LEIDEN, The Netherlands,
November 21, 2016 /PRNewswire/ --
THIS PRESS RELEASE
AND THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR
RELEASE, DISTRIBUTION OR PUBLICATION IN WHOLE OR IN PART , DIRECTLY
OR INDIRECTLY, IN OR INTO THE UNITED
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UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS PRESS
RELEASE.
Pharming Group N.V. ("Pharming" or "the Company") (Euronext
Amsterdam: PHARM) announces its financing plans to enable the
completion of the acquisition of the North American
commercialization rights to RUCONEST® from Valeant Pharmaceuticals
International, Inc. (NYSE/TSX: VRX) ("Valeant"), as announced on
9 August 2016.
Highlights
- 1 for 7 Rights Issue of 58,943,624 shares to
raise approximately €12.1 million to existing
shareholders
- Board of Management to take up their full allotments under
the Rights Issue
- New $40 million (€37.7
million) straight debt facility from existing lender Silicon Valley
Bank and from Kreos Capital V (UK) Ltd
Fund
- All remaining funding (€62.0 million) from two
new convertible bonds with conversion at premiums
of between 25% and 35%
to the 20 Day Volume Weighted Average
Price
- Total Funds to be raised in the funding arrangements amount
to €111.8 million, resulting in €85 million after
transaction costs, fees and repayment
of the US$17 million
existing debt (€16.2 million)
- Net Funds raised (€85 Million) are
for payment of the acquisition of the North American
commercialisation rights for RUCONEST of US$60 million (€56.7
million) and a total of €28.3 million for
additional marketing and sales investments for RUCONEST both
in the USA and in the
EU.
- Total shares issued now will be
limited to 58,943,750
Pharming announces that it has agreed terms with investors for a
series of financing transactions which, upon closing, will raise
€111.8 million gross, or €85 million after payment of transaction
costs, fees and repayment of existing debt. This set of
funding transactions will enable the Company to meet the upfront
payment and complete its acquisition of the North American
commercialization rights to RUCONEST® from Valeant Pharmaceuticals
International, Inc. (NYSE/TRX: VRX) ("Valeant"), and to accelerate
the development of sales of RUCONEST® in North America. This acquisition
transaction will be completed as soon as sufficient of the
instruments have closed to enable the Company to do so. This
is currently expected to be prior to the closing of the Rights
Offer.
The financing will comprise of four elements, which are
described further below. With the exception of the rights
issue, the terms shown below are subject to final changes as the
full documentation is completed. These descriptions show the
terms as currently agreed. These elements are as follows:
1) A new 8% straight debt facility of $40 million (€37.7 million) (or €35.9 million net
of costs and liquidity retentions) from existing lender Silicon
Valley Bank and new lender Kreos Capital V (UK) Ltd. The
existing facility with Silicon Valley Bank and Oxford Finance LLC
will be repaid in full in accordance with its terms;
2) A rights issue offering existing shareholders the chance
to subscribe for one new ordinary share for every seven shares they
hold at the record date, expected to be 22
November 2016, at a price of €0.205 per share (the "Rights
Price"), which represents a discount of 10% to the 20-day
volume-weighted average price to 18 November
2016; the last business day before the anticipated approval
of the prospectus, of €0.227 (the "VWAP"). The Rights Issue is
expected to raise approximately €12.1 million (or €11.3 million net
of costs) if all the rights are taken up. Interest has been
received from investors to support the Rights Issue by acquiring
shares for which shareholders have not exercised their rights at
the end of the exercise period.
3) A 5 year 8.5% redeemable convertible bond (the "Ordinary
Bond") to raise approximately €17.0 million (or €16.2 million net
of costs) if all current prospective investors who have expressed
firm interest take up their allocations. The Ordinary Bond is
convertible into shares at a price of €0.284 (the "Conversion
Price"), which represents a premium of 25% to the VWAP and a
premium of 38.5% to the Rights Price. Interest will be paid
on the Ordinary Bond at a rate of 8.5% per annum. Ordinary
Bond investors will also receive warrants to subscribe for Pharming
shares at a premium strike price equivalent to the Conversion
Price.
4) An 18 month zero interest redeemable convertible bond
(the "Amortizing Bond") expected to raise approximately €45.0
million (or €37.8 million net of costs) if all current prospective
investors who have expressed firm interest take up their
allocations. The Company has entered into a non- binding term
sheet with a lead investor for the Amortizing Bond and has
sufficient interest to complete this bond, although the precise
terms may change prior to execution. The Amortizing Bond is
currently convertible into shares at a price of €0.30, which
represents a premium of 32% to the VWAP and a premium of 46%
to the Rights Price. The Amortizing Bond will be repaid
by the Company in 16 equal monthly instalments, in cash or shares
at the discretion of the Company, starting after two months
following closing. After the initial 2 months without repayments,
the first 3 instalments are due to be paid entirely in cash.
Amortizing Bond investors will also receive warrants to subscribe
for Pharming shares at a premium strike price equivalent to the
Conversion Price.
The overall result of the Rights Issue, the new debt facility
and the Convertible Bonds, if the current agreed terms are finally
confirmed is that the Company will issue 58,943,624 new shares, and
will reserve the rest of its authorized share capital against
conversion of the Bonds and exercise of the warrants.
As the balance of the unreserved authorized share capital is not
quite sufficient to ensure delivery in the unlikely event that all
warrants, options and convertible bonds were converted immediately
following the transaction, the Board of Management have pledged all
of their unissued options and warrants for the Company to use for
such delivery. The Board of Management will not benefit in
any way from this pledge.
Sijmen de Vries, CEO of Pharming:
"I am absolutely delighted to be able to confirm that,
subject to final documentation, we have secured good terms on new
financing instruments with first class investors looking to support
Pharming over the long term in its new growth phase. As
promised, we are offering all new equity being issued to existing
shareholders first. I and my colleagues on the Board of
Management intend to take up our entire allotment of rights to
subscribe for new shares, to have a stake in what promises to be a
very exciting and successful phase of growth for Pharming after we
close this transformational acquisition.
About the Ordinary Bonds
The draft terms for the Ordinary Bonds are as follows. The
Ordinary Bonds will have a fixed term of 5 years unless previously
converted or redeemed, and carry a fixed coupon of 8.5% per annum
(payable semi-annually) and are convertible at the option of the
holder during an exercise period, expected to begin shortly after
issue and to end shortly before the 5 year maturity date, into
58,859,154 shares at a conversion price of €0.284 per share, i.e. a
price representing a premium of 25% to the VWAP or 38.5% to the
Rights Price. The Ordinary Bonds are redeemable at the Company's
option at par value after 3 years, if the volume weighted average
price of the shares at the time is above the price which means that
the Ordinary Bonds, if converted into Shares, would be worth 30%
more than their par value. The holders may elect to convert
their Ordinary Bonds. The holders may request redemption at par of
any unredeemed or unconverted Bonds on maturity after 5 years. The
Ordinary Bonds are not guaranteed nor secured. The Ordinary
Bondholders will receive 20% warrant coverage in the 2016 Warrants
entitling them to subscribe for 11,971,831 Shares at a warrant
strike price of €0.284, i.e. a price representing a premium of 25%
to the VWAP or 38.5% to the Issue Price.
About the Amortizing Bonds
The Company has entered into a term sheet with a lead investor
to take all of The Amortizing Bonds on the following main terms.
The Amortizing Bonds have a maturity of 18 months, and carry
no coupon, although there is a fee payable to the holders taking up
the bonds upon closing of €5.0 million. The bonds are
convertible at the option of the holder within 18 months from issue
at a conversion price of the lower of a premium of 35% to the 20
Day VWAP or €0.300 at closing. This means today at
€0.300,representing a premium of 32% to the VWAP or 46.0% to the
Issue Price. The Company will begin repaying the Amortizing Bonds
after two months in 16 equal instalments, in either Shares or cash
at the Company's sole discretion, although the first three such
payments will be in cash only. Because the number of Shares
calculated to be required for any monthly repayment depends on the
share price in the 20 days preceding such calculation, it is
possible in some circumstances that more shares will be issued for
such a payment than the portion of the Amortizing Bond being repaid
would convert into, which would increase the dilutive effect of
such repayment. This is offset by the release of the Shares
into which such portion would convert, and also by any amount of
repayments which are made in cash. The maximum total payment
in cash (other than for an early repayment) is capped at 70% of the
facility. This means that the minimum amount of the Amortizing
Bonds which must be repaid in Shares is €13.5 million, which would
mean share repayments of 60,267,857 shares at the theoretical
ex-rights price ("TERP") for a Pharming Share immediately after the
Rights Issue of €0.224.
This compares with full conversion of the Amortizing Bonds into
shares at the €0.300 conversion price of 150,000,000 shares. After
the initial 2 months without repayments, the first 3 instalments
are due to be paid entirely in cash. This reduces the effect of
full conversion of the Amortizing Bonds from 150,000,000 Shares to
121,875,000 Shares.
The Amortizing Bonds are also redeemable for cash at the
Company's option at a premium within the 18 months duration. The
premium varies between 10% and 25% depending on how much of the
Amortizing Bonds have already been paid in Shares. The Amortizing
Bonds are not guaranteed nor secured and rank behind both the debt
and the Ordinary Bonds. The Amortizing Bondholders will receive 40%
warrant coverage in the 2016 Warrants entitling them to subscribe
for 63,380,282 Shares at a warrant strike price of €0.284, i.e. a
price representing a premium of 25% to the VWAP or 38.5% to the
Issue Price.
About the new debt facility
The new debt facility is expected to be granted by Kreos Capital
V (UK) Ltd Fund and Silicon Valley Bank (the New Lenders), with
whom the Company has entered into a term sheet on very similar
general terms to those of the Loans. Under the terms and conditions
of the new debt facility, the New Lenders will provide US$40 million (approximately €37.7 million)
secured senior debt funding repayable over 42 months with a 8%
fixed interest per annum. During the initial 12 months of the
facility only interest will be payable, followed by monthly
repayments of the outstanding principal amount on a 30 month
straight amortisation basis. As further consideration for the new
debt facility, the New Lenders or their associate companies will
receive 10% warrant coverage (i.e. warrants to acquire 12,933,431
Shares at a conversion price of €0.284, i.e. a price representing a
premium of 25% to the VWAP or 38.5% to the Issue Price) and a final
payment on maturity (due June 2020)
of 9% of the principal sum.
The New Lenders will receive a first priority ranking debenture
(or the equivalent) and/or other first ranking security over all
assets, including intellectual property of the Group. Closing of
the New Debt Facility is conditional on a minimum raise of €40
million in equity and convertible debt, satisfactory outcome of due
diligence inquiry by the New Lenders, no breach of representations
and warranties by Pharming and execution of all required
documentation by the parties.
The New Lenders, the Ordinary Bond holders and the Amortizing
Bond holders will all receive warrants on identical terms (the 2016
Warrants). The 2016 Warrants will be exercisable for a period of
five years as of the settlement date of the Rights Issue at an
exercise price of €0.284, equal to a premium of 25.0% above the
VWAP, or 38.5% over the Rights Price. The exercise price of the
2016 Warrants will be adjusted in case of an issue altering the
terms and conditions of the Shares, such as subdivision or
amalgamation of Shares, to reflect the value of the original
warrant immediately prior to such event.
About the Prospectus
A full prospectus for the Rights Offer, including additional
information on all the instruments as well as information regarding
the risks relating to the Company, the Offer and the business, will
be issued following approval by the Netherlands Authority for the
Financial Markets (Stichting Autoriteit Financiële Markten,
the AFM). Subject to that approval, the Company has
provisionally established the following timetable for the Rights
Issue:
________________________________________________________________________________________
Record Date - Immediately after the close of trading on Euronext
Amsterdam at 17:40 CET on 22 November
2016
Ex-Rights trading in the Shares commences 09:00 CET on 23 November
2016
Exercise Period commences
09:00
CET on 23 November 2016
Trading in the Rights commences 09:00
CET on 23 November 2016
Trading in the Rights ceases 17:40
CET on 29 November 2016
Exercise Period ends 17:40 CET on
30 November 2016
Allotment of New Shares
Expected on 2
December 2016
Issue of, payment for and delivery of, Expected on
6 December 2016
the New Shares (including the Rump Shares)
(Settlement Date) and start of trading in the New Shares
The prospectus contains a new detailed pro forma in accordance
with the rules of the Prospectus Directive, and this is based on a
more detailed version of the Company's Q3 Condensed Consolidated
Financial Statements prepared under IAS 34 for the purposes of
reference information. This form of the Q3 report has been
published today on Pharming's website under Public Reports within
the Shareholder section of Information.
The pro forma shows an adjusted view of the transaction as a
hypothetical situation similar (but not identical) to the pro forma
information presented in each of Pharming's announcement of the
transaction on 9 August 2016 and last
two financial reports on 3 October
2016 (8 month report to 31 August
2016) and 27 October 2016 (Q3
Report 2016). The differences mainly relate to the change of
accounting approach from an asset transaction to a business
combination, plus changes related to more accurate cost information
and the financial structure on the basis of the latest terms.
About Pharming Group N.V.
Pharming is a specialty pharmaceutical company developing
innovative products for the safe, effective treatment of rare
diseases and unmet medical needs. Pharming's lead product,
RUCONEST® (conestat alfa) is a recombinant human C1 esterase
inhibitor approved for the treatment of acute Hereditary Angioedema
("HAE") attacks in patients in Europe, the US and rest of the world. The
product is available on a named-patient basis in other territories
where it has not yet obtained marketing authorization.
RUCONEST® is commercialized by Pharming in Algeria, Andorra, Austria, Bahrain, Belgium, France, Germany, Ireland, Jordan, Kuwait, Lebanon, Luxembourg, Morocco, Netherlands, Oman, Portugal, Qatar, Syria,
Spain, Switzerland, Tunisia, United Arab
Emirates, United Kingdom
and Yemen.
RUCONEST® is distributed by Swedish Orphan Biovitrum AB (publ)
(SS: SOBI) in the other EU countries, and in Azerbaijan, Belarus, Georgia, Iceland, Kazakhstan, Liechtenstein, Norway, Russia, Serbia, and Ukraine.
RUCONEST® is distributed in the United
States by a subsidiary of Valeant Pharmaceuticals
International, Inc. (NYSE: VRX/TSX: VRX), following Valeant's
acquisition of Salix Pharmaceuticals, Ltd.
RUCONEST® is distributed in Argentina, Colombia, Costa
Rica, the Dominican
Republic, Panama and
Venezuela by Cytobioteck, in
South Korea by HyupJin Corporation
and in Israel by Megapharm.
RUCONEST® is also being investigated in a Phase II clinical
trial for the treatment of HAE in young children (2-13 years of
age) and evaluated for various additional follow-on
indications.
Pharming's technology platform includes a unique, GMP-compliant,
validated process for the production of pure recombinant human
proteins that has proven capable of producing industrial quantities
of high quality recombinant human proteins in a more economical and
less immunogenetic way compared with current cell-line based
methods. Leads for enzyme replacement therapy ("ERT") for Pompé and
Fabry's diseases are being optimized at present, with additional
programs not involving ERT also being explored at an early stage at
present.
Pharming has a long term partnership with the China State
Institute of Pharmaceutical Industry ("CSIPI"), a Sinopharm
company, for joint global development of new products, starting
with recombinant human Factor VIII for the treatment of Haemophilia
A. Pre-clinical development and manufacturing will take place to
global standards at SIPI and are funded by SIPI. Clinical
development will be shared between the partners with each partner
taking the costs for their territories under the partnership.
Pharming has declared that the
Netherlands is its "Home Member State" pursuant to the
amended article 5:25a paragraph 2 of the Dutch Financial
Supervision Act.
Additional information is available on the Pharming website:
http://www.pharming.com
Forward-looking Statements
This press release of Pharming Group N.V. and its
subsidiaries ("Pharming", the
"Company" or the
"Group") may contain forward-looking
statements including without limitation those regarding
Pharming's financial projections, market
expectations, developments, partnerships, plans, strategies and
capital expenditures.
The Company cautions that such forward-looking statements may
involve certain risks and uncertainties, and actual results may
differ. Risks and uncertainties include without limitation the
effect of competitive, political and economic factors, legal
claims, the Company's ability to protect intellectual
property, fluctuations in exchange and interest rates, changes in
taxation laws or rates, changes in legislation or accountancy
practices and the Company's ability to identify,
develop and successfully commercialize new products, markets or
technologies.
As a result, the Company's actual performance,
position and financial results and statements may differ materially
from the plans, goals and expectations set forth in such
forward-looking statements. The Company assumes no obligation to
update any forward-looking statements or information, which should
be taken as of their respective dates of issue, unless required by
laws or regulations.
The distribution of this announcement in jurisdictions other
than the Netherlands may be
affected by the laws of relevant jurisdictions. Therefore any
persons who are subject to the laws of any jurisdiction other than
the Netherlands will need to
inform themselves about, and observe any applicable
requirements. Investors will need to base their investment
decision on the prospectus and particularly the risk factors as
described in the prospectus that the Company will publish in
connection with the rights issue. When made generally available,
copies of the prospectus may be obtained at no cost from the
Company or through the website of the Company, subject to certain
regulatory restrictions.
This announcement is for information purposes only and shall
not constitute an offer to buy, sell, issue or subscribe for, or
the solicitation of an offer to buy, sell, issue, or subscribe for,
any securities in the Company or any other entity. Any such offer
pursuant to the proposed rights issue will be made solely by means
of a prospectus to be published in due course and any supplement or
amendment thereto and any acquisition of securities in the Company
should be made solely on the basis of the information contained in
such prospectus.
Neither this announcement nor any copy of it may be taken or
transmitted, published or distributed, directly or indirectly, in
whole or in part, in, into or from the
United States of America (including its territories and
possessions, any state of the United
States of America (the "United States" or the
"US")), Australia, Canada, Japan
or the Republic of South Africa or
transmitted, distributed to, or sent by, any national or resident
or citizen of any such countries or any other jurisdiction where to
do so would constitute a violation of the relevant securities laws
of such jurisdiction (each a "Restricted
Jurisdiction"). Any failure to comply with this
restriction may constitute a violation of United States, Australian, Canadian,
Japanese or South African securities laws.
The securities mentioned in this announcement have not been,
and will not be, registered under the US Securities Act of 1933 (as
amended) (the "US Securities Act"), and
may not be offered or sold in the United
States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act. No public offer of the shares is being
made in the United States and the
information contained herein does not constitute an offering of
securities for sale in the United
States.
This announcement is directed only at persons whose ordinary
activities involve them in acquiring, holding, managing and
disposing of investments (as principal or agent) for the purposes
of their business and who have professional experience in matters
relating to investments and are: (i) if in a member state of the
European Economic Area, qualified investors within the meaning of
article 2(1)(e) of the Prospectus Directive
("Qualified Investors"); or (ii) if in
the United Kingdom, Qualified
Investors and fall within: (a) article 19(5) (investment
professionals) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (the
"Order"); or (b) article 49(2)(a) to (d)
(high net worth companies, unincorporated associations, etc.) of
the Order (all such persons together being referred to as
"Relevant Persons"). The term
"Prospectus Directive" means Directive
2003/71/EC as amended and includes any relevant implementing
measures in each member state of the European Economic
Area.
Contacts:
Pharming Group N.V.
Sijmen de Vries, CEO
Tel: +31-71-524-7400
Robin Wright, CFO
Tel: +31-71-524-7400
FTI Consulting:
Julia Phillips / Victoria Foster Mitchell
Tel: +44-203-727-1136
Lifespring Life Sciences Communication
Leon Melens
Tel: +31-20-705-95-90