TIDMATD
RNS Number : 6437H
Asterand PLC
13 July 2012
13 July 2012
Asterand plc
("Asterand" or the "Company")
POSTING OF SHAREHOLDER CIRCULAR
Proposed disposal of the Human Tissue Business
Proposed cancellation of the listing of the Ordinary Shares on
the Official List and the admission to trading of the Ordinary
Shares on the Main Market of the London Stock Exchange
Proposed change of name to BioSeek plc
and
Notice of General Meeting
The Board of Asterand announces that a circular relating to the
proposed Disposal of the Human Tissue Business (the "Circular") has
been approved by the UK Listing Authority and is being posted today
to Shareholders.
The Circular contains a notice convening a General Meeting of
Shareholders at the offices of Daniel Stewart & Company Plc,
Becket House, 36 Old Jewry, London EC2R 8DD at 11.00 a.m. on 30
July 2012, at which, amongst other things, approval for the
Disposal, Cancellation and Change of Name Resolutions will be
sought.
The Circular will be made available for inspection during normal
working hours on any weekday (Saturdays, Sundays and public
holidays excepted) at the offices of Bird & Bird LLP, 15 Fetter
Lane, London EC4A 1JP and at the registered office of Asterand plc,
2 Orchard Road, Royston, Hertfordshire SG8 5HD. The Circular will
also shortly be made available for viewing on the Company's website
at www.asterand.co.uk and has been submitted to the National
Storage Mechanism, where it will be available for inspection at
www.hemscott.com/nsm.do.
The terms of the Disposal Agreement, in all material respects,
remain as notified by the Company on 11 June 2012.
Subject to the Cancellation Resolution (which is being proposed
as a special resolution) being passed by the Shareholders at the
General Meeting, the Company intends to seek the Cancellation of
the listing of the Ordinary Shares and the admission to trading of
the Ordinary Shares on the Main Market of the London Stock
Exchange. Under the Listing Rules, a cancellation can be effected
by a company after securing a special resolution (requiring at
least 75 per cent. approval of those shareholders who vote) in
general meeting and the expiration of a period of not less than 20
business days from the date of such shareholder approval. The Board
proposes to make application as soon as possible for the
Cancellation to be effected. Accordingly, subject to the passing of
the Cancellation Resolution, it is anticipated that the date of the
Cancellation will be at 8.00 a.m. on 29 August 2012.
Appendices I to IV below have been extracted with out material
adjustment from the Circular. Shareholders should read these
appendices in conjunction with the Circular. The Circular should be
read carefully and in its entirety before making a decision with
respect to the Proposals.
The Directors would like to draw Shareholders attention to the
qualified working capital statement contained in paragraph 17 of
Appendix I below and of the Circular which shows a material
difference in the maximum working capital requirement to that which
was announced by the Company on 11 June 2012.
For further information, please contact:
Asterand plc
Jack Davis, Chairman and Interim Tel: + 44 (0) 1763 211 600 / +
Chief Executive Officer 1 (313) 263-0960
Alan Fishman, Interim Chief As above
Financial Officer
Daniel Stewart & Company Plc
Antony Legge Tel: +44 (0) 20 7776 6550
Matt Wilson
Beaumont Cornish Limited -
Sponsor
Roland Cornish Tel: +44 (0) 20 7628 3396
Emily Staples
Covington Associates LLC
Steven Mermelstein Tel: +1 (914) 420-4510
David Wood
A copy of this announcement will be available at
www.asterand.co.uk. The content of the website referred to in this
announcement is not incorporated into and does not form part of
this announcement.
Daniel Stewart & Company Plc, which is authorised and
regulated in the United Kingdom by the FSA, is acting exclusively
for the Company and no-one else in connection with the Disposal and
will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Daniel Stewart
& Company Plc nor for giving advice in relation to the Disposal
or any other matters referred to in this announcement.
Beaumont Cornish Limited, which is authorised and regulated in
the United Kingdom by the Financial Services Authority, is acting
exclusively for the Company as sponsor under the requirements of
the Listing Rules, in relation to the Disposal and is neither
taking responsibility for the commercial assessment of the
Disposal, which remains the sole responsibility of the Board, nor
for any matters outside the duties of a sponsor, as prescribed by
the Listing Rules, nor is it advising any other person and
accordingly will not be responsible to any person other than the
Company for providing the protections afforded to the clients of
Beaumont Cornish Limited or for providing advice in relation to the
Disposal or any other matters referred to in this announcement.
Important notice
The release, publication or distribution of this announcement in
jurisdictions other than the United Kingdom may be restricted by
law and therefore persons into whose possession this announcement
comes should inform themselves about, and observe, any applicable
restrictions or requirements. Any failure to comply with such
restrictions may constitute a violation of the securities laws of
any such jurisdiction. This announcement has been prepared for the
purposes of complying with English law and the Listing Rules and
the applicable rules and the information disclosed may not be the
same as that which would have been disclosed if this Circular had
been prepared in accordance with the laws and regulations of any
jurisdiction outside of England and Wales. The statements contained
in this announcement are made as at the date of this announcement,
unless some other time is specified in relation to them, and
publication of this announcement shall not give rise to any
implication that there has been no change in the facts set forth
herein since such date. Nothing contained in this announcement
shall be deemed to be a forecast, projection or estimate of the
future financial performance of the Company, the Group, the
Continuing Group or the Human Tissue Business except where
otherwise stated.
Forward looking statements
This announcement contains certain "forward-looking statements"
with respect to the financial condition, results of operations and
business of the Company, the Group and the Continuing Group and
certain plans and objectives of the members of the Group. In some
cases, these forward-looking statements can be identified by the
fact that they do not relate to historical or current facts and by
the use of forward-looking terminology, including the terms
"anticipates", "believes", "estimates", "expects", "intends",
"plans", "prepares", "goal", "target", "will", "may", "should",
"could" or "would" or, in each case, their negative or other
variations or comparable terminology. These statements are based on
assumptions and assessments made by the Directors in light of their
experience and their perception of historical trends, current
conditions, expected future developments and other factors they
believe appropriate. Investors should specifically consider the
factors identified in this announcement that could cause actual
results to differ before making an investment decision. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual
results, performance or achievements of the Company, the Group or
the Continuing Group, or industry results, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. They are
also based on numerous assumptions regarding the Company's, the
Group's and/or the Continuing Group's present and future business
strategies and the environment in which it is believed that the
Continuing Group will operate in the future. These forward-looking
statements speak only as at the date of this announcement. Except
as required by the FSA, the Listing Rules, the Disclosure and
Transparency Rules, the London Stock Exchange or applicable law,
the Company expressly disclaims any obligations or undertaking to
release publicly any updates or revisions to any forward-looking
statements contained in this announcement to reflect any change in
the Company's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based. Should one or more of these risks or uncertainties
materialise, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in this
announcement.
APPENDIX I
LETTER FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF ASTERAND
PLC
1. Introduction
On 11 June 2012, the Company announced an agreement for the
disposal of the Human Tissue Business, to the Buyers, subject to,
amongst other matters, Shareholder approval, for an aggregate cash
consideration of USD9,000,000. The Disposal is necessary to raise
funds to repay the Secured Debt, in respect of which the Company
received notices of default on 4 October 2011 and 17 October 2011
on the BioSeek Loan Notes and the SVB Debt respectively.
Further information relating to the principal terms and
conditions of the Disposal is outlined in more detail in Part VI of
the Circular.
The purpose of the Circular is to provide you with information
on, and to outline the reasons for, the Proposals and to explain
why the Board considers them to be in the best interests of the
Company and the Shareholders as a whole and why it unanimously
recommends that Shareholders vote in favour of the Resolutions.
In view of its size, the Disposal constitutes a Class 1
transaction for the purpose of the Listing Rules and is, therefore,
subject to the approval of Shareholders. Following Completion, the
Continuing Group will be significantly reduced in size and, having
considered the costs and regulatory requirements of remaining a
publicly quoted company and the likelihood of raising further funds
as an unlisted entity as opposed to a listed entity, the Board
believes that the best course of action is to cancel the listing of
the Ordinary Shares on the Official List and the admission to
trading of the Ordinary Shares on the Main Market of the London
Stock Exchange. Accordingly, in addition to seeking Shareholder
approval for the proposed Disposal, the Board is also unanimously
recommending that Shareholders approve the proposed Cancellation.
This process is outlined in more detail in paragraphs 10 and 11 of
this Appendix I.
The Directors have convened the General Meeting for 11 a.m. on
30 July 2012 (or as soon thereafter as the Annual General Meeting
concludes or is adjourned), at which Shareholders will be asked to
consider, and if thought fit, approve the Resolutions in order to
implement the Proposals. Details of the General Meeting and the
Resolutions are contained in the notice of General Meeting set out
at the end of the Circular.
Shareholders should note that if the Disposal Resolutions are
not passed, it is likely that the Company will be placed
immediately into administration.
Shareholders should read the whole of the Circular and not just
rely on the summarised information or summarised financial
information contained in this letter. In particular your attention
is drawn to paragraph 17 of this Appendix I (Working Capital
Statement) and also to the Risk Factors set out in Part II of the
Circular.
2. Background to and reasons for the Disposal
In December 2010, the Company announced that it had secured a
USD3,000,000 term loan and revolving credit line from Silicon
Valley Bank which could be used to satisfy the Deferred
Consideration due on the BioSeek Acquisition. Subsequently, in
April 2011, the Company, having agreed with the BioSeek
Shareholders that the Deferred Consideration was to be satisfied
solely with cash, announced that, as a consequence of poor trading
conditions in March 2011 resulting in an inability to draw down on
the revolving credit line, it had entered into new financing
arrangements as a replacement for such revolving credit line and in
order to satisfy the Deferred Consideration, leaving only the term
loan in place. Under these new financing terms USD2,500,000 was
paid to the BioSeek Shareholders in July 2011 and the remaining
USD6,000,000 was satisfied by the issue of the BioSeek Loan
Notes.
The Company continued to experience challenging and volatile
trading conditions and in its interim results announcement on 31
August 2011, it announced a reduced outlook for the year as a whole
and the need to raise additional working capital.
On 24 October 2011 the Company announced that it had received
notices of default from SVB and from the BioSeek Loan Note Holders.
It was announced that the loans repayable to SVB were payable on
demand and that, in respect of the BioSeek Loan Notes, the Company
had 120 days to remedy the situation. Accordingly, the Company
commenced a formal sale process for the entire issued and to be
issued ordinary share capital of the Company.
It was announced on 7 November 2011 that the Company had
received further notice from the BioSeek Loan Note Holders to the
effect that the conditions for the Company to avail itself of the
120 day cure period had not been met and as such the BioSeek Loan
Notes were also payable on demand.
After several months of talks with potential buyers, the Board
was unable to secure an offer for the Group. Instead, letters of
interest were received from two separate buyers for the assets of
each of its two businesses: the BioSeek Business and the Human
Tissue Business. As announced on 30 April 2012, the Company entered
into negotiations with such potential buyers and ended the formal
sale process for the entire issued and to be issued ordinary share
capital of the Company.
On 2 May 2012, the Company announced that the potential bidder
of the BioSeek Business had informed the Company that it no longer
wished to pursue the acquisition and had released the Company from
an agreed exclusivity provision.
On 10 June 2012, the Company entered into the Disposal
Agreement, pursuant to which the Selling Group will, subject to the
terms and conditions of the Disposal Agreement, dispose of the
Human Tissue Business. The proceeds of the Disposal of USD9,000,000
in conjunction with some of the Existing Cash Resources will, if
the Disposal is approved by Shareholders, satisfy in full the
Company's repayment obligations to the Secured Lenders.
The receipt of the notices of default on the Secured Debt
necessitated action by the Board to avoid the immediate potential
loss of all Shareholder value. The Board considered alternatives to
the Disposal, including an equity fundraising, but encountered
limited opportunities in light of, inter alia, the Company's lack
of profitability, the capital requirement for inventory and the
reluctance of finance providers to invest in equity to repay debt.
The Board believes that the prospects for the Continuing Group
after the Disposal and repayment of the Secured Debt are much
greater than with any other option currently available.
The Board's ability to negotiate with potential purchasers of
either the Group, the BioSeek Business or the Human Tissue Business
or with potential funders was hampered by the Group's decreasing
cash position and the need to reach an agreement before its
financial resources were exhausted. Despite this the Board was able
to negotiate a competitive price for the Human Tissue Business. In
deciding to proceed with the Disposal to the Buyers the Board
concluded that the aggregate purchase price of USD9,000,000 offered
by the Buyers was an acceptable outcome in the circumstances as the
business has been loss-making in recent years and requires
significant capital for its human tissue inventory. Since
commencing the formal sale process in October 2011, the Board has
evaluated a number of proposals for the sale of the Human Tissue
Business and has taken into account a number of factors when
assessing these proposals, including the price offered. In view of
the level of working capital shortfall facing the Company, the
Board has placed significant weight on the level of certainty that
could be attributed to an offer, which allowed settlement of the
Secured Debt, within an acceptable timeframe and that would avoid
the Company being placed into administration. Accordingly, the
Board resolved to enter into the Disposal Agreement with the Buying
Group and to unanimously recommend that Shareholders vote in favour
of the Proposals.
Following the conclusion of the formal sale process, the signing
of the Disposal Agreement and the receipt of irrevocable
undertakings representing over 50 per cent. of the existing issued
ordinary share capital to vote in favour of the Disposal, the
Company received a materially higher non-binding offer for the
Human Tissue Business from a third party. The net proceeds of the
late offer could potentially fund the aggregate further funding
requirement of the Continuing Group of approximately USD618,000 (as
set out in more detail in paragraph 17 of this Appendix I), and
accordingly the Board has been obliged to give due consideration to
the merits of this offer and to its decision to unanimously
recommend that Shareholders vote in favour of the Disposal
Resolutions. Against the benefits to Shareholders and creditors of
realising a materially higher amount for the Human Tissue Business,
the Board has had regards to, amongst other things: (i) the
certainty of completing the Disposal by having entered into a
Disposal Agreement which is a binding contract with the Buying
Group; (ii) the exclusivity provisions in the Disposal Agreement
which prevent any alternative proposal for the sale of the Human
Tissue Business being pursued until the Disposal Agreement has
lapsed without the risk of exposing the Company to significant
liabilities to the Buying Group; (iii) that the holders of over 50
per cent. of the existing issued ordinary share capital have given
irrevocable undertakings to vote in favour of the Disposal; (iv)
that the Company may not have the necessary cash resources to cover
the time period within which an alternative proposal could be
negotiated following the lapsing of the Disposal Agreement and that
failure to proceed with the Disposal within the envisaged timeframe
could result in the Company being placed into administration; and
(v) that despite the higher value of the late offer, there is no
certainty that a deal could ultimately be concluded at this price
or at all. Notwithstanding the alternative proposal, which the
Board does not consider to be a viable alternative given points (i)
to (v) above, it therefore remains the Board's intention to vote in
favour of the Disposal Resolutions and unanimously recommend that
Shareholders also vote in favour. The recommendation of the Board
is set out in paragraph 18 below.
Whilst the proceeds of the Disposal, together with some of the
Existing Cash Resources, will enable the Continuing Group to settle
in full the Secured Debt, the Continuing Group continues to
experience financing problems and the Board continues to explore a
number of alternatives for BioSeek or the BioSeek Business
including, inter alia, its disposal, or the securing of additional
and/or interim funding from Shareholders and/or third parties.
Whilst the Board cannot be certain that it will be able to raise
sufficient funds to avoid the Company being placed into
administration, it believes that it is more likely to be able to do
so if the Cancellation Resolution is approved by Shareholders. The
Board believes that there are limited funding options available to
the Continuing Group in the UK, and that potential US funders would
have a preference for unlisted investments which do not have the
costs associated with maintaining a listing.
Your attention is drawn to Part II (Risk Factors) of the
Circular.
3. Principal terms of the Disposal
The Company, Asterand UK and Asterand US entered into the
Disposal Agreement on 10 June 2012 with Stemgent, the UK Buyer and
the US Buyer. The Human Tissue Business will be sold to the Buyers
for an aggregate cash consideration of USD9,000,000 subject to
certain adjustments (including a working capital adjustment). The
Disposal will be effected by way of a sale of the assets of the
Human Tissue Business by the Sellers (both being wholly owned
subsidiaries of the Company). Completion of the Disposal Agreement
is subject to the following conditions being satisfied:
(a) the representations and warranties given by the Selling
Group and the Buying Group remaining true and correct in all
material respects;
(b) the Sellers and the Buyers having performed and complied in
all material respects with their obligations under the Disposal
Agreement;
(c) the Company obtaining the consent of Shareholders to the Disposal at the General Meeting;
(d) there being no event, transaction, condition or change since
31 December 2011 which has had or could be reasonably expected to
have a material adverse effect on the Human Tissue Business, the
assets and/or liabilities to be acquired and assumed by the Buyers
pursuant to the Disposal Agreement;
(e) all necessary third party consents having been obtained.
These consents are required from certain contractual counterparties
of the Human Tissue Business and are expected to be received prior
to the date of the General Meeting;
(f) there being no restraining order or injunction entered to
materially prevent the Disposal and no action, suit or proceeding
pending or threatened before any court or administrative agency of
any federal, state, provincial, local, or foreign jurisdiction in
which it is sought to restrain or prohibit or obtain damages or
other relief in connection with the transactions contemplated by
the Disposal Agreement or the operation of all or a material
portion of the Human Tissue Business by the Sellers or the
Buyers;
(g) the Sellers delivering to the Buyers releases of any and all
liens (other than liens permitted by the Disposal Agreement) held
by third parties with respect to any of the assets of the Human
Tissue Business;
(h) BioSeek executing and delivering the Guarantee;
(i) each of the Company, BioSeek, the Sellers and the Buyers
executing and delivering the Security and Contingent Escrow
Agreement; and
(j) the delivery by the Sellers and the Buyers of certain documents.
As at the date of the Circular, all conditions remain to be
satisfied.
The Disposal Agreement contains warranties from the Selling
Group in favour of the Buyers of the kind customarily given in
connection with asset purchase agreements. The total liability of
the Selling Group for claims under the warranties shall not exceed
8 per cent. of the consideration paid by the Buyers, subject to
certain limitations as more fully described in Part VI of the
Circular.
BioSeek is to guarantee all of the Selling Group's
indemnification obligations to the Buying Group pursuant to the
terms of the Disposal Agreement. As additional security for such
obligations, BioSeek will grant in favour of the Buyers a security
interest in all of its assets and Asterand US will pledge all of
the outstanding membership interests of BioSeek. Pursuant to the
terms of such security arrangements, the Continuing Group may raise
up to USD3,000,000 of secured senior debt without requiring the
consent of the Buyers.
In the event that, after Completion, either or both Sellers fail
to:
(a) make, when due, any indemnification payments that they are
required to make under the Disposal Agreement; and/or
(b) fully satisfy any payments due under the working capital adjustment when due,
the Selling Group and BioSeek are required to issue a
convertible promissory note in favour of the Buyers (a Promissory
Note). The full amount owing under any Promissory Note shall bear
interest at a rate of the lesser of: (i) 18 per cent. per annum,
compounding monthly; or (ii) the maximum rate of interest permitted
under applicable law. Any Promissory Note shall be due and payable
upon demand and, in any event, upon a Change of Control or
Qualified Financing. In addition, upon the closing of any equity
financing by the Company, Asterand UK, Asterand US or BioSeek
pursuant to which stock capital or other equity of the Company,
Asterand UK, Asterand US or BioSeek is issued, the amounts
outstanding under each Promissory Note shall be convertible, at the
election of the Buyers, into shares or stock in the capital of the
Company, Asterand UK, Asterand US or BioSeek (as appropriate).
In connection with the Disposal, which includes the right of the
Buyers to the "Asterand" name, it is proposed to change the name of
the Company to BioSeek plc. The Change of Name Resolution will,
accordingly, be proposed at the General Meeting.
On 21 June 2012 the Company and Stemgent entered into a side
letter to the Disposal Agreement (the Disposal Side Letter). In
accordance with the terms of the Disposal Side Letter, if at any
time on or prior to 31 December 2012, Stemgent or any of its
affiliates disposes of all or any part of the Human Tissue Business
by way of: (a) a sale of all or substantially all of the assets of
the Human Tissue Business or the assets of any of the Buyers; (b) a
sale of 50 per cent. or more of the securities of any of the
Buyers; or (c) any business combination in which any entity who
holds the assets of the Human Tissue Business does not survive, and
the consideration received in connection therewith (net of any
transaction costs) exceeds the purchase price under the Disposal
Agreement, Stemgent shall pay to the Company an amount equal to 50
per cent. of such excess.
The principal terms and conditions of the Disposal Agreement are
described in more detail in Part VI of the Circular.
4. Use of proceeds and financial effects of the Disposal
The net proceeds arising from the Disposal are expected to be
approximately USD6,900,000 after deducting total transaction costs
of approximately USD2,100,000 (of which approximately USD1,128,000
remain unpaid as at the date of the Circular).
At Completion, the proceeds of the Disposal of USD9,000,000 in
conjunction with some of the Existing Cash Resources will be
applied by the Continuing Group to pay down its liabilities as
follows:
(a) repayment in full of the SVB Debt of approximately USD2,050,000; and
(b) repayment in full of the BioSeek Loan Notes of approximately USD7,017,000.
The unaudited pro forma statement of net assets set out in Part
IV of the Circular and Appendix III below illustrates the effects
of the Disposal on the consolidated net assets of the Continuing
Group had the Disposal occurred on 31 December 2011. In these
circumstances total liabilities of the Continuing Group would be
approximately USD7,316,000 and net assets would be approximately
USD8,103,000.
The proceeds from the Disposal will strengthen the Continuing
Group's financial position in that it will be in a position to
repay the Secured Lenders in full which, given the working capital
position of the Company explained in paragraph 17 of this Appendix
I, may effectively buy the Company time to either find a buyer for
BioSeek or the BioSeek Business or raise funds for the BioSeek
Business. The Disposal is expected to be immediately earnings
accretive as set out in the unaudited pro forma statement of
earnings in Part IV of the Circular and Appendix III below.
Your attention is drawn to Part IV of the Circular and Appendix
III below, which contain the unaudited pro forma statements of the
net assets and earnings of the Continuing Group as at 31 December
2011 as if the Disposal had been undertaken at this date.
Financial information set out in this paragraph has been
extracted without material adjustment from the unaudited pro forma
statement of net assets set out in Part IV of the Circular and
Appendix III below. Investors should read the whole Circular and
not rely solely on this summarised financial information.
5. Information relating to the Human Tissue Business
The Human Tissue Business provides solutions that are directed
at reducing the failure rate of compounds in clinical trials.
Pharmaceutical researchers know that animal models do not provide a
complete guide to drug response in humans, and so the incorporation
of human tissue based models at all stages of the discovery process
is gaining acceptance as scientists seek methods to improve
decision making during the development of medicines.
The Human Tissue Business currently offers two primary products
and services:
1. XpressBANK(TM); and
2. PhaseZERO(TM).
The XpressBANK(TM) biobank contains several thousand specimens
from a broad range of therapeutics areas, offering delivery of
specimens that meet the research requirements of its clients. Each
specimen is accompanied by disease characterisation and clinical
information, making the samples suited for drug discovery research.
In addition to the bio repository, the business unit offers: custom
isolations of specific cell lines and primary cells; custom
designed tissue microarrays; and, bio fluids, including blood,
serum and plasma.
The PhaseZERO(TM) platform offer human tissue-based drug
discovery research services on a fee-for-service basis. The
services platform leverages the Human Tissue Business' experience
and proven track record in human tissue-based research.
PhaseZERO(TM) includes:
1. XpressWay(R) - human gene expression in non-diseased and diseased tissue;
2. XpressArray(TM) - human protein expression profiling;
3. Human tissue-based and primary cell assays for metabolism and toxicity analysis; and
4. 'Good Laboratory Practice' compliant preclinical safety study
services to pharmaceutical and biotech clients.
A summary of the unaudited trading results for the Human Tissue
Business for the three years ended 31 December 2011 (on an IFRS
basis) is set out below.
For and as For and as For and as
at at at
31 December 31 December 31 December
USD'000 2011 2010 2009
Revenue 15,463 15,025 18,706
Operating loss (5,082) (2,812) (1,553)
Loss before tax (5,106) (2,753) (1,927)
Loss for the financial year
attributable to owners of the
parent (5,801) (2,785) (1,631)
A summary of the unaudited gross and net assets of the Human
Tissue Business as at 31 December 2011 (on an IFRS basis) is set
out below:
For and as
at
31 December
USD'000 2011
Gross assets 14,934
Net assets 10,984
Unless otherwise stated, the unaudited financial information in
this paragraph 5 has been extracted without material adjustment
from the unaudited financial information contained in Part III
(Unaudited Financial information of the Human Tissue Business) of
the Circular and Appendix II below.
Investors should read the whole Circular and not rely solely on
this summarised financial information. Please refer to Part III
(Unaudited Financial information of the Human Tissue Business) of
the Circular and Appendix II below for further information.
6. Information relating to the Continuing Group
After Completion, the Continuing Group will consist of the
BioSeek Business only. BioSeek's BioMAP(R) System is a cell based
disease model used to generate a profile of human biological
response for specific drug candidates. The platform helps to reduce
risk at the earliest stages of research and at multiple decision
points within the research and development process. Most human cell
lines used in preclinical testing are unable to provide truly
predictive information since they lack the natural regulatory
activity inherent in humans. By using primary cells directly
isolated from the human body, the BioMAP(R) System replicates the
cellular interactions present in specific human diseases.
A summary of the unaudited trading results for the Continuing
Group for the year ended 31 December 2011 (on an IFRS basis), as if
the Disposal had occurred on 31 December 2011, is set out
below.
For and as
at
31 December
USD'000 2011
Revenue 8,628
Operating profit 544
Loss before tax (1,495)
A summary of the unaudited gross and net assets of the
Continuing Group as at 31 December 2011 (on an IFRS basis), as if
the Disposal had occurred on 31 December 2011, is set out
below.
For and as
at
31 December
USD'000 2011
Gross assets 14,818
Net assets 7,502
Unless otherwise stated, the unaudited financial information in
this paragraph 6 has been extracted without material adjustment
from the unaudited financial information contained in Part IV
(Unaudited Pro Forma Statements of Net Assets and Earnings) of the
Circular and Appendix III below.
Investors should read the whole Circular and not rely solely on
this summarised financial information. Please refer to Part IV
(Unaudited Pro Forma Statements of Net Assets and Earnings) of the
Circular and Appendix III below for further information.
7. Information relating to Stemgent
Stemgent is engaged in working alongside some of the world's
leading stem cell scientists in developing innovative technology
and application solutions for the advancement of stem cell
research. The company's goal is to help simplify and support
cellular reprogramming by producing products designed by leading
stem cell researchers worldwide. The company has scientific
development sites located in both Cambridge, Massachusetts and San
Diego, California.
Further information on Stemgent is provided at
www.stemgent.com.
8. Details of key individuals for the Human Tissue Business
Dr. Victoria Blanc, Vice President Strategic Planning and
Government Affairs - joined Asterand in 2002 as Application
Scientist and was appointed General Manager of Asterand, Inc. in
2007. Since 2010, Dr. Blanc has been responsible for planning and
managing strategic initiatives in the Human Tissue Business and the
management of contracts with the US government.
Dr. Tony Brown, General Manager US Operations - joined Asterand
in 1998 as Head of Pharmacology and was appointed General Manager
of Asterand UK Limited in 2006. Since 2010, Dr. Brown has been
responsible for overseeing the laboratory operations in Detroit and
tissue donor site development and operations.
Dr. Thomas Mander, Vice President Sales and Marketing - joined
Asterand in 2007. Since 2011, Dr. Mander has been responsible for
managing the Human Tissue Business' sales and marketing operations
and for developing the international sales strategy and client
relationships.
Dr. Amanda J. Woodrooffe, General Manager UK Operations - joined
Asterand in 2001 as Head of Biochemical Pharmacology and was
appointed Director of Scientific Development in 2006. Since 2010,
Dr. Woodrooffe has been responsible for managing the UK services
operation in Royston, overseeing all staff in the UK and customer
services projects.
None or the above mentioned individuals have or have had any
material involvement in the BioSeek Business.
It is intended that the above mentioned individuals will not
have a role in the Continuing Group following Completion.
9. Current trading of the Company and prospects for the Continuing Group
Current trading of the Company
On 18 May 2012, the Company updated the market on its current
trading in an interim management statement:
"Since 1 January 2012, the Board has been focused on resolving
the funding crisis that arose in the fourth quarter of last year.
As previously announced on 30 April 2012, it has not been possible
to find a single buyer for the whole Group and, instead, the Board
has focused on securing buyers for the constituent parts of the
Group. Negotiations regarding the sale of the non BioSeek Tissue
based Solutions (Tissue) business are continuing and the Board
expects that a circular, seeking shareholder approval for the sale,
will be sent to shareholders in the next few weeks. The Board also
continues to explore a number of alternatives in respect of the
BioSeek business including the continuation of the business on a
stand alone basis or the sale of the business after the potential
disposal of the Tissue business. In an effort to reduce costs, the
Board is also considering whether or not it is appropriate for the
Group to continue as a listed company following a disposal of the
Tissue business.
"Despite these distractions and volatile trading conditions,
revenue for the period ended 31 March 2012 is flat over the
previous year, although the mix has changed with Tissue revenues
improving and BioSeek revenues declining. Cash remains tight and
the Group continues to manage its cash flow carefully in order that
it may have sufficient funds to complete a transaction for the
Tissue business. The Group maintains a constructive dialogue with
its major creditors regarding the settlement of its secured loans,
in which regard Asterand remains in default, and believes that it
continues to receive the support of its lenders during his
process.
"Shareholders should note that the proceeds from a successful
disposal of the Tissue Business should enable the Group to repay
its secured creditors but that its cash resources will not be
sufficient to cover transaction costs and retained liabilities.
Further funding will be required after the disposal of the Tissue
business to sustain the BioSeek business on an ongoing basis or
until a sales agreement for the business can be reached.
"Shareholders should be aware that the completion of any
disposal or the securing of additional funding for the Group is not
guaranteed."
Save as disclosed in paragraph 9 of Part VII of the Circular,
the Director's expectations for the financial and trading prospects
of the Company in the short term remain unchanged from the date of
the interim management statement. As at 12 July 2012, being the
latest practicable date prior to publication of the Circular, the
Company had approximately USD2,700,000 in cash.
Prospects and trend information for the Continuing Group
The financial performance of the Continuing Group has declined
over the current financial year. Whilst its markets have remained
favourable, the Continuing Group has been hampered by the delay of
projects by clients as a result of uncertainty created by the
formal sale process and potential disposals. Additionally the
Continuing Group has experienced funding restrictions and, as a
result, has not been able to hire the sales staff required to
increase trading volumes.
The Continuing Group's revenue is wholly generated from the drug
discovery services provided by BioSeek. Due to its exposure to a
high-growth sector, the Continuing Group has historically
experienced strong growth and high profitability. Recent projects
have generated less revenue than in previous years as BioSeek has
initiated a number of smaller projects with new customers that
should lead to increased revenue in future trading years. Over the
current financial year the Continuing Group has experienced steady
demand from customers for future projects but the signing of a
number of agreements and the commencement of projects have been
deferred by clients until the future of the Continuing Group is
more secure.
Whilst there remains significant uncertainty both in the global
economy and in the drug discovery and services sector, if the
Continuing Group is able to secure funds it aims to take advantage
of future opportunities to work with large pharmaceutical customers
and invest in new services, capital equipment, related technologies
and staff.
10. Cancellation of listing, transfers and trading of the Ordinary Shares
Following Completion, the Continuing Group will be significantly
reduced in size and the Board has concluded that the costs and
regulatory requirements associated with maintaining the Company's
listing (estimated to be USD1,043,000 per annum) are a drain on the
Company's financial and management resources and outweigh the
benefits of the listing. Such quantifiable cash costs include fees
paid to the Company's financial advisers, lawyers, accountants and
registrars, annual fees paid to the London Stock Exchange and costs
relating to the release of regulatory announcements. In addition,
there is a cost of management time which is used in meeting the
ongoing obligations of being a listed company. The Board therefore
believes that the best course of action is to cancel the listing of
the Ordinary Shares on the Official List and the admission to
trading of the Ordinary Shares on the Main Market of the London
Stock Exchange.
Under the Listing Rules, a de-listing can be effected by a
company after securing a special resolution (requiring at least 75
per cent. approval of those shareholders who vote) in general
meeting and the expiration of a period of not less than 20 business
days from the date of the shareholder approval. The Board proposes
to make application as soon as possible for the Cancellation to be
effected. Accordingly, subject to the passing of the Cancellation
Resolution, it is anticipated that the date of the Cancellation
will be at 8 a.m. on 29 August 2012.
11. Strategy of the Company following, and principal effects of, the Cancellation
Should the Disposal Resolutions and the Cancellation Resolution
be passed, the Directors will continue to focus on preserving
Shareholder value by exploring a number of alternatives including,
amongst other things, a disposal of BioSeek or the BioSeek Business
or the securing of additional funding from Shareholders and/or
third parties in order to develop and run the business. As the
future funding of the Company will continue to be uncertain, the
value of the Ordinary Shares will also be uncertain. Should funding
not become available and/or a buyer for BioSeek or the BioSeek
Business not found, there may be little or no value to the Ordinary
Shares in the Company.
Following the Cancellation, although the Ordinary Shares will
remain transferable they will no longer be tradable on the Official
List and no other trading facility will be available to enable the
trading of the Ordinary Shares. Consequently, there can be no
guarantee that following the Cancellation a Shareholder will be
able to purchase or sell any Ordinary Shares. Shareholders should
also note that following the Cancellation:
(a) the Company may not remain subject to the Takeover Code as
the Company's place of central management and control is outside of
the UK and its shares will no longer be traded on a regulated
market in the United Kingdom. The Company's minority Shareholders
will therefore no longer benefit from the protections afforded to
them by the Takeover Code. However, if in the future the Takeover
Panel determines that the Company's place of central management and
control is in the UK, the Takeover Code would again apply to the
Company;
(b) the Company will not be bound to announce material events,
administrative changes or material transactions or to announce
interim or final results;
(c) the Company will no longer be required to comply with any of
the regulatory requirements applicable to companies admitted to the
Official List and to trading on the Main Market of the London Stock
Exchange. For example, transactions with related parties or which
are of a certain size will no longer require prior Shareholder
approval (as is required under the Listing Rules);
(d) the Company will no longer be subject to the Disclosure and
Transparency Rules and Shareholders will no longer be required to
disclose major shareholdings in the Company and the announcement by
the Company of those disclosures will no longer be required;
and
(e) the Company will no longer be subject to the Model Code or
the UK Corporate Governance Code.
The Cancellation might also have either positive or negative
taxation consequences for Shareholders (for example, once the
Cancellation has become effective, the Ordinary Shares would no
longer be a qualifying investment for an ISA). If Shareholders are,
however, in any doubt about their own tax position, they should
consult a professional adviser immediately.
12. Change of Name
Included within the assets of the Human Tissue Business sold to
the Buyers under the Disposal Agreement is the right to the
"Asterand" name. It is therefore necessary for the Company to adopt
a new corporate name from Completion. Accordingly, the Change of
Name Resolution, which is conditional on the Resolution approving
the Disposal being passed, proposes to change the name of the
Company to "BioSeek plc". This also reflects the fact that the
Continuing Group will consist of the BioSeek Business only.
13. General Meeting
The implementation of the Proposals will require Shareholders to
vote in favour of the Resolutions at the General Meeting, which has
been convened for 11 a.m. on 30 July 2012 (or as soon thereafter as
the annual general meeting concludes or is adjourned). Set out at
the end of the Circular is a notice convening the General Meeting.
The General Meeting will be held at the offices of Daniel Stewart
& Company Plc, Becket House, 36 Old Jewry, London EC2R 8DD.
Resolution no.1 which will be proposed as an ordinary
resolution, provides for the approval of the Disposal on the terms
set out in the Circular and for the Board or a committee of the
Board to be authorised to make non-material amendments, waivers or
variations and do all such other things as in each case they
consider necessary, desirable or expedient in connection with the
Disposal. This Resolution is not conditional on any other
Resolution being passed.
The Change of Name Resolution, which will be proposed as a
special resolution, provides for the name of the Company to be
changed to BioSeek plc. The Change of Name Resolution is
conditional on Resolution no.1 being passed.
The Cancellation Resolution, which will be proposed as a special
resolution, provides for approval of the Cancellation. The
Cancellation Resolution is not conditional on any other Resolution
being passed.
Shareholders should note that if the Disposal Resolutions are
not passed, it is likely that the Company will be placed
immediately into administration.
As explained in more detail in paragraph 3 of this Appendix I,
the amounts outstanding under any Promissory Note may be converted
into shares of the Company. Accordingly, resolutions will also be
proposed at the General Meeting to:
(a) authorise the Directors under section 551 of the Act to
allot shares up to a maximum of GBP537,300 in connection with the
Promissory Note. This will give the Directors authority to allot up
to 10,746,000 Ordinary Shares (representing approximately 9.05 per
cent. of the existing issued ordinary share capital of the Company
as at 12 July 2012, being the latest practicable date prior to the
publication of the Circular). This Resolution will expire 60 months
after the date it is passed. This Resolution will be proposed as an
ordinary resolution and is not conditional on any other Resolution
being passed; and
(b) disapply the pre-emption rights provisions of section 561 of
the Act in respect of any allotments made pursuant to the above
Resolution. This authority will expire at the same time as the
authority conferred by the above Resolution. This Resolution will
be proposed as a special resolution and is conditional on the above
Resolution being passed.
If, following the Cancellation, the Company raises additional
funds through further issuances of equity or convertible debt
securities, existing Shareholders could suffer significant
dilution. Your attention is drawn to Part II (Risk Factors) of the
Circular.
A further Resolution will be proposed at the General Meeting to
permit the Company to communicate with Shareholders electronically
in accordance with the provisions of the Act. All Company notices,
documents and other information (Shareholder Information) can be
provided to Shareholders electronically, provided that they agree
to this in general meeting and then provide an appropriate (e.g.
email) address. If Shareholders are invited to agree that the
Company may send or supply Shareholder Information by means of a
website, those who do not respond with 28 days are deemed to have
agreed to the Company communicating Shareholder Information to them
by means of a website. Where Shareholders agree (or are deemed to
have agreed) to communication of Shareholder Information by means
of a website, Shareholders must be notified of the availability of
the relevant document or information on the website, the address of
the website, the place on the website where it may be accessed and
how to access the document or information. This information will be
provided to Shareholders by post or by email (if an email address
has been provided for this purpose). This Resolution will be
proposed as an ordinary resolution and is not conditional on any
other Resolution being passed.
The full text of the Resolutions is set out in the notice
convening the General Meeting at the end of the Circular.
The annual general meeting of the Company, which was convened on
26 June 2012, was adjourned and will now take place at 10.30 a.m.
on 30 July 2012 at the offices of Daniel Stewart & Company Plc,
Becket House, 36 Old Jewry, London EC2R 8DD. Notice of the
adjournment of the Annual General Meeting is set out at the end of
the Circular.
Shareholders should note that all the Resolutions (save for the
Resolution permitting electronic communications and the
Cancellation Resolution) are required to be passed in order for the
Disposal to proceed in accordance with the terms and conditions of
the Disposal Agreement.
14. Irrevocable undertakings
14.1. The Company has received irrevocable undertakings from the
following Director Shareholders, to vote in favour of all of the
Resolutions:
Number of Percentage of
Ordinary Shares issued
Director Shareholder Ordinary Shares
Jack Davis 1,556,216 1.31
Jill Force 110,000 0.09
Robert Salisbury 50,000 0.04
Total 1,716,216 1.44
14.2. The Company has received irrevocable undertakings from the
following Shareholders to vote in favour of all of the Resolutions
except for Resolutions no.3 and no.6 (being the Resolution which if
approved would allow the Company to communicate with Shareholders
electronically and the Change of Name Resolution) set out in the
notice of General Meeting:
Number of Percentage of
Ordinary Shares issued
Shareholder Ordinary Shares
Oxford Bioscience Partners 26,570,325 22.38
Chrysalis Ventures II LP 15,735,457 13.25
Hale Fund I LLC 6,343,089 5.34
Arboretum Ventures LLC 4,903,676 4.13
Fort Washington Private Equity
Investors II LP 4,846,346 4.08
Amherst Fund LLC 525,000 0.44
Total 58,923,893 49.65
15. Action to be taken
You will find enclosed with the Circular a Form of Proxy for use
at the General Meeting or at any adjournment thereof. Whether or
not you propose to attend the General Meeting in person, it is
important that you complete and sign the enclosed Form of Proxy in
accordance with the instructions printed thereon and return it to
the Company's Registrars, Capita Registrars at PXS, 34 Beckenham
Road, Beckenham, Kent BR3 4TU as soon as possible and, in any
event, so as to be received not later than 11 a.m. on 26 July 2012.
The completion and return of a Form of Proxy will not preclude you
from attending the General Meeting in person and voting in person,
if you so wish.
If you hold Ordinary Shares in CREST, you may appoint a proxy by
completing and transmitting a CREST Proxy Instruction to Capita
Registrars (CREST participant ID RA10), so that it is received by
no later than 11 a.m. on 26 July 2012. The completion and return of
a CREST Proxy Instruction will not preclude you from attending and
voting in person at the General Meeting or any adjournment thereof,
if you so wish and are so entitled.
Alternatively you can vote online by visiting
www.capitashareportal.com as soon as possible but in any event not
later than 11 a.m. on 26 July 2012. Voting electronically will not
preclude you from attending and voting in person at the General
Meeting or any adjournment thereof, if you so wish and are so
entitled.
16. Further information
Your attention is drawn to the further information contained in
Parts II to VII of the Circular and in particular, to the Risk
Factors in Part II of the Circular. You are advised to read the
whole of the Circular and not to rely solely on the information
contained in this letter.
17. Working Capital Statement
In the opinion of the Company, the Continuing Group does not
have sufficient working capital for its present requirements, being
the next 12 months from the date of the Circular.
Immediately on Completion, the Continuing Group will have a cash
balance of approximately USD11,024,000, including the proceeds from
the Disposal of USD9,000,000. Against this are immediate
liabilities of approximately USD11,156,000, being the Secured Debt
of approximately USD9,067,000 (which will be paid on Completion),
outstanding professional fees relating to the Disposal of
approximately USD1,128,000 and other creditors of approximately
USD961,000. Thus there is an immediate funding requirement of
approximately USD132,000.
In the next 12 months from the date of the Circular the
Continuing Group has a maximum funding shortfall of approximately
USD618,000 which falls in September 2012.
If the Cancellation Resolution is not passed, the Continuing
Group will have an additional annual working capital requirement of
approximately USD1,043,000 which represents the annual costs of
maintaining the listing (further details of which are set out in
paragraph 10 of this Appendix I), the effect of which in the
current year would be to increase this maximum working capital
requirement by approximately USD175,000 to an estimated USD793,000
in September 2012.
The Continuing Group will not be in a position, following
Completion, to settle all its liabilities as they fall due and is
dependent on the forbearance of some its major creditors to
continue trading. The Board is in advanced discussions with certain
of the professional advisers to defer USD770,000 of professional
fees until either the Continuing Group receives a tax refund of
approximately USD1,100,000, which is due to be received in April
2013, or until BioSeek is either refinanced or sold. Whilst the
Board is confident that it can reach the necessary agreement with
its professional advisers, there can be no guarantee that this will
be the case and as at the date of the Circular there are no legally
binding agreements in place. In the event that the Company cannot
reach an agreement to defer a minimum of approximately USD618,000
of professional fees, it is likely that the Company will be placed
into administration.
It should be noted that there can be no certainty that the
expected tax refund will be received in April 2013 or that any of
the existing liabilities can be deferred and your attention is
therefore drawn to Part II (Risk Factors) of the Circular.
The Board is also considering the possibility of a fundraising,
through either debt or equity, or a disposal of BioSeek or the
BioSeek Business. However, without a deferment of certain
creditors, the Board believes that it is unlikely that there will
be sufficient time for these options to be successfully concluded.
Furthermore, the Board believes that there are limited funding
options available to the Continuing Group in the UK, and that
potential US funders would have a preference for investing in an
unlisted group which does not have the costs associated with
maintaining a listing. Therefore, whilst the Board cannot be
certain that it will be able to raise funds even if the USD770,000
is deferred, it believes that it is more likely to be able to do so
if the Cancellation Resolution is approved by Shareholders. In the
event that a buyer is found for BioSeek or the BioSeek Business, it
is the Board's intention to wind up the remaining group and
distribute any surplus funds to Shareholders.
In summary, if the Disposal Resolutions are not passed, it is
likely that the Company will be placed immediately into
administration. If the Disposal Resolutions are passed, in order to
avoid being placed into administration the Continuing Group will
need to defer certain liabilities on Completion to provide time
either to:
1. trade through until the earlier of the tax refund is
received, which is expected in April 2013, or until such time as
the Continuing Group is generating sufficient cash to repay such
liabilities;
2. raise funds; or
3. dispose of BioSeek or the BioSeek Business.
In the event that a minimum of approximately USD618,000 of
liabilities and the estimated USD175,000 of pro rata listing costs
(in the event of the Cancellation Resolution not being passed) can
be deferred until April 2013, the Continuing Group expects to be
able to settle its liabilities from its operational cash flows.
Your attention is drawn to paragraph 18 of the Circular and this
Appendix I which contains the recommendation from the Board and the
importance of the vote.
For further implications of the Disposal and/or the Cancellation
not being approved by Shareholders or the action plan outlined
above being unsuccessful you are referred to Part II (Risk Factors)
of the Circular.
18. Recommendation
The Board considers the Proposals set out in the Circular to be
in the best interests of the Company and Shareholders as a
whole.
Accordingly, the Board unanimously recommends that Shareholders
vote in favour of the Resolutions set out in the notice of General
Meeting, as the Directors have irrevocably committed to do in
respect of their own beneficial holdings of Ordinary Shares which
amount to 1,716,216 Ordinary Shares, representing approximately
1.44 per cent. of the existing issued ordinary share capital of the
Company as at 12 July 2012, being the latest practicable date prior
to the publication of the Circular.
In addition the Company has received irrevocable undertakings to
vote in favour of all of the Resolutions except for Resolutions
no.3 and no.6 (being the Resolution which if approved would allow
the Company to communicate with Shareholders electronically and the
Change of Name Resolution) set out in the notice of General
Meeting, which amount to 58,923,893 Ordinary Shares, representing
approximately 49.65 per cent. of the existing issued ordinary share
capital of the Company as at 12 July 2012, being the latest
practicable date prior to the publication of the Circular.
Shareholders should note that if the Disposal Resolutions are
not passed, it is likely that the Company will be placed
immediately into administration.
APPENDIX II
UNAUDITED FINANCIAL INFORMATION OF THE HUMAN TISSUE BUSINESS
The following unaudited financial information relating to the
Company's Human Tissue Business, which has been prepared under
IFRS, has been extracted without material adjustment from the
consolidation schedules used in preparing the audited consolidated
financial statements of the Group for the years ended 31 December
2011, 31 December 2010 and 31 December 2009.
The extracted financial information relating to the Company's
Human Tissue Business has not been audited and has not been
reported on by an accountant. The unaudited financial information
contained in Part III (Unaudited Financial Information of the Human
Tissue Business) of the Circular and this Appendix II does not
constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006. The consolidated statutory accounts for the
Company in respect of the financial year ended 31 December 2011
will be, and in respect of the financial years ended 31 December
2010 and 31 December 2009 have been, delivered to the Registrar of
Companies. The auditors' reports in respect of the consolidated
statutory accounts for the Company for each of these three
financial periods were unqualified and did not contain statements
under section 498(2) or (3) of the Companies Act 2006.
Shareholders should read the whole of the Circular and not rely
solely on the summarised unaudited financial information contained
in Part III (Unaudited Financial Information of the Human Tissue
Business) of the Circular and this Appendix II.
Income statement for each of the years ended 31 December 2011,
31 December 2010 and 31 December 2009:
Year ended 31 December
-------------------------------
2011 2010 2009
--------- --------- ---------
USD'000 USD'000 USD'000
--------- --------- ---------
Revenue 15,463 15,025 18,706
Cost of sales (8,154) (7,128) (7,894)
--------- --------- ---------
Gross profit 7,309 7,897 10,812
--------- --------- ---------
Research and development costs (1,120) (1,118) (478)
Selling and distribution costs (2,780) (3,524) (3,661)
* Normal operations (5,091) (5,617) (6,735)
* Exceptional items (3,400) (450) (1,491)
--------- --------- ---------
Total general and administrative
expenses (8,491) (6,067) (8,226)
--------- --------- ---------
Total operating expenses (12,391) (10,709) (12,365)
Operating loss (5,082) (2,812) (1,553)
Interest income 78 3 49
Interest expense (267) (53) (49)
Foreign exchange income / (expense) 165 109 (374)
--------- --------- ---------
Total finance income / (expense) (24) 59 (374)
Loss before tax (5,106) (2,753) (1,927)
--------- --------- ---------
Taxation (695) (32) 296
--------- --------- ---------
Loss for the financial year attributable
to owners of the parent (5,801) (2,785) (1,631)
--------- --------- ---------
Net asset statement as at 31 December 2011:
Year ended
31 December
Note 2011
USD'000
Assets
Non-current assets
Intangible assets 1 1,293
Property, plant and equipment 470
Trade and other receivables 90
------------
1,853
Current assets
Inventory 2 8,656
Trade and other receivables 4,425
Cash and cash equivalents -
------------
13,081
Total assets 14,934
Liabilities
Current liabilities
Trade and other payables (3,950)
Total liabilities (3,950)
Net assets 10,984
============
Notes:
1. Intangible assets of USD1,293,000 are recorded at historic
cost less accumulated amortisation in the financial information of
the Human Tissue Business. In preparing the Group's consolidated
financial information for the year ended 31 December 2011, the
Directors applied an impairment charge of USD1,293,000 to the
intangible assets of the Human Tissue Business in order to reduce
their carrying value in the Group's consolidated financial
information to their net recoverable amount on a disposal of the
Human Tissue Business by the Group, being USDNil.
2. Inventory of USD8,656,000 is recorded at the lower of cost
and net realisable value in the financial information of the Human
Tissue Business as at 31 December 2011. In preparing the Group's
consolidated financial information at the same date, the Directors
applied an impairment charge of USD2,107,000 to inventory held in
the Human Tissue Business in order to reduce its carrying value in
the Group's consolidated financial information to its net
realisable value on a disposal of the Human Tissue Business by the
Group, being USD6,549,000.
APPENDIX III
UNAUDITED PRO FORMA STATEMENTS OF NET ASSETS AND EARNINGS
Set out below is an unaudited pro forma statement of net assets
of the Continuing Group as at 31 December 2011 and an unaudited pro
forma statement of earnings for the year ended 31 December 2011
(together the "Pro Forma Financial Information"). The Pro Forma
Financial Information has been prepared on the basis set out in the
notes below to illustrate the effect of the Disposal on the
consolidated net assets and earnings of the Continuing Group had
the Disposal occurred on 31 December 2011. It has been prepared for
illustrative purposes only. Because of its nature, the Pro Forma
Financial Information addresses a hypothetical situation and,
therefore, does not represent the Continuing Group's actual
financial position or results. It is based on the consolidation
schedules used in preparing the audited consolidated balance sheet
and income statement of the Company and the unaudited financial
information of the Human Tissue Business as at 31 December 2011 and
the year ended 31 December 2011, which in the case of the Human
Tissue Business is reproduced in Part III (Unaudited Financial
Information of the Human Tissue Business) of the Circular and
Appendix II above.
Shareholders should read the whole of the Circular and not rely
solely on the summarised financial information contained in Part IV
(Unaudited Pro Forma Statements of Net Assets and Earnings) of the
Circular and this Appendix III.
The report on the unaudited pro forma statements of net assets
and earnings is set out in Part V (Report on the Unaudited Pro
Forma Statements of Net Assets and Earnings) of the Circular.
Unaudited pro forma statement of net assets
Adjustments
Pro forma
Group net net assets
assets as for the
at 31 December Human Tissue Disposal Continuing
2011 Business adjustments Group
(Note 1) (Note 2) (Note 3) (Note 4)
---------------- ------------- ------------- ------------
USD'000 USD'000 USD'000 USD'000
Assets
Non-current assets
Intangible assets 3,305 (1,293) 1,293 3,305
Property, plant and equipment 2,959 (470) - 2,489
Deferred tax assets 4,360 - - 4,360
Trade and other receivables 90 (90) - -
---------------- ------------- ------------- ------------
10,714 (1,853) 1,293 10,154
Current assets
Biobank inventory 6,549 (8,656) 2,107 -
Trade and other receivables 6,130 (4,425) - 1,705
Cash and cash equivalents 2,978 - (19) 2,959
---------------- ------------- ------------- ------------
15,657 (13,081) 2,088 4,664
Total assets 26,371 (14,934) 3,381 14,818
Liabilities
Current liabilities
Trade and other payables (6,857) 3,950 (1,128) (4,035)
Income tax payable (1,307) - - (1,307)
Other financial liabilities
-
Finance leases (5) - - (5)
Current debt (2,428) - 2,428 -
Amounts due to former shareholders
of BioSeek (6,591) - 6,591 -
Warrants (12) - - (12)
---------------- ------------- ------------- ------------
(17,200) 3,950 7,891 (5,359)
Non-current liabilities
Deferred tax liabilities (179) - - (179)
Other payables (1,778) - - (1,778)
---------------- ------------- ------------- ------------
(1,957) - - (1,957)
Total liabilities (19,157) 3,950 7,891 (7,316)
Net assets 7,214 (10,984) 11,272 7,502
================ ============= ============= ============
Unaudited pro forma statement of earnings
Adjustments
---------------------------------------------
Group earnings Pro forma
for the year earnings
ended for the
31 December Human Tissue Continuing
2011 Business Group
(Note 1) (Note 2) (Note 4)
--------------- -------------- ------------
USD'000 USD'000 USD'000
Revenue 24,091 (15,463) 8,628
Cost of sales (11,233) 8,154 (3,079)
--------------- -------------- ------------
Gross profit 12,858 (7,309) 5,549
Research and development costs (1,432) 1,120 (312)
Selling and distribution costs (3,412) 2,780 (632)
* Normal operations (7,819) 5,091 (2,728)
* Exceptional items (4,733) 3,400 (1,333)
--------------- -------------- ------------
Total general and administrative
expenses (12,552) 8,491 (4,061)
--------------- -------------- ------------
Total operating expenses (17,396) 12,391 (5,005)
Operating (loss)/profit (4,538) 5,082 544
Interest income - normal operations 78 (78) -
Interest expense - normal operations (716) 267 (449)
Interest expense - exceptional
items (1,591) - (1,591)
Foreign exchange income / (expense) 166 (165) 1
--------------- -------------- ------------
Total finance expenses (2,063) 24 (2,039)
Loss before tax (6,601) 5,106 (1,495)
Taxation (1,627) 695 (932)
--------------- -------------- ------------
Loss for the financial year attributable
to owners of the parent (8,228) 5,801 (2,427)
=============== ============== ============
Notes:
1. The financial information relating to the Group has been
extracted without material adjustment from the audited financial
statements of the Group as at 31 December 2011.
2. The unaudited financial information relating to the Company's
Human Tissue Business has been extracted without material
adjustment from the unaudited financial information of the
Company's Human Tissue Business as set out in Part III (Unaudited
Financial Information of the Human Tissue Business) of the Circular
and Appendix II above. To the extent that the adjustments to the
Group earnings relate to the sale of the Human Tissue Business,
these adjustments will have a continuing impact on the consolidated
profit and loss of the Continuing Group.
3. The Company has agreed to sell the Human Tissue Business for
a consideration of USD9,000,000. The Disposal adjustments consist
of the following items:
a. recognition of the proceeds of USD9,000,000 cash;
b. estimated outstanding transaction expenses relating to the
Disposal of USD1,128,000 recorded against cash;
c. the repayment in full of the debt owed to SVB as at 31 December 2011 being USD2,428,000;
d. the repayment in full of the BioSeek Loan Notes which
amounted to USD6,591,000 as at 31 December 2011;
e. the reversal of the impairment charge of USD1,293,000
recorded in the Group's consolidated financial statements for the
year ended 31 December 2011. The impairment was initially allocated
against goodwill (USD974,000) and other intangible assets
(USD319,000) associated with the relevant cash generating units in
the Human Tissue Business effectively reducing their carrying value
to USDNil. The adjustment of USD1,293,000 is required to offset the
carrying value of intangible assets included in Part III of the
Circular and Appendix II above. Following the adjustments, the
unaudited pro forma balance of USD3,305,000 relates to intangible
assets of the Continuing Group only;
f. the reversal of the impairment charge of USD2,107,000
recorded in the Group's consolidated financial statements for the
year ended 31 December 2011. Included in Part III of the Circular
and Appendix II above, inventory is stated at USD8,656,000. This
balance is gross of the USD2,107,000 impairment charge applied to
the inventory on consolidation of the Group's financial
information. The reversal of the impairment charge, together with
the carrying value of the inventory as stated in Part III of the
Circular and Appendix II above, cancels out the impaired carrying
value of the inventory in the Group's consolidated financial
statements, resulting in an unaudited pro forma balance of USDNil.
The Continuing Group had no inventory as at 31 December 2011;
g. the net cash outflow of USD19,000 consists of the
USD9,000,000 (Note 3.a.) consideration, less the payments of
USD2,428,000 of SVB Debt and USD6,591,000 of BioSeek Loan
Notes.
4. The unaudited pro forma statements of net assets and earnings
does not reflect any changes in the trading position of the Group
or any other changes arising from other transactions, or payment of
other creditors of USD961,000 other than those outlined in the
above notes, since 31 December 2011.
5. The debt balances removed as adjustments (Note 3.c. and Note
3.d.) were balances as at 31 December 2011. The projected debt
balances as at 20 July 2012 are as stated in paragraph 4 of Part I
of the Circular and Appendix I above.
APPENDIX IV
DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise.
$ or USD US dollars
Act the Companies Act 2006
Annual General Meeting the adjourned annual general meeting
of the Company to be held at the offices
of Daniel Stewart & Company Plc, Becket
House, 36 Old Jewry, London EC2R 8DD
at 10.30 a.m. on 30 July 2012
Asterand UK Asterand UK Limited, a private limited
company, incorporated and registered
in England (registered number 3113041)
Asterand US Asterand, Inc., a Delaware corporation
(organisational number 3223748)
BioSeek BioSeek, LLC, a California limited
liability company(organisational number
200931710007)
BioSeek Acquisition the acquisition of the BioSeek Business
by the Company and certain of its
affiliates pursuant to an agreement
and plan of merger dated 17 November
2009
BioSeek Business the business of applying predictive
human biology to drug discovery utilising
the products and services of BioMAP(R)
BioSeek Loan Notes the subordinated secured promissory
notes issued by the Company to the
BioSeek Loan Note Holders dated 22
July 2011 amounting to approximately
USD7,017,000 as at 20 July 2012
BioSeek Loan Note Holders the holders of the BioSeek Loan Notes
BioSeek Shareholders the shareholders of BioSeek immediately
prior to the completion of the BioSeek
Acquisition
Board the board of Directors of the Company
from time to time
Buyers the UK Buyer and the US Buyer
Buying Group Stemgent and the Buyers
Cancellation the proposed cancellation of the listing
of the Ordinary Shares on the Official
List and the admission to trading
of the Ordinary Shares on the Main
Market of the London Stock Exchange
Cancellation Resolution resolution no. 4 set out in the notice
of General Meeting set out at the
end of the Circular
Change of Control (a) one or more transfers of or transactions
(including, without limitation, a
merger or consolidation) involving
BioSeek in which the members of BioSeek,
immediately prior to the first such
transfer or transaction do not own
more than fifty per cent. of the outstanding
voting power (assuming conversion
of all convertible securities and
the exercise of all outstanding options)
of the surviving or successor entity
participating in such transfer or
transaction; or (b) the sale or exclusive
licensing of all or substantially
all the assets or intellectual property
of BioSeek.
Change of Name Resolution resolution no. 6 set out in the notice
of General Meeting set out at the
end of the Circular
Company Asterand plc, a public limited company,
incorporated and registered in England
(registered number 3355618)
Completion the completion of the Disposal in
accordance with the terms of the Disposal
Agreement
Continuing Group the Group following the Disposal and
repayment of the Secured Debt
CREST the relevant system (as defined in
the Regulations) in respect of which
Euroclear is the operator (as defined
in the Regulations)
CREST Proxy Instruction the form of appointment of proxy to
vote through the Euroclear system
Deferred Consideration the contingent payment of USD8,523,980
required to have been made by the
Company to the BioSeek Shareholders
pursuant to the BioSeek Acquisition
Directors the existing Directors of the Company
whose names are set out on page 6
of the Circular
Disclosure and Transparency the disclosure rules and transparency
Rules rules made by the FSA pursuant to
Part VI of the Financial Services
and Markets Act 2000, as revised from
time to time
Disposal the proposed disposal of the assets
of the Human Tissue Business pursuant
to the Disposal Agreement
Disposal Agreement means the conditional asset purchase
agreement dated 10 June 2012 and made
between the Selling Group and the
Buying Group
Disposal Resolutions resolution no.1, resolution no.2,
resolution no.5 and resolution no.6
set out in the notice of General Meeting
set out at the end of the Circular
Disposal Side Letter as defined in paragraph 3 of Part
I of the Circular and of Appendix
I of this announcement
Euroclear Euroclear UK & Ireland Limited, a
company incorporated in England and
Wales and the operator of CREST
Existing Cash Resources the estimated existing cash resources
of the Continuing Group as at 20 July
2012 being approximately USD2,024,000
Form of Proxy the form of proxy for use at the General
Meeting which accompanies the Circular
FSA the UK Financial Services Authority
General Meeting the general meeting of the Company
convened for the purpose of considering
the Resolutions to be held on 30 July
2012 (or any adjournment of it), notice
of which is set out at the end of
the Circular
Group the Company and each of its subsidiary
undertakings (within the meaning of
the Act) at the date of the Circular
Guarantee as defined in paragraph 7 of Part
VI of the Circular
Human Tissue Business the Human Tissue Products Business
Unit and the Human Tissue Services
Business Unit
Human Tissue Products Business the human tissue products business
Unit unit of the Sellers, including, without
limitation, the products XpressBANK(TM)
and ProCURE(TM)
Human Tissue Services Business the human tissue services business
Unit unit of the Sellers, including, without
limitation, the services offered under
the service mark PhaseZERO(TM)
Listing Rules the listing rules of the UKLA under
section 73A of the Financial Services
and Markets Act 2000
London Stock Exchange London Stock Exchange Plc
Main Market the London Stock Exchange's market
for listed securities
Model Code the model code on directors' dealings
in securities, as set out in the Appendix
to Chapter 9 of the Listing Rules
Official List the list maintained by the Financial
Services Authority in accordance with
section 74(1) of the Financial Services
and Markets Act 2000
Ordinary Shares ordinary shares of 5 pence each in
the capital of the Company
Promissory Note as defined in paragraph 3 of Part
I of the Circular and Appendix I of
this announcement
Proposals the proposals as described in the
Circular
Qualified Financing the sale by any of the Company, Asterand
US or BioSeek of their equity securities
in a single transaction or a series
of related transactions for an aggregate
gross purchase price paid to such
party of at least USD5,000,000
Regulations the Uncertificated Securities Regulations
2001 (SI 2001 No. 01/3755), as amended
Resolutions the resolutions to be proposed at
the General Meeting, which are set
out in the notice of General Meeting
set out at the end of the Circular
Secured Debt the sum, in aggregate, owed to SVB
and the BioSeek Loan Note Holders,
amounting to approximately USD9,067,000
as at 20 July 2012, in respect of
which notices of default were received
by the Company in October 2011
Secured Lenders SVB and the BioSeek Loan Note Holders
Security and Contingent as defined in paragraph 8 of Part
Escrow Agreement VI of the Circular
Sellers Asterand UK and Asterand US
Selling Group the Company and the Sellers
Shareholders holders of Ordinary Shares
Silicon Valley Bank or SVB Silicon Valley Bank, a California
corporation, being a member of the
SVB Financial Group
Stemgent Stemgent, Inc., a Delaware corporation
(organisational number 4438247)
SVB Debt all debts owed to SVB amounting to
approximately USD2,050,000 as at 20
July 2012
Takeover Code the City Code on Takeovers and Mergers
Takeover Panel the Panel on Takeovers and Mergers
UK or United Kingdom the United Kingdom of Great Britain
and Northern Ireland
UK Buyer Asterand UK Acquisition Limited, a
private limited company, incorporated
and registered in England (registered
number 8092729) and a wholly owned
subsidiary of Stemgent
UK Corporate Governance the UK Corporate Governance Code issued
Code by the Financial Reporting Council
UKLA the Financial Services Authority acting
in its capacity as the competent authority
for the purposes of Part VI of the
Financial Services and Markets Act
2000
US or United States the United States of America
US Buyer Asterand US Acquisition Corporation,
a Delaware corporation (organisational
number 5163312) and a wholly owned
subsidiary of Stemgent
This information is provided by RNS
The company news service from the London Stock Exchange
END
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