TIDMDDDD
RNS Number : 3747L
4d Pharma PLC
30 December 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED UNDER
THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON PUBLICATION OF
THIS ANNOUNCEMENT THIS INFORMATION IS NOW CONSIDERED IN THE PUBLIC
DOMAIN
4D pharma Announces an Update on Administration and Suspension
of Trading
Leeds, UK - December 30, 2022 - 4D pharma plc (AIM: DDDD) (in
administration), a pharmaceutical company leading the development
of Live Biotherapeutic products (LBPs), a novel class of drug
derived from the microbiome, today provides an update on
developments since the announcement of the suspension of its shares
from trading on the AIM market of the London Stock Exchange and the
appointment of David Pike and James Clark of Interpath Advisory as
joint administrators (the "Joint Administrators") on 24 June
2022.
The Joint Administrators are working with the Company's advisers
on proposals to rescue 4D pharma, exit administration and return
the Company to the control of its directors, with the intention of
lifting the suspension and restoring trading in the Company's
ordinary shares.
To that end, a circular is today being posted to the Company's
shareholders which contains a notice of General Meeting to be held
on 16 January 2023. The relevant sections of the circular are set
out in full below and a copy of the circular will be made available
on the Company's website in due course (
https://www.4dpharmaplc.com ).
"Introduction
On 24 June 2022, 4D pharma plc was placed into administration
and James Clark and David Pike of Interpath Advisory were appointed
as joint administrators to 4D pharma plc. Trading of the Company's
Ordinary Shares on AIM was suspended on the same day. The Company
was placed in administration by Oxford Finance who held
approximately $13,216,482 of secured debt against the Company's
assets. On 7 October 2022, this debt was acquired by Armistice, a
U.S. based specialist healthcare investor, with a view to
converting the debt into equity alongside an equity investment to
bring the Company out of administration.
As an intermediate step towards the Company looking to exit
administration and seeking the lifting of the suspension of the
Company's Ordinary Shares on AIM, the Financing Package was offered
by Armistice (with no input from the Joint Administrators). The
equity component of the Financing Package is subject to Shareholder
approval. Under the terms of the Financing Package, the Company and
Armistice have agreed an amendment to the Loan Agreement which
allowed a further $1,600,000 to be made available to the Company, a
new Subordinated Loan Agreement (under which Duncan Peyton and Alex
Stevenson act as lenders to the Company alongside Armistice) which
allows an additional $600,000 to be made available to the Company
and an equity fundraising totaling up to $15,000,000. Additionally,
amendments have been made to the Loan Agreement which would allow
outstanding amounts due to be convertible into Ordinary Shares
and/or Pre-Payment Warrants (subject to Shareholder approval).
In order to access the Financing Package, the Company is
required to convene and hold the General Meeting at which
resolutions shall be put to Shareholders to obtain the requisite
shareholder authorities and waivers to give the Board authority to
allot the Ordinary Shares, Pre-Payment Warrants and Ordinary
Warrants contemplated by the Financing Package.
The purpose of this Document is to explain the background to and
reasons for the Financing Package and to give the Shareholders
notice of the General Meeting, at which the Resolutions will be put
to Shareholders. For the avoidance of doubt, the Joint
Administrators make no representations as to the likelihood of
success of the Fundraising Package or Fundraising, or
recommendations as to which voting intention you may wish to take
at such General Meeting. Similarly, the Joint Administrators make
no representations as to the likelihood that the suspension of the
Ordinary Shares on AIM will be lifted.
If the Resolutions are not passed by the close of business on 20
January 2023, the conditions underlying the Financing Package will
not be met and the Financing Package will not be secured by the
Company. In the absence of the Fundraising, the Company has no
other viable options and as no alternative sources of funding are
available, the consequence of the Fundraising not being consummated
would be that the Company would have to cease trading, and proceed
to an insolvent liquidation of the Company yielding a zero (or a
near zero) return to Shareholders.
Background to and reasons for the Fundraising
To exit administration, the Company will be required to pay down
or otherwise settle all secured and unsecured creditors (the cost
of this is estimated to be GBP2,140,189 as at the date of this
Document), excluding those under the Loan Agreement and
Subordinated Loan Agreement. The Company must also be able to show
that it has suf cient working capital to last for at least 12
months. The additional capital from the Fundraising will provide a
cash runway to enable the Company to continue to conduct its
research and clinical activities as well as optimise the prospect
of strategic partnerships across the key technology areas of the
Micro Rx platform, in house manufacturing and clinical
pipeline.
This strategy of funding the internal development of selected
product candidates combined with the formation of strategic
partnerships to utilise the Company's enabling technology with the
MicroRx platform and manufacturing capability is intended to
balance the ongoing funding requirements for the Company by
maximizing the value of the overall product portfolio.
The $15 million equity component of the Fundraising is subject
to the Shareholders' approval of the Resolutions, the Company's
exit from administration and the lifting of the suspension of the
Ordinary Shares on AIM. The Resolutions will also allow for the
conversion of the existing secured indebtedness into equity.
As soon as practicable following passing of the Resolutions at
the General Meeting, the Joint Administrators intend to make an
application to the court to be listed for a hearing on an urgent
basis to approve the Company's exit from administration. Provided
the court approves the listing on an urgent basis, it is expected
that the hearing will be within approximately two weeks of passing
on the Resolutions. Should the court approve the exit from
administration, the Joint Administrators will vacate of ce (and the
Board of Directors will resume their full authority) following
receipt and nalisation of the court order which would be expected
to be within two days of the court hearing.
Shortly after the Company's entry into administration, the Joint
Administrators and the Directors engaged in extensive negotiations
with a range of potential purchasers of the Company's business
and/or assets. Despite extensive due diligence and negotiation by
the potential bidders (including between the respective parties'
legal advisers), all of the bids were withdrawn due to a number of
reasons including timing, strategic t and complexity of the
transaction surrounding administration.
In the absence of the Fundraising, the Company has no other
viable options and as no alternative sources of funding are
available, the consequence of the Fundraising not being consummated
would be that the Company would have to cease trading, and proceed
to an insolvent liquidation of the Company yielding a zero (or a
near zero) return to Shareholders.
Use of Proceeds
The net proceeds from the Fundraising will be used rstly to pay
the expenses of the ongoing administration, including paying off
its outstanding unsecured creditors positions (circa GBP2,140,189)
and exiting administration, and secondly for funding the Company's
research and clinical activities and for general corporate purposes
as outlined in section 2 above.
Details of the Loan Agreement, Subordinated Loan Agreement,
Subscription Agreement, Pre-Payment Warrants and Ordinary
Warrants
Loan Agreement
The Loan Agreement was amended on 3 December 2022 by way of an
amendment letter, and further amended on 29 December 2022 by way of
a further amendment letter (the "Amendment Letters").
Under the terms of the Loan Agreement, the lender (originally
Oxford Finance, now Armistice) provides the Company with term loans
of $12,500,000 (further facilities provided for under the Loan
Agreement of $7,500,000 and $10,000,000 were never drawn). This was
amended by the Amendment Letters, which replaced the undrawn term
loan facilities of $7,500,000 and $10,000,000 with a single term
loan of $1,600,000 (each outstanding term loan being a "Loan",
together the "Loans"). The principal amount outstanding under the
Loan Agreement as at 29 December 2022 (being the last practicable
date prior to the publication of this Document) is $14,100,000.
The terms of the Loan Agreement were amended by the Amendment
Letters so that additional conditions precedent must be satis ed
prior to the second loan of $1,600,000 being drawn. Additionally
under the terms of the Loan Agreement (as amended by the Amendment
Letter) on the Ordinary Shares returning from suspension on AIM,
Armistice has the right to require that all or part of the amount
outstanding under the Loans be converted into Ordinary Shares at
GBP0.06 per Ordinary Share or Pre-Payment Warrants at GBP0.0575 per
Pre-Payment Warrant (and that two Ordinary Warrants be issued for
every Ordinary Share or Pre-Payment Warrant issued as part of the
conversion provisions under the Amendment Letters). Under the terms
of the Amendment Letters, interest under the Loan Agreement is not
payable until 31 March 2024 and the Loans will not amortise until
the Amortisation Date (which cannot be earlier than 31 March
2024).
If the Company completes a single raise of equity totaling
$15,000,000 or more by way of an issue of Ordinary Shares (but
excluding any amount raised pursuant to (i) an allotment of
Ordinary Shares pursuant to the Subscription Agreement and/or (ii)
an allotment of Ordinary Shares on the exercise subscription rights
of Pre-Payment Warrants or Ordinary Warrants) while amounts remain
outstanding under the Loan Agreement, Armistice shall be entitled
to require the Company to make an immediate repayment of 50 per
cent. of such amounts as remain outstanding (together with
applicable interest).
The right to serve a notice of conversion is conditional on the
passing of shareholder resolutions to give the Company the
requisite authorities to allot and issue the Ordinary Shares, the
Pre-Payment Warrants and the Ordinary Warrants. Only the Lender may
serve a notice requesting a conversion of the Loans into shares. If
having received the conversion notice the Company does not issue
the Ordinary Shares, Pre-Payment Warrants and Ordinary Warrants on
the conversion date then it must repay the Loans that are the
subject of the conversion notice.
If the full amount outstanding under the Loans were so
converted, Armistice would be entitled to 207,541,667 Ordinary
Shares and 415,083,334 Ordinary Warrants or 216,565,217 Pre-payment
Warrants and 433,130,434 Ordinary Warrants. This calculation
assumes that the total amount outstanding under the Loans is
$14,943,000 (including interest accrued up to the date of this
circular) and that the prices for the Ordinary Shares and
Pre-Payment Warrants are as follows: GBP0.06 per Ordinary Share and
GBP0.0575 per Pre-Payment Warrant.
Subordinated Loan Agreement
On 3 December 2022, the Company entered into a subordinated loan
agreement (the "Subordinated Loan Agreement") pursuant to which the
Company was granted access to the Subordinated Loan. The lenders in
connection with the Subordinated Loan are Armistice, Duncan Peyton
and Alex Stevenson. Each of Duncan Peyton and Alex Stevenson
committed to lend the Company $150,000 each, and Armistice
committed to lend the Company $300,000, in each case subject to ful
llment of certain conditions. If all of the Loans under the Loan
Agreement (as amended by the Amendment Letters) are subject to
conversion in accordance with the terms of the Amendment Letters
then the outstanding portion of the Subordinated Loan shall be
converted on the same basis.
Subscription Agreement
On 3 December 2022, the Company and Armistice entered into an
agreement, which was subsequently amended and restated on 29
December 2022 (the "Subscription Agreement"). Under the terms of
the Subscription Agreement, Armistice has agreed to invest up to
$15,000,000 for the purpose of subscribing for Ordinary Shares and
/ or Pre-Payment Warrants (the "Subscription").
The Subscription is subject to a number of conditions, including
the passing of the Resolutions.
Under the terms of the Subscription Agreement, Armistice has
agreed that it will subscribe for Ordinary Shares and Pre-Payment
Warrants as follows:
a. $6,000,000 on the second business day following Admission;
b. $3,000,000 on the 3rd business day following a written
request from the Company, which cannot be served earlier than the
60th day after the date of Admission;
c. $3,000,000 on the 3rd business day following a written
request from the Company, which cannot be served earlier than the
30th day following the previous drawdown request (provided that the
drawings under paragraphs (a) and (b) have been made); and
d. $3,000,000 on the 3rd business day following a written
request from the Company, which cannot be served earlier than the
30th day following the previous drawdown request (provided that the
drawings under paragraphs (a), (b) and (c) have been made).
For Ordinary Shares subscribed for under the Subscription
Agreement, Armistice has agreed to pay a price of GBP0.06 per
share. For Pre-Payment Warrants subscribed for under the
Subscription Agreement, Armistice has agreed to pay a price of
GBP0.0575 per warrant.
If the subscription obligations in the Subscription Agreement
oblige the Armistice to subscribe for Ordinary Shares representing
more than 9.9 per cent. of the enlarged issued share capital,
Armistice will instead subscribe for Pre-Payment Warrants.
Pre-Payment Warrants are exercisable at any time on payment of
GBP0.0025.
Armistice will be allotted two Ordinary Warrants, for every one
Ordinary Share or Pre-Payment Warrant that Armistice is allotted
pursuant to the Subscription Agreement. One of the Ordinary
Warrants so allotted shall entitle the holder to subscribe for one
Ordinary Share at an exercise price of GBP0.08, and the other shall
entitle the holder to subscribe for one Ordinary Share at an
exercise price of GBP0.10.
Pre-Payment Warrants
The Pre-Payment Warrants will be constituted by the Pre-Payment
Warrant Instrument.
Under the terms of the Pre-Payment Warrant Instrument, each
Pre-Payment Warrant is capable of being exercised at any time after
the date of grant until the Pre-Payment Warrant is exercised in
full, save that no Ordinary Shares will be issued pursuant to the
Pre-Payment Warrants which would result in any holder holding in
excess of 4.99 per cent. of the aggregate voting rights in the
Company as a result of the relevant exercise. This percentage limit
may be increased or decreased in accordance with the provisions of
the Pre- Payment Warrant Instrument up to a maximum of 9.99 per
cent. The Pre-Payment Warrant exercise price is GBP0.0025, subject
to certain adjustments.
The Pre-Payment Warrants will not be separately admitted to
trading on AIM, but the Ordinary Shares which will arise following
any valid exercise of Pre-Payment Warrants will be admitted to
trading as part of the Company's single class of shares admitted to
trading on AIM or the relevant exchange on which the Company's
shares are traded at the time the Pre-Payment Warrants are
exercised.
Ordinary Warrants
As part of the Financing Package two Ordinary Warrants shall be
allotted to Armistice in consideration for Armistice subscribing
for every Ordinary Share or Pre-Payment Warrant subscribed pursuant
to the Subscription Agreement or on conversion of the Loan or
Subordinated Loan. The Ordinary Warrants will be constituted by the
Ordinary Warrant Instrument.
Under the terms of the Ordinary Warrant Instrument, each
Ordinary Warrant is capable of being exercised at any time after
the date of grant until the fth anniversary of the date of issue of
the Ordinary Warrant, save that no Ordinary Shares will be issued
pursuant to the Ordinary Warrants which would result in any person
holding in excess of 4.99 per cent. of the aggregate voting rights
in the Company as a result of the relevant exercise. This
percentage limit may be increased or decreased in accordance with
the provisions of the Ordinary Warrant Instrument up to a maximum
of 9.99 per cent. 50 per cent. of the Ordinary Warrants so issued
shall have an exercise price of GBP0.08, and the other 50 per cent.
of the Ordinary Warrants so issued shall have an exercise price of
GBP0.10.
The Ordinary Warrants will not be separately admitted to trading
on AIM, but the Ordinary Shares which will arise following any
valid exercise of Ordinary Warrants will be admitted to trading as
part of the Company's single class of shares admitted to trading on
AIM or the relevant exchange on which the Company's shares are
traded at the time the Ordinary Warrants are exercised.
Information on Armistice
Armistice is a global, long/short, value-oriented and
event-driven hedge fund focused primarily on the health care and
consumer sectors. It invests predominantly in equities and can be
opportunistic across the capital structure. It seeks to maximize
the opportunity set of investment candidates allowing for the
selection of unique, concentrated bets to generate uncorrelated
returns. Armistice maintains signi cant position and portfolio
level hedges in an effort to mitigate basis and market risks.
Armistice views its strategy as the marriage of value and event and
aims to produce compelling risk-adjusted returns in all
markets.
Dilution
The Ordinary Shares to be allotted pursuant to the Fundraising
and the conversion of the Loan and Subordinated Loan will represent
70.65 per cent. of the Company's enlarged ordinary share
capital.
The Ordinary Shares to be allotted pursuant to the Fundraising,
conversion of the Loan and Subordinated Loan and exercise of all
Ordinary Warrants will represent 87.84 per cent. of the Company's
enlarged ordinary share capital.
The calculations in this section take into account interest
accrued on the Loan and Subordinated Loan up to the date of this
Document (where relevant) and assumes that all Pre-Payment Warrants
and Ordinary Warrants are exercised in full.
Business of the General Meeting
The Directors do not currently have suf cient authorisation to
allot the New Ordinary Shares, the Pre-Payment Warrants or the
Ordinary Warrants pursuant to the Fundraising, nor to allot the
Ordinary Shares, Pre-Payment Warrants and Ordinary Warrants
pursuant to the conversion of (or grant rights so to convert) the
principal and interest due under the Loan Agreement and
Subordinated Loan Agreement. Accordingly, the Board is seeking the
approval of Shareholders for authorisation to allot such Ordinary
Shares and Warrants and to disapply pre-emption rights in respect
of such allotments at the General Meeting.
Consequences of the Resolutions Failing to Pass
The Company's current access to cash is reliant on funding
advanced from Armistice. As is evident from the extensive sale
process conducted by the Joint Administrators, alternative means of
stabilising the capital structure of the Company and securing
further funding are not available.
In the present circumstances, the consequence of the Fundraising
not being consummated would be that the Company would have to cease
trading, and proceed to an insolvent liquidation of the Company
yielding a zero (or a near zero) return to Shareholders.
The Company's exit from administration is not possible without
suf cient commitments to the Company's funding requirements in
order for the Joint Administrators to conclude that the statutory
purpose of the Company's administration has been achieved.
Cognizant of that legal threshold, Armistice have presented the
Financing Package to the Company. The acceptance of the Financing
Package and any other matters to which the General Meeting as
proposed by the Notice seeks to authorise or discuss, is a
shareholder matter and the Joint Administrators put forward no
recommendations to the Shareholders as to the merits, economic
value or appropriateness of such options available to the
Company.
Additional information
Loan Agreement
The Loan Agreement was amended on 3 December 2022 by way of an
amendment letter, and further amended on 29 December 2022 by way of
a further amendment letter (the "Amendment Letters").
Under the terms of the Loan Agreement, the lender (originally
Oxford Finance Luxembourg S.A R.L, now Armistice) provides the
Company and its wholly owned subsidiaries 4D Pharma Research
Limited, 4D Pharma Cork Limited and 4D Pharma Delaware Inc with
term loans of $12,500,000 (further facilities provided for under
the Loan Agreement of $7,500,000 and $10,000,000 were never drawn).
The Loan Agreement was amended by the Amendment Letters, which
replaced the term loans of $7,500,000 and $10,000,000 with a single
term loan of $1,600,000 (each outstanding term loan being a "Loan",
together the "Loans"). Under the Loan Agreement, the Company
provides security to the lender in the form of collateral over the
shares of its subsidiaries, property owned by the Company and all
property and assets owned by its Scottish and Irish
subsidiaries.
Under the Loan Agreement the Company provides security to the
lender in the form of collateral over the shares of its
subsidiaries, assets owned by the Company and the Company's
Scottish, Delaware and Irish subsidiaries provide security over all
of their assets.
The Loans are to be used to fund the Company's working capital
requirements, although this purpose was amended by the Amendment
Letters which allows the Loan for $1,600,000 to also be used to pay
costs related to the Company's administration.
The terms of the Loan Agreement were amended by the Amendment
Letters so that additional conditions precedent must be satis ed
prior to the loan of $1,600,000 being drawn. These conditions
include that no major default is occurring (or would occur as a
result of the borrowing) and that an administration plan and
disbursement letter has been provided to the collateral agent
appointed by the Loan Agreement.
If the Company completes a single raise of equity totaling
$15,000,000 or more by way of an issue of Ordinary Shares (but
excluding any amount raised pursuant to (i) an allotment of
Ordinary Shares pursuant to the Subscription Agreement and/or (ii)
an allotment of Ordinary Shares on the exercise subscription rights
of the Pre-Payment Warrants or the Ordinary Warrants) while amounts
remain outstanding under the Loan Agreement, Armistice shall be
entitled to require the Company to make an immediate repayment of
50 per cent. of such amounts as remain outstanding (together with
applicable interest).
Additionally under the terms of the Loan Agreement (as amended
by the Amendment Letters) on the Ordinary Shares being re-listed to
AIM, Armistice has the right to require that all or part of the
amount outstanding under the Loans be converted into Ordinary
Shares or Pre-Payment Warrants (or a combination thereof). If such
an election is made, Armistice shall be entitled to be
allotted:
a. Ordinary Shares at an issue price of GBP0.06; or
b. Pre-Payment Warrants at a price of GBP0.0575 per Pre-Payment
Warrant, such Pre-Prepayment Warrants to have an exercise price of
GBP0.0025 per Ordinary Share; and
c. in either case, two Ordinary Warrants for every Ordinary
Share or Pre-Payment Warrant so issued, with 50 per cent. of such
Ordinary Warrants having an exercise price of GBP0.08, and the
other 50 per cent. of such Ordinary Warrants having an exercise
price of GBP0.10.
The right to serve a notice of conversion is conditional on the
passing of shareholder resolutions to give the Company the
requisite authorities to allot and issue the Ordinary Shares, the
Pre-Payment Warrants and the Ordinary Warrants. As at 28 December
2022 (being the last practicable date prior to the publication of
this Document) the amount outstanding under the Loan Agreement is
$14,943,000. Only the Lender may serve a notice requesting a
conversion of the Loans into Ordinary Shares or Pre-Payment
Warrants. If having received the conversion notice, the Company
does not issue the Ordinary Shares on the conversion date then it
must repay the Loans that are the subject of the conversion
notice.
If the full amount outstanding under the Loans were so converted
at a price of GBP0.06 per Ordinary Share or GBP0.0575 per
Pre-Payment Warrant, Armistice would be entitled to 207,541,667
Ordinary Shares and 415,083,334 Ordinary Warrants or 216,565,217
Pre-payment Warrants and 433,130,434 Ordinary Warrants. This
calculation assumes that the total amount outstanding under the
Loans is $14,943,000 (including interest) and an exchange rate of
US$1.20: GBP1.00.
Subordinated Loan Agreement
On 3 December 2022, the Company entered into the Subordinated
Loan Agreement pursuant to which the Company was granted access to
an unsecured and subordinated loan of $600,000. The lenders in
connection with the Subordinated Loan are Armistice, Duncan Peyton
and Alex Stevenson. Each of Duncan Peyton and Alex Stevenson
committed to lend the Company $150,000, and Armistice committed to
lend the Company $300,000.
The Subordinated Loan Agreement refers to the Loan Agreement,
with it being noted that no drawing may be made under the
Subordinated Loan Agreement until the Amendment Letters have been
signed and the Company has passed all requisite resolutions at a
general meeting of its shareholders to give the board of the
Company all necessary authorities and waivers to enable the
issuance of Ordinary Shares, Pre-Payment Warrants and Ordinary
Warrants in accordance with the Loan Agreement.
If all of the Loans under the Loan Agreement (as amended by the
Amendment Letters) are subject to conversion in accordance with the
terms of the Amendment Letters then the outstanding Subordinated
Loans shall be converted on the same basis.
The Subordinated Loan is non-amortising and is repayable 30 days
after the maturity date of the Loans under the Loan Agreement (as
amended by the Amendment Letters). Interest accrues on the same
basis and is payable at the same time as under the Loan Agreement
(as amended by the Amendment Letters).
The terms of the Subordinated Loan Agreement provide that the
Subordinated Loan is unsecured, does not bene t from any corporate
guarantees and is expressed to be subordinated to the Loans under
the Loan Agreement.
Subscription Agreement
Under the terms of the Subscription Agreement, Armistice has
agreed to invest up to $15,000,000 for the purpose of subscribing
for Ordinary Shares and / or Pre-Payment Warrants (the
"Subscription").
The Subscription is conditional upon:
a. The requite authorities being passed by the Company's
shareholders to give the board of the Company all necessary
authorities and waivers to enable the issuance of Ordinary Shares,
the Pre-Payment Warrants and the Ordinary Warrants in accordance
with the Subscription Agreement and the Loan Agreement;
b. The Company exiting administration by no later than 8.00 a.m.
(London time) on 14 February 2023;
c. Admission being effective by no later than 8.00 a.m. (London
time) on the business day falling two months following the exit
from administration; and
d. For each subscription other than the $6,000,000 funded on
Admission, no liquidator, receiver, administrative receiver,
administrator, compulsory manager or other similar of cer has been
appointed over the Company.
Under the terms of the Subscription Agreement, Armistice has
agreed that it will subscribe for Ordinary Shares and Pre-Payment
Warrants as follows:
a. $6,000,000 on the second business day following Admission;
b. $3,000,000 on the 3rd business day following a written
request from the Company, which cannot be served earlier than the
60th day after the date of Admission;
c. $3,000,000 on the 3rd business day following a written
request from the Company, which cannot be served earlier than the
30th day following the previous drawdown request (provided that the
drawings under paragraphs (a) and (b) have been made); and
d. $3,000,000 on the 3rd business day following a written
request from the Company, which cannot be served earlier than the
30th day following the previous drawdown request (provided that the
drawings under paragraphs (a), (b) and (c) have been made).
For Ordinary Shares subscribed for under the Subscription
Agreement, Armistice has agreed to pay a price of GBP0.06 per
Ordinary Share. For Pre-Payment Warrants subscribed for under the
Subscription Agreement, Armistice has agreed to pay a price of
GBP0.0575 per Pre-Payment Warrant.
If the subscription obligations in the Subscription Agreement
oblige Armistice to subscribe for Ordinary Shares which will result
in its shareholding representing more than 9.9 per cent. of the
enlarged issued share capital, Armistice will instead subscribe for
Pre-Payment Warrants.
Armistice will be allotted two Ordinary Warrants for every one
Ordinary Share or Pre-Payment Warrant that Armistice acquires
pursuant to the Subscription Agreement. One of the Ordinary
Warrants so allotted shall entitle the holder to subscribe for one
Ordinary Share at an exercise price of GBP0.08, and the other shall
entitle the holder to subscribe for one Ordinary Share at an
exercise price of GBP0.10.
Pre-Payment Warrants
Under the terms of the Pre-Payment Warrant Instrument, each
Pre-Payment Warrant is capable of being exercised at any time after
the date of grant until the Pre-Payment Warrant is exercised in
full, save that no Ordinary Shares will be issued on the exercise
of the Pre-Payment Warrants which would result in any holder
holding in excess of 4.99 per cent. of the aggregate voting rights
in the Company as a result of the relevant exercise. This
percentage limit may be increased or decreased by the holder in
accordance with the provisions of the Pre-Payment Warrant
Instrument up to a maximum of 9.99 per cent. Armistice will pay the
full exercise price of a Pre-Payment Warrant, less the sum of
GBP0.0025 (being the nominal value of an Ordinary Share) on the
allotment of the Pre-Payment Warrant. The Pre-Payment Warrant
exercise price is GBP0.0025 per Ordinary Share, subject to certain
adjustments (the "Exercise Price").
The Pre-Payment Warrant Instrument contains customary provisions
for adjustments to the Exercise Price and the number of Ordinary
Shares issuable upon exercise of the Pre-Payment Warrants in
certain circumstances, including if the following events occur:
a. If the Company, at any time while a Pre-Payment Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions on Ordinary Shares or any other
equity or equity equivalent securities payable in Ordinary Shares,
(ii) subdivides or consolidates its Ordinary Shares or (iii) issues
by reclassi cation of Ordinary Shares any shares of capital stock
of the Company.
b. If at any time the Company grants, issues or sells any
Ordinary Share Equivalents or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any
class of Ordinary Shares.
c. If, at any time while a Pre-Payment Warrant is outstanding,
there is a Fundamental Transaction, then Armistice shall have the
right to exercise the Pre-Payment Warrant concurrent with, or
following, the closing of the Fundamental Transaction and receive,
the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Ordinary
Shares then issuable upon exercise in full of such Pre-Payment
Warrant.
In certain circumstances, holders of Pre-Payment Warrants can
require that the Company or any successor to the Company pays (to
the extent lawful) to the holders, the value of the unexercised
portion of the Pre- Payment Warrants as at the date of the
Fundamental Transaction using the same type or form of
consideration (and in the same proportion) that is being offered
and paid to the holders of Ordinary Shares of the Company in
connection with the Fundamental Transaction. The value of the
Pre-Payment Warrants will be determined in accordance with a
Black-Scholes valuation provision.
The Pre-Payment Warrants may be exercised for cash but the
Pre-Payment Warrant Instrument also contains provisions for
cashless exercise of Pre-Payment Warrants. Under these provisions,
a holder may exercise Pre-Payment Warrants in respect of a number
of Ordinary Shares but only receive a lesser number of Ordinary
Shares having a market value equal to the difference between the
market value of the number of Ordinary Shares in respect of which
Pre-Payment Warrants are exercised and the Exercise Price payable
upon that exercise. On a cashless exercise, the holder of the
Pre-Payment Warrants may be required to pay up the aggregate
nominal value of the lesser number of Ordinary Shares that it
receives.
Ordinary Warrants
Under the terms of the Ordinary Warrant Instrument, each
Ordinary Warrant is capable of being exercised at any time after
the date of grant until the Ordinary Warrant is exercised in full,
save that no Ordinary Shares will be issued pursuant to the
Ordinary Warrants which would result in any person holding in
excess of 4.99 per cent. of the aggregate voting rights in the
Company as a result of the relevant exercise. This percentage limit
may be increased or decreased in accordance with the provisions of
the Ordinary Warrant Instrument up to a maximum of 9.99 per cent.
50 per cent. of the Ordinary Warrants issued shall have an exercise
price of GBP0.08, and the other 50 per cent. of the Ordinary
Warrants issued shall have an exercise price of GBP0.10 (in each
case, the "OW Exercise Price").
The Ordinary Warrant Instrument contains customary provisions
for adjustments to the OW Exercise Price and the number of Ordinary
Shares issuable upon exercise of the Ordinary Warrants in certain
circumstances, including if the following events occur:
a. If the Company, at any time while the Ordinary Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions on Ordinary Shares or any other
equity or equity equivalent securities payable in Ordinary Shares,
(ii) subdivides or consolidates its Ordinary Shares or (iii) issues
by reclassi cation of Ordinary Shares any shares of capital stock
of the Company.
b. If at any time the Company grants, issues or sells any
Ordinary Share Equivalents or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any
class of Ordinary Shares.
c. If, at any time while the Ordinary Warrant is outstanding
there is a Fundamental Transaction, then Armistice shall have the
right to exercise the Ordinary Warrant concurrent with, or
following, the closing of the Fundamental Transaction and receive,
the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Ordinary
Shares then issuable upon exercise in full of the Ordinary
Warrant.
d. If the Company, at any time while the Ordinary Warrant is
outstanding, sells, enters into an agreement to sell or grant any
option to purchase, or sells or grants any right to reprice, or
otherwise disposes of or issues (or announces any offer, sale,
grant or any option to purchase or other disposition) any Ordinary
Shares or Ordinary Share Equivalents, at an effective price per
share less than the OW Exercise Price then simultaneously with the
consummation of this transaction, the OW Effective Price shall be
reduced to this lower price.
In certain circumstances, holders of Ordinary Warrants can
require that the Company or any successor to the Company pays (to
the extent lawful) to the holders, the value of the unexercised
portion of the Ordinary Warrants as at the date of the Fundamental
Transaction using the same type or form of consideration (and in
the same proportion) that is being offered and paid to the holders
of Ordinary Shares of the Company in connection with the
Fundamental Transaction. The value of the Ordinary Warrants will be
determined in accordance with a Black-Scholes valuation
provision.
The Ordinary Warrants may be exercised for cash but the Ordinary
Warrant Instrument also contains provisions for cashless exercise
of Ordinary Warrants. Under these provisions, a holder may exercise
Ordinary Warrants in respect of a number of Ordinary Shares but
only receive a lesser number of Ordinary Shares having a market
value equal to the difference between the market value of the
number of Ordinary Shares in respect of which Ordinary Warrants are
exercised and the OW Exercise Price payable upon that exercise. On
a cashless exercise, the holder of the Ordinary Warrants may be
required to pay up the aggregate nominal value of the lesser number
of Ordinary Shares that it receives.
Expected Timetable of Principal Events
Announcement of the Fundraising 30 December 2022
Latest time and date for receipt of
completed forms of proxy 9.00 a.m. on 14 January 2023
General Meeting 9.00 a.m. on 16 January 2023
Announcement of results of General Meeting 16 January 2023
Exchange Rates
The rates of exchange used, unless otherwise stated, are
US$1.20: GBP1.00 being the rate quoted at the beginning of the
business day in the US on 28 December 2022 in the Wall Street
Journal.
De nitions
The following de nitions apply, unless the context requires
otherwise:
"Admission" the listing of the Ordinary Shares on AIM being
restored
"AIM" a market operated by London Stock Exchange
---------------------------------------------------------
"AIM Rules" the AIM Rules for Companies, as published by
London Stock Exchange from time to time
---------------------------------------------------------
"Announcement" the announcement released by the Company on
30 December 2022 related to the Fundraising
---------------------------------------------------------
"Armistice" Armistice Capital Master Fund Ltd
---------------------------------------------------------
"Board" or "Directors" the directors of the Company
---------------------------------------------------------
"Company" 4d pharma plc (in administration), a company
incorporated in England and Wales with registered
number 08840579
---------------------------------------------------------
"Document" this document which for the avoidance of doubt
does not comprise a prospectus (under the Prospectus
Regulation) or an admission document (under
the AIM Rules)
---------------------------------------------------------
"Financing Package" the Fundraising proposal
---------------------------------------------------------
"Fundamental Transaction" means (i) the Company, directly or indirectly,
in one or more related
transactions effects any merger or consolidation
of the Company with or into another person,
(ii) the Company, directly or indirectly, effects
any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially
all of its assets in one or a series of related
transactions, (iii) any, direct or indirect,
purchase offer, tender offer or exchange offer
(whether by the Company or another person)
is completed pursuant to which holders of Ordinary
Shares are permitted to sell, tender or exchange
their shares for other securities, cash or
property and has been accepted by the holders
of 50 per cent. or more of the outstanding
Ordinary Shares,
iv) the Company, directly or indirectly, in
one or more related transactions effects any
reclassi cation, reorganisation or recapitalisation
of the Ordinary Shares or any compulsory share
exchange pursuant to which the Ordinary Shares
are effectively converted into or exchanged
for other securities, cash or property, or
(v) the Company, directly or indirectly, in
one or more related transactions consummates
a stock or share purchase agreement or other
business combination (including, without limitation,
a reorganization, recapitalisation, spin-off
or scheme of arrangement) with another person
or group of persons whereby such other person
or group acquires more than 50 per cent. of
the outstanding Ordinary Shares (not including
any Ordinary Shares held by the other person
or other persons making or party to, or associated
or af liated with the other persons making
or party to, such stock or share purchase agreement
or other business combination)
---------------------------------------------------------
"Fundraising" the private offering of the New Ordinary Shares
and Pre-Payment Warrants
---------------------------------------------------------
"General Meeting" the general meeting of Shareholders to be held
at the of ces of
Pinsent Masons LLP at 1 Park Row, Leeds, LS1
5AB at 9.00 a.m. (London time) on 16 January
2023 or any reconvened meeting following any
adjournment thereof
---------------------------------------------------------
"Loans" the loans of $12,500,000 and $1,600,000 made
to the Company pursuant to the Loan Agreement
---------------------------------------------------------
"Loan Agreement" the loan and security agreement entered into
on 29 July 2021
between, inter alia, the Company, 4D Pharma
Research Limited, 4D Pharma Cork Limited and
4D Pharma Delaware Inc (as borrowers) and Oxford
Finance Luxembourg S.À.R.L (as lender),
which was subsequently assigned to Armistice
on 7 October 2022
---------------------------------------------------------
"London Stock Exchange" London Stock Exchange plc
---------------------------------------------------------
"New Ordinary Shares" the Ordinary Shares to be issued pursuant to
the Fundraising
---------------------------------------------------------
"Notice" the notice of the General Meeting
---------------------------------------------------------
"Ordinary Shares " ordinary shares of GBP0.0025 each in the capital
of the Company
---------------------------------------------------------
"Ordinary Share Equivalents" means any securities of the Company which would
entitle the holder thereof to acquire at any
time Ordinary Shares, including, without limitation,
any debt, preferred stock, right, option, warrant
or other instrument that is at any time convertible
into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive,
Ordinary Shares
---------------------------------------------------------
"Ordinary Warrants" warrants constituted by the Ordinary Warrant
Instrument
---------------------------------------------------------
"Ordinary Warrant Instrument" the ordinary warrant deed appended to the Subscription
Agreement
---------------------------------------------------------
"Oxford Finance" Oxford Finance Luxembourg S.ÀR.L
---------------------------------------------------------
"Pre-Payment Warrants" warrants constituted by the Pre-Payment Warrant
Instrument
---------------------------------------------------------
" Pre-Payment Warrant the pre-payment warrant deed appended to the
Instrument " Subscription Agreement
---------------------------------------------------------
"Resolutions" the ordinary resolution and special resolution
to be proposed at the General Meeting, as set
out in the notice of General Meeting
---------------------------------------------------------
"Shareholders" holders of Ordinary Shares
---------------------------------------------------------
"Subordinated Loan" the unsecured and subordinated loan of $600,000
lent to the Company pursuant to the Subordinated
Loan Agreement
---------------------------------------------------------
"Subordinated Loan Agreement" the subordinated loan agreement dated 3 December
2022 between, inter alia, the Company (as borrower)
and Armistice, Duncan Peyton and Alex Stevenson
(as lenders).
---------------------------------------------------------
"Warrants " the Pre-payment Warrants and the Ordinary Warrants
---------------------------------------------------------
All references to "GBP", "pence" or "p" are to the lawful
currency of the United Kingdom, and all references to "US$" or
"$"are to the lawful currency of the United States.
About 4D pharma
4D pharma is a world leader in the development of Live
Biotherapeutics, a novel and emerging class of drugs, defined by
the FDA as biological products that contain a live organism, such
as a bacterium, that is applicable to the prevention, treatment or
cure of a disease. 4D has developed a proprietary platform, MicroRx
(R) , that rationally identifies Live Biotherapeutics based on a
deep understanding of function and mechanism.
4D pharma's Live Biotherapeutic products (LBPs) are orally
delivered single strains of bacteria that are naturally found in
the healthy human gut. The Company has five clinical programs,
namely a Phase I/II study of MRx0518 in combination with KEYTRUDA
(pembrolizumab) in solid tumors, a Phase I study of MRx0518 in a
neoadjuvant setting for patients with solid tumors, a Phase I study
of MRx0518 in patients with pancreatic cancer, a Phase I/II study
of MRx-4DP0004 in asthma, and Blautix(R) in Irritable Bowel
Syndrome (IBS) which has completed a successful Phase II trial.
Preclinical-stage programs include candidates for CNS disease such
as Parkinson's disease and other neurodegenerative conditions. The
Company has a research collaboration with MSD, a tradename of Merck
& Co., Inc., Kenilworth, NJ, USA, to discover and develop Live
Biotherapeutics for vaccines.
For more information, refer to https://www.4dpharmaplc.com
Forward-Looking Statements
This announcement contains "forward-looking statements." All
statements other than statements of historical fact contained in
this announcement, including without limitation statements
regarding the timing of studies, are forward-looking statements
within the meaning of Section 27A of the United States Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of
the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Forward-looking statements are often identified by
the words "believe," "expect," "anticipate," "plan," "intend,"
"foresee," "should," "would," "could," "may," "estimate," "outlook"
and similar expressions, including the negative thereof. The
absence of these words, however, does not mean that the statements
are not forward-looking. These forward-looking statements are based
on the Company's current expectations, beliefs and assumptions
concerning future developments and business conditions and their
potential effect on the Company. While management believes that
these forward-looking statements are reasonable as and when made,
there can be no assurance that future developments affecting the
Company will be those that it anticipates.
All of the Company's forward-looking statements involve known
and unknown risks and uncertainties, some of which are significant
or beyond its control, and assumptions that could cause actual
results to differ materially from the Company's historical
experience and its present expectations or projections. The
foregoing factors and the other risks and uncertainties that could
cause actual results to differ materially include potential delays
in the process of admission. The Company wishes to caution you not
to place undue reliance on any forward-looking statements, which
speak only as of the date hereof. The Company undertakes no
obligation to publicly update or revise any of its forward-looking
statements after the date they are made, whether as a result of new
information, future events or otherwise, except to the extent
required by law.
Contact Information:
4D pharma
4dpharma@interpathadvisory.com
Singer Capital Markets - Nominated Adviser and Joint Broker
Philip Davies / James Fischer (Corporate Finance) +44 (0)20 7496
3000
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END
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December 30, 2022 07:30 ET (12:30 GMT)
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