in the
UK, Eire and Export markets. In 1989 she started Madden Associates as a
freelance consultant in regulatory affairs. Clients have included Clinical
Research Organisations who do not have regulatory personnel; national companies
from France, the UK, America, Switzerland, Japan, Germany and multi-nationals.
Sam served on the Board of the British Institute of Regulatory Affairs (BIRA)
from 1986, until September 1999 including six years as Treasurer, and is a
member of the Association of Consultants to the Biosciences Industry (ACBI).
Sam has worked with Alliance since its inception to ensure that all UK Product
Licences and Irish Product Authorisations are maintained. Sam is married to
John Dawson.
Sam is employed directly by Alliance Pharmaceuticals for her director's duties
and provides regulatory, technical and development consultancy via Madden
Associates Limited. In total she spends around 50 per cent. of her time on
those matters.
Madeleine Scott, Finance Director - ACCA, ACIS
Maddy (aged 38) has 16 years experience across manufacturing and service
industries as a Management Accountant, Financial Controller and Administration
Manager. She has held positions at King Edward VII Hospital in London, McCann
Erickson, HH&S Limited, Nokia Consumer Electronics, Bluemay Limited, Leibert
Europe and Serco Aviation. She joined Alliance Pharmaceuticals in May 1999 as
finance and administration manager. Maddy is also company secretary at
Alliance.
Andrew Dean, Business Development Director - BSc Chemistry and Business
Andrew (aged 33) joined Schering Plough as a medical sales representative in
1993. He became an Associate Product Manager in the surgical division in 1996
and a Product Manager in the dermatological division I 1997. In 1998, he was
promoted to Senior product Manager in urology and the following year became a
Regional Business Manager. In January 2001, Andrew became Marketing Development
Manager and led the launch on NeoClarityn, Schering Plough's 'flagship' product.
In August 2002, Andrew left to become Business Development Director at.
Alliance.
John Barber, Director of Scientific Affairs - BSc Pharmacology, MSc Information
Science.
John (aged 40) worked from 1985 to 1988 as an information scientist for the UK
Atomic Energy Authority providing information services in all areas of nuclear
engineering. From 1988 to 1992, he worked at ICI Pharmaceuticals (now
AstraZeneca) providing services for bioscience Research and Development ("R&D")
and developing a business information service for commercial departments. In
1992, he moved to Roche Products as an information scientist for antiviral and
anti-inflammatory R&D. In 1996, he joined GlaxoWellcome R&D as an information
analyst providing an information and analysis service for anti-infective,
anti-inflammatory and dermatology R&D. In 1997, he joined PharmaVentures, a
pharmaceutical business development and business information consultancy, as
information manager for the content and development of a series of
pharmaceutical business information services. John joined Alliance
Pharmaceuticals in June 2000. He is a member of the Association of Information
Officers of the Pharmaceutical Industry (AIOPI), for which he is currently
Secretary.
Peerless Board Composition
Upon completion, all of the existing Directors, with the exception of Steven
Harris, will resign without compensation for loss of office except that Richard
James, Jeremy Fenn and Ajaz Ahmed will be entitled, in accordance with their
contractual rights set out in their service contracts (or letter of appointment
in the case of Ajaz Ahmed) to payment for their 12 months' notice periods. Upon
Completion, the Board will comprise the following:
John Dawson Chairman and Chief Executive Officer
Madeleine Elizabeth Scott Finance Director
Anthony Booley Executive Director
Stella Anne Dawson (aka Sam Madden) Executive Director
Steven Harris Non-executive Director
Paul Ranson Non-executive Director
Steve Harris - Non-executive Director
Steven Harris (aged 37) will continue as a non-executive Director. He is a
Chartered Accountant. From 1997 to 2003 he was the finance director of
PowderJect Pharmaceuticals plc until that company was taken over earlier this
year. As a member of the Powderject board he played a key role in the company's
flotation and subsequent rounds of financing to fund vaccine development and
acquisitions. Prior to joining PowderJect, he was Group Financial Controller of
Desoutter, a UK division of the Swedish multinational, Atlas Copco. He has
extensive knowledge of the pharmaceutical sector. He is also a director of
Micap plc, which was floated on AIM earlier in 2003.
Paul Ranson - Non-executive Director
Paul Ranson (aged 50) was called to the bar in 1977, practising at 13 Kings
Bench Walk before acting as legal adviser and subsequently manager of legal
affairs at Smith Kline & French for five years. In 1985 he became legal
director of Merck, Sharp and Dohme. During this time he re-qualified as a
solicitor going on to become, first, a partner in Brain & Brain, a Reading based
solicitors between 1990 and 1997 and then head of healthcare law at Simmons &
Simmons until 2001. In 2002 Paul founded PharmaLaw. Paul has expertise in the
commercial, regulatory and liability aspects of the pharmaceutical and related
health care sectors, including, in particular, European and strategic alliances
and outsourcing and EC and legislative compliance. He has been an independent
ethics committee member for 5 years, is a member of the ABHI Legal Issues
Committee and since 1990 has been the co-ordinator of the Ethical Medicines
Industry Group.
Non-executive chairman
It is the Board's intention to appoint a non-executive in the near future.
DIRECTORS' AND PROPOSED DIRECTORS' SERVICE CONTRACTS AND APPOINTMENTS
Following Admission, it is proposed that new service contracts will be entered
into between each Proposed Director and the Company on substantially the same
terms as their existing service contracts with Alliance.
CHANGE OF NAME AND ACCOUNTING REFERENCE DATE
Following Admission, it is proposed to change the name of the Company to "
Alliance Pharma PLC".
The Proposed Directors also intend to change the accounting reference date of
the Company from 31 December to 28 February in each year so that for financial
reporting purposes the Company will have the same accounting reference date as
Alliance. Accordingly, following Completion, the Company proposes to publish
accounts for the 14 months ending 28 February 2004, reflecting the Acquisition.
WAIVER OF RULE 9 OF THE CITY CODE
Under the City Code persons co-operating pursuant to an agreement or
understanding (be it formal or informal) for the purposes of acquiring control,
that is obtaining an aggregate holding of shares carrying 30 per cent. or more
of the voting control of a company, are considered to be acting as one.
The persons comprising the Concert Party are the Alliance Shareholders. In
addition, in the event that there are any persons associated with the Alliance
Shareholders, being those persons who can control or potentially control the
Alliance shares held by the Alliance Shareholders, such persons are also deemed
to be within the Concert Party by the Panel for the purposes of this document.
Upon Completion, the Concert Party will own an aggregate of 70,578,737 New
Ordinary Shares representing 63.70 per cent. of the Enlarged Share Capital. Upon
Completion, John Dawson and his wife Stella Anne Dawson (a.k.a. Sam Madden) (who
will together own 56.20 per cent. legally and beneficially of the Enlarged Share
Capital) will be the sole holder of Ordinary Shares owning more than 30 per
cent. of the Enlarged Share Capital.
Rule 9 of the City Code normally requires that any person who (together with
persons acting in concert with him) acquires 30 per cent. or more of the voting
rights of a company which is subject to the City Code, or any person who
(together with persons acting in concert with him) holds not less than 30 per
cent. but not more than 50 per cent. of the voting rights of such a company and
who acquires additional shares, is obliged to make a general offer in cash to
all shareholders for the shares not owned by him at the highest price paid by
him, or any person acting in concert with him, within the preceding 12 months.
In addition, where persons act in concert in relation to an acquisition of
shares, each individual member of the relevant concert party will normally incur
an obligation to make a general offer under Rule 9 of the City Code if that
individual member (together with his associates) acquires ordinary shares which
has the effect of increasing the respective shareholding to 30 per cent. or more
of the issued share capital of the relevant company.
Once shareholder approval has been obtained, the controlling shareholder of the
Concert Party, John Dawson (who together with his wife Stella Anne Dawson
(a.k.a. Sam Madden) will own more than 50 per cent. of the Enlarged Share
Capital) will be free to acquire further shares, subject to Rules 5 and 9 of the
City Code.
At the EGM referred to below, a resolution will be proposed to waive any
obligation on the Concert Party, both individually and collectively, which may
otherwise arise as a result of the issue of the Consideration Shares to them, to
make, pursuant to Rule 9 of the City Code, a general offer for the Company. To
be passed, the resolution will require a simple majority of votes cast in favour
of such resolution by Independent Shareholders on a poll. Individual members of
the Concert Party whose holding is less than 50 per cent. would be restricted
from purchasing further Ordinary Shares which carry voting rights if their
holding of shares in the Company is 30 per cent. or more or if the purchase of
additional Ordinary Shares would result in that person holding in excess of 30
per cent. of the voting rights of the Company.
LOCK-INS AND ORDERLY MARKET ARRANGEMENTS
Upon Completion, the Proposed Directors will hold in aggregate 69,499,661
Consideration Shares representing 62.73 per cent. of the Enlarged Share Capital.
Each Proposed Director (other than Paul Ranson who prior to the Acquisition
holds, and upon Completion will hold, no securities in Alliance or in the
Company) has undertaken, inter alia, to the Company that (subject to certain
exceptions), they will not sell or dispose of, or agree to sell or dispose of,
any of the Ordinary Shares which they acquire in the Acquisition or any
interests in such shares at any time in the two years following Admission.
Each of the Excluded Shareholders has agreed, subject to certain exceptions,
only to effect any sales of the Consideration Shares received pursuant to the
Optionholders Agreement through the Company's broker for the time being, for a
period of twelve months following Admission.
CONVERTIBLE LOAN STOCK
The Convertible Loan Stock carries a coupon of 8 per cent. per annum. which is
payable six monthly in arrears on 28 February and 31 August in each year except
that the first payment of interest, which will be made on 28 February 2004 will
be in respect of the period from the date of issue to 28 February 2004 (both
dates inclusive). Under the Trust Deed, at Completion the Company will place in
any account charged to the Trustee for the benefit of Stockholders a sum equal
to two years' gross interest on the Stock as security for its obligations to
make payments of principal, premium and interest on the Stock. The Company will
draw upon such monies to meet interest payments under the Stock as they fall due
during the first two years in which the Stock is outstanding.
The Convertible Loan Stock, which (save in respect of the interest monies to be
retained as referred above) will be unsecured and will be subordinated in a
winding up to the claims of secured creditors of the Company from time to time,
is convertible in Ordinary Shares at the rate of 476.19 Ordinary Shares for
every 100 Units, subject to adjustment in certain circumstances. The conversion
rate is equivalent to a subscription price of 21p per Ordinary Share. The
conversion rights are exercisable at any time from the date of issue of the
stock to 30 November 2013 . Any Convertible Loan Stock which has not been
previously converted will, subject to the terms of the Trust Deed, be redeemed
on 31 December 2013 at par together with interest accrued up to and including
the date of redemption.
ADMISSION TO AIM
A conditional application is being made to the London Stock Exchange for the
Enlarged Share Capital and the #7.5 million nominal of Convertible Loan Stock to
be admitted to trading on AIM. Admission is expected to become effective and
trading in the Enlarged Share Capital and the Convertible Loan Stock to commence
on 23 December 2003.
DIVIDEND POLICY
The Proposed Directors anticipate that any earnings will be retained by the
Company for the development of the business of the Enlarged Group and will not
be distributed for the foreseeable future to holders of Ordinary Shares as cash
or other dividends. The declaration and payment by the Company of dividends
will, once the Enlarged Group has achieved its development objectives, be
dependent upon the Enlarged Group's results from operations and other factors
deemed to be relevant at the time.
CONTROLLING SHAREHOLDER AGREEMENT
John Dawson and Stella Anne Dawson (a.k.a. Sam Madden), who together own 56.20
per cent. of the Enlarged Share Capital of the Company following Completion,
have entered into a Controlling Shareholder Agreement with the Company.
NUMIS OPTION
Pursuant to the Numis Option Agreement, Numis Securities will, conditional upon
Admission, be granted the right to subscribe for 1,384,924 Ordinary Shares
representing 1.25 per cent. of the Enlarged Share Capital. The Numis Option may
be exercised within five years of Admission at an exercise price of the Issue
Price per Ordinary Share.
PROPOSED OPTION TO NAVIGATORLTD LIMITED
The Proposed Directors are also proposing to engage the services of Navigatorltd
Limited as a consultant to the Company after Completion. The Proposed Directors
are proposing that the Company grant an option to Navigatorltd Limited to
subscribe for up to 500,000 Ordinary Shares at a price of not less than 20p per
share as part of its remuneration. This option would be exercisable for the
duration of the consultancy plus one year (or until the second anniversary of
Admission, if later) but would not be exercisable after the fifth anniversary of
Admission.
SHARE OPTION PLAN
Conditional on and subject to the passing of the remaining Resolutions, the
Company is proposing to introduce the Share Option Plan in which qualifying
directors and employees of the Enlarged Group will be eligible to participate at
the discretion of the Remuneration Committee, in order to assist with the
appropriate motivation and remuneration of employees and directors of the
Enlarged Group.
Amendment of Articles to limit the Borrowings Directors may incur on behalf of
the Company
Conditional on and subject to the passing of the remaining Resolutions at the
EGM, the Company is also proposing to amend its Articles with respect to the
limits on the Directors' authority to incur borrowings on behalf of the Company
and its subsidiaries. Currently, the Articles contain no restriction on this
authority. As part of the Proposals, it is proposed to introduce a limit to the
Directors' authority to incur borrowings on behalf of the Enlarged Group,
although it should be noted that in calculating the Company's borrowings for
this purpose, the Convertible Loan Stock is not treated as a borrowing. Such
authority will be restricted to four times the Company's adjusted capital and
reserves as shown by the then latest annual audited accounts of the Company but
subject to certain adjustments. Upon Completion, these adjustments will include
adjustments to reflect the changes in the Enlarged Group's balance sheet
following the Acquisition and the Placings and Open Offer. On the basis of the
latest published audited balance sheets of the Company and Alliance and the
adjustments to be made according to the proposed amendment to the Articles (but
taking no account of the trading performance of the Company or Alliance after
the last balance sheet dates), the Directors' authority to incur borrowings on
behalf of the Enlarged Group as from Completion will be approximately #15.7
million in addition to Alliance's existing facilities.
EXTRAORDINARY GENERAL MEETING
An Extraordinary General Meeting of the Company is being convened for 22
December 2003 for the purpose considering and, if thought fit, passing the
requisite resolutions, inter alia, to approve and implement the Acquisition,
Placings and Open Offer and the change of name.
Expected Timetable Of Principal Events
Record Date for entitlement under the Open Offer 24 November 2003
Posting of Prospectus 28 November 2003
Latest time and date for splitting of Application Forms (to 3.00 p.m. on 17 December 2003
satisfy bona fide market claims only)
Latest time and date for receipt of completed Application 3.00 p.m. 19 December 2003
Forms and payment in full under the Open Offer
Latest time and date for receipt of Form of Proxy for the EGM 11.00 a.m. 20 December 2003
Time and date of Extraordinary General Meeting 11.00 a.m. on 22 December 2003
Completion of the Acquisition 23 December 2003
CREST accounts credited 22 December 2003
Admission and first day of dealings in New Ordinary Shares 23 December 2003
and Convertible Loan Stock
Despatch by post of definitive certificates for New Ordinary 5 January 2004
Share and Convertible Loan Stock
Statistics
Number of Existing Ordinary Shares 14,962,500
Number of Consideration Shares to be issued pursuant to the Acquisition 72,916,667
Percentage of Enlarged Share Capital represented by the Consideration Shares 65.81 per cent.
Issue Price 16 pence
Number of New Issue Shares and Vendor Placing Shares the subject of the Placings 25,000,000
and the Open Offer
Number of Open Offer Shares to be issued pursuant to the Open Offer assuming that 7,481,250
the Open Offer is subscribed in full
Number of Ordinary Shares in issue upon Completion 110,793,903
Market capitalization of the Company, upon completion of the Proposals, at the #17.73 million
Issue Price excluding conversion of any of the Convertible Loan Stock
Aggregate nominal amount of Convertible Loan Stock to be issued pursuant to the #7.5 million
Placings
Maximum number of Ordinary Shares which may be issued upon conversion in full of 35,714,285
the Convertible Loan Stock
Number of Ordinary Shares in issue upon completion of the Proposals and assuming 146,508,188
conversion in full of all the Convertible Loan Stock
Gross proceeds of the Placings and the Open Offer (excluding the Vendor Placing) #11.2 million
DEFINITIONS
The following definitions apply throughout this announcement, unless the context
requires otherwise:
"Acquisition'' the proposed acquisition by the Company of all the issued
and to be issued share capital of Alliance and the BoS
Warrant pursuant to the Share Purchase Agreements
"Admission'' admission of the New Ordinary Shares and the Convertible
Loan Stock to trading on AIM
"AIM'' the Alternative Investment Market of the London Stock
Exchange
"AIM Rules'' the AIM Rules for companies whose shares are traded on AIM
and their nominated advisers, as issued by the London Stock
Exchange from time to time
"Alliance" or "Alliance Pharmaceuticals" Alliance Pharmaceuticals Limited, incorporated and
registered with the Registrar of Companies in England and
Wales under number 3250064
"Alliance Directors" or "Alliance Board" the directors of Alliance
"Alliance Group" Alliance and its subsidiary undertakings
"Alliance Optionholders" those persons who will, pursuant to existing subscription
rights under option, acquire Alliance Shares prior to the
Acquisition
"Alliance Option Scheme" the Alliance Pharmaceuticals Limited Annual Enterprise
Management Incentive Plan and the Alliance Pharmaceuticals
Limited Enterprise Management Incentive Plan
"Alliance Shareholders" the existing holders of Alliance Shares together with the
Alliance Optionholders (other than the Excluded
Shareholders)
"Alliance Shares" the A ordinary shares of 1p each and/or (as the case may be)
the B ordinary shares of 1p each in the share capital of
Alliance
"Application Form" the application form on which Qualifying Shareholders may
apply for Open Offer Shares under the Open Offer and which
forms part of the terms and conditions of the Open Offer
"Articles" articles of association of the Company
"Article 120 Borrowing Limit" Article 120 of the Articles of Association as proposed to be
amended by Resolution 6 to be proposed at the EGM and set
out at the end of this document
"BoS" the Governor and Company of the Bank of Scotland of
Beauclerc House, 3 Queens Road, Reading, RG1 4AR
"BoS Warrant" the warrant granted to the BoS Group pursuant to a warrant
instrument executed by Alliance dated 23 September 2002
pursuant to which the BoS Group is entitled to subscribe for
"A" Ordinary Shares of Alliance representing between 12.5
per cent. and 20 per cent. of the ordinary share capital of
Alliance
"business day" a day (other than a Saturday, Sunday or UK public holiday)
on which banks are generally open for business in London
"certificated" or "in certificated form" a share or other security which is not in uncertificated
form (i.e. not in CREST)
"City Code'' or "Code" the City Code on Takeovers and Mergers
"Company" or "Peerless" Peerless Technology Group Plc, incorporated and registered
with the Registrar of Companies in England and Wales under
number 4241478
"Completion" completion of the Proposals
"Concert Party" the Alliance Shareholders
"Consideration Share Agreements" the two agreements, each dated 28 November 2003 between, in
one case, Numis Securities (1), certain of the Alliance
Shareholders (2) and the Company (3) and, in the other case,
Numis Securities (1), the Excluded Shareholders (2) and the
Company (3), in each case relating to the Vendor Placing
"Consideration Shares'' the 72,916,667 new Ordinary Shares to be issued as part
consideration for the Acquisition, credited as fully paid
"Controlling Shareholder Agreement" a conditional deed dated 28 November 2003 between John
Dawson (1) Stella Anne Dawson (a.k.a. Sam Madden) (2) and
Peerless (3) which regulates the relationship between John
Dawson, Stella Anne Dawson (a.k.a. Sam Madden) and the
Company
"Convertible Loan Stock" or "Stock" the #7.5 million 8 per cent. convertible unsecured
subordinated loan stock 2013 to be issued by the Company in
Units pursuant to the Placings and having the rights and
being subject to the restrictions set out in the Trust Deed
"CREST" the relevant system (as defined in the CREST Regulations) in
respect of which CRESTCo is the operator (as defined in the
CREST Regulations)
"CRESTCo" CRESTCo Limited
"Crest Regulations" the Uncertificated Securities Regulations 2001 (S.I. 2001
No. 3755)
"Directors" or "Board'' the directors of the Company
"Enlarged Group'' the Group as enlarged following Completion
"Enlarged Share Capital'' the enlarged issued ordinary share capital of the Company
following implementation of the Proposals
"EURIBOR" the percentage rate per annum equal to the offered quotation
which appears on the page of the Telerate Screen which
displays an average rate of the Banking Federation of the
European Union for the Euro (being currently page 248)
"Excluded Shareholders" Jason Cale and Trevillion Associates Limited
"Existing Ordinary Shares" the 14,962,500 Ordinary Shares in issue on the Record Date
"Extraordinary General Meeting" or "EGM" the extraordinary general meeting of the Company convened
for 11.00 a.m. on 22 December 2003, notice of which is set
out at the end of this document
"FSMA" the Financial Services and Markets Act 2000
"Group" Peerless and its subsidiary undertakings as at the date of
this document
"Independent Shareholders" the Shareholders other than the Concert Party or their
connected persons and Alliance (in the event that Alliance
acquires any Ordinary Shares before the EGM)
"Issue Price" 16p per New Issue Share
"LIBOR" the rate (expressed as an annual percentage rate) at which
Sterling deposits are offered in the London Inter Bank
Market by prime banks
"London Stock Exchange" London Stock Exchange plc
"Memorandum" the memorandum of association of the Company
"New Issue Shares" the 22,914,736 new Ordinary Shares to be issued by the
Company pursuant to the Placing and Open Offer Agreement
"New Ordinary Shares" the Consideration Shares and the New Issue Shares
"Numis Option" the option granted to Numis to subscribe for the Numis
Option Shares on the terms of the Numis Option Agreement
"Numis Option Agreement" the agreement dated 28 November 2003 between (1) the Company
and (2) Numis Securities relating to the Numis Option
"Numis Option Shares" the 1,384,924 Ordinary Shares representing 1.25 per cent. of
the Enlarged Share Capital subject to the Numis Option
Agreement
"Numis Securities" Numis Securities Limited, incorporated and registered with
the Registrar of Companies in England and Wales under number
02285918 whose registered office is at 5th Floor, Cheapside
House, 138 Cheapside, London, EC2V 6LH
"Official List" the Official List maintained by the UK Listing Authority
"Open Offer" the conditional offer by Numis Securities, on behalf of the
Company, to Qualifying Shareholders to subscribe for the
Open Offer Shares
"Open Offer Shares" the 7,481,250 New Issue Shares which are the subject of the
Open Offer
"Ordinary Shares" the ordinary shares of 1p each in the capital of the Company
"Panel" the Panel on Takeovers and Mergers
"Placings" the conditional placings by Numis Securities of the New
Issue Shares, the Vendor Placing Shares and the Convertible
Loan Stock subject to the terms of the Placing and Open
Offer Agreement
"Placing and Open Offer Agreement" the conditional agreement dated 28 November 2003 between (1)
the Company, (2) Numis Securities, (3) the Directors and (4)
the Proposed Directors relating to the Placings and the Open
Offer
"Principal Agreement" the conditional agreement dated 28 November 2003 between
Peerless (1), the Principal Vendors (2), BoS (3), Jeremy
Mark Fenn and Richard Mark James (4) relating to the
Acquisition
"Principal Vendors" John Dawson, Stella Anne Dawson (a.k.a. Sam Madden) and
Anthony Richard Booley
"Proposals" the Acquisition, the Placings, the Open Offer, the proposed
change of name of the Company, the proposed amendment to the
Articles, the Waiver and Admission pursuant, inter alia,to
the Share Purchase Agreements, the Placing and Open Offer
Agreement
"Proposed Directors" John Dawson, Anthony Richard Booley, Stella Anne Dawson
(a.k.a. Sam Madden), Madeleine Elizabeth Scott and Paul
Ranson,
"Qualifying Shareholders" holders of Existing Ordinary Shares on the register of
members of the Company at the Record Date and others with
bona fide market claims, other than certain overseas
Shareholders
"Record Date" the close of business on 24 November 2003
"Shareholders" holders of Existing Ordinary Shares
"Share Option Plan" the Share Option Plan of Peerless which the Company proposes
to adopt at the EGM
"Share Purchase Agreements" the Principal Agreement and the Optionholders Share Purchase
Agreement
"SSAP" Statement of Standard Accounting Practice
"Stockholders holders of the Stock
"subsidiary" or "subsidiary undertaking" have the meanings given to them by the Act
"Trustee" The Law Debenture Trust Corporation p.l.c. whose registered
and head office is at Fifth Floor, 100 Wood Street, London,
EC2V 7EX
"Trust Deed" the trust deed to constitute the Convertible Loan Stock to
be entered into between the Company and the Trustee
"UK GAAP" generally accepted accounting principles in the UK
"UK Listing Authority" the Financial Services Authority in its capacity as the
competent authority for the purposes of Part VI of FSMA
"Unit" a unit of 100p nominal of the Convertible Loan Stock
"Vendor Placing" the placing by Numis Securities on behalf of certain of the
Alliance Shareholders and the Excluded Shareholders of the
Vendor Placing Shares pursuant to the Consideration Share
Agreements
"Vendor Placing Shares" the 2,085,264 Consideration Shares, being a proportion of
the Consideration Shares to be received by certain of the
Alliance Shareholders and the Excluded Shareholders, which
are the subject of the Vendor Placing
"Waiver" the conditional waiver by the Panel of the obligation of the
Concert Party that may otherwise arise under Rule 9 of the
City Code to make a mandatory cash offer for the issued
Ordinary Shares not already owned by the Concert Party on
Completion
ENQUIRIES
Alliance Pharmaceuticals Ltd Numis Securities Limited
John Dawson John Harrison
Managing Director 020 7776 1500
01249 466966
Beattie Financial
Ann Marie Wilkinson/James Chandler
020 7398 3300
None of the Ordinary Shares, the New Ordinary Shares or the Loan Stock have
been, nor will be, registered in the United States of America under the United
States Securities Act of 1933, as amended, or the securities laws of any state
of the United States of America or under the securities laws of Canada,
Australia, the Republic of Ireland or Japan and they may not, subject to certain
exceptions, be offered or sold directly or indirectly within the United States
of America, Canada, Australia, the Republic of Ireland or Japan or to, or for
the account or benefit of US persons (as defined in Regulation S under the US
Securities Act of 1933) or any national, citizen or resident of Canada,
Australia, the Republic of Ireland or Japan. This announcement does not
constitute an offer to sell or issue or the solicitation of an offer to buy or
subscribe for Ordinary Shares, New Ordinary Shares, Loan Stock, Warrants or New
Warrants in any jurisdiction in which such offers or solicitations are unlawful.
This announcement has been approved for the purposes of Section 21 of the
Financial Services and Markets Act 2000 by Numis Securities Limited, which is
authorised by The Financial Services Authority Limited to act for Peerless
Technology Group in connection with the Placing and Open Offer and will not be
responsible to anyone other than Peerless Technology Group for providing the
protections afforded to customers of Numis Securities Limited, or for providing
advice in relation to the Acquisition, Placings and Open Offer.
The Directors of Peerless Technology Group are the persons responsible for the
information contained in this announcement. To the best of the knowledge and
belief of the Directors (who have taken all reasonable care to ensure that such
is the case) the information contained in this announcement is in accordance
with the facts and does not omit anything likely to affect the import of such
information. This summary should be read in conjunction with the full text of
the following announcement which follows.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQUWONROBRAUAA
