TIDMSALV
RNS Number : 5527I
SalvaRx Group plc
27 November 2018
SalvaRx Group plc
("SalvaRx" or the "Company")
Posting of Circular and Notice of AGM
Further to its announcements of 14 and 28 August 2018 and 21
November 2018, SalvaRx Group plc (AIM: SALV) confirms that it has
posted, or otherwise made available, a circular to shareholders
(containing a notice convening the Annual General Meeting) in
connection with the proposed disposal of its interest in SalvaRx
Limited to Portage Biotech Inc. ("Portage") and the Demerger of
Consideration Shares (the "Circular").
The Annual General Meeting of the Company is to be held at 3.00
p.m. on 8 January 2019 (the "AGM") at The Claremont Hotel, 18-22
Loch Promenade, Douglas, Isle of Man, IM1 2LX.
In addition to resolutions covering the normal business to be
considered at such a meeting, the AGM will also consider
resolutions to approve the following matters:
(i) the disposal of the Company's interest in SalvaRx Limited,
its 94.2 per cent. owned subsidiary, to Portage Biotech Inc. for a
consideration of US$67.5 million (the "Consideration"), to be
satisfied by the issue of 757,943,784 new shares in Portage (the
"Consideration Shares") (the "Disposal");
(ii) the transfer of not less than 660,593,556 of the
Consideration Shares (the "Demerger Shares") on a pro-rata basis to
the Company's shareholders on the register for the Demerger Record
Date (being 5.00 p.m. on 8 January 2019) (the "Demerger");
(iii) the adoption of new articles of association in
substitution for its existing articles of association;
(iv) following completion of the Disposal, the purchase by the
Company of outstanding options over 2,767,470 new Ordinary Shares
in consideration for the grant by the Company, to holders of such
options, of new options over a total of 40,692,697 Consideration
Shares (the "New Options"); and
(v) the appointment of Denham Eke as Chief Financial Officer and
as a director of the Company.
The Disposal and the Demerger will constitute a fundamental
change of business under Rule 15 of the AIM Rules. On completion of
the Disposal and the Demerger, the Company would cease to own,
control or conduct all, or substantially all, of its existing
trading business activities or assets. It would therefore be
classified as an AIM Rule 15 cash shell and as such will be
required to make an acquisition or acquisitions which constitutes a
reverse takeover under AIM Rule 14 (or seek re-admission as an
investing company (as defined under the AIM Rules)) on or before
the date falling six months from completion of the Disposal and the
Demerger, failing which, the Company's Ordinary Shares would then
be suspended from trading on AIM pursuant to AIM Rule 40. Admission
to trading on AIM would be cancelled six months from the date of
suspension should the reason for the suspension not have been
rectified.
A copy of the Circular and the Company's annual report and
accounts for the year ended 31 December 2017 for use in connection
with the AGM are available on the Company's website:
https://www.salvarx.io/investors/aim-rule-26.html
The key dates applicable to the Disposal, the Demerger and the
Option Redemption are expected to be as follows:
SALVARX GROUP PLC
Latest time and date for receipt of Forms By 3.00 p.m. on 4 January
of Proxy 2019
--------------------------
Annual General Meeting 3.00 p.m. on 8 January
2019
--------------------------
Demerger Record Date 5.00 p.m. on 8 January
2019
--------------------------
Issue of Redeemable Shares 5.00 p.m. on 8 January
2019
--------------------------
Portage registers the allotment of the 5.30 p.m. on 8 January
Consideration Shares to the Company 2019
--------------------------
Company registers Redemption of Redeemable 5.30 p.m. on 8 January
Shares and Portage registers transfer of 2019
Demerger Shares by the Company to Qualifying
Shareholders
--------------------------
Ordinary Shares marked "ex-entitlement" 8.00 a.m. on 9 January
by the London Stock Exchange 2019
--------------------------
Expected date for despatch of definitive On or around 15 January
shares certificates for the Demerger Shares 2019
(except to US Persons subject to safe-keeping
and custody arrangements)
--------------------------
End of Restricted Period 8 July 2019
--------------------------
Expected date for despatch of definitive On or around 8 July
share certificates for Demerger Shares 2019
and Option Redemption Shares no longer
subject to safe-keeping and custody arrangements
--------------------------
The times and dates set out above may be adjusted by the Company
and Portage in consultation with Northland, London Stock Exchange
PLC, the CSE and the OTC, in which event details of the new times
and dates will be notified via a Regulatory Information
Service.
All references in this announcement to times are to London (GMT)
time unless otherwise stated.
Defined terms in this announcement have the same meaning as set
out in the Circular.
Enquiries
SalvaRx Group plc
Ian B. Walters, MD (Chief Executive) Tel: +1 203 441 5451
Northland Capital Partners Limited Tel: +44 (0) 20 3861
Nominated Adviser and Broker 6625
Matthew Johnson / Edward Hutton (Corporate
Finance)
Vadim Alexandre (Corporate Broking)
Peterhouse Capital Limited Tel: +44 (0) 20 7469
Joint Broker 0932
Lucy Williams / Duncan Vasey
APPIX
The following information is extracted without material
adjustment from the Circular being sent to Shareholders.
Capitalised terms used in the summary below are defined at the end
of this announcement.
1. Introduction
SalvaRx Group Plc is a drug development company focused on
cancer immunotherapy and complementary areas of oncology. Following
a group restructuring conducted in March 2017, all investments and
business interests of the Company are held by SalvaRx Limited
("Target"), the Company's 94.2 per cent. owned subsidiary.
On 14 August 2018, the Company announced that it had entered
into a conditional Sale Agreement for the disposal of its 94.2 per
cent. interest in Target to Portage Biotech Inc. ("Portage"), in
consideration of US$67.5 million, to be satisfied by Portage
issuing and allotting 757,943,784 new Portage Shares (the
"Consideration Shares") to the Company. The Sale Agreement includes
the following Conditions Precedent:
(i) Portage issuing and allotting the Consideration Shares to the Company;
(ii) receipt of the Portage Approval;
(iii) receipt of the Rule 15 Approval;
(iv) approval of the Demerger.
Concurrent with the Disposal (and as a condition of the Sale
Agreement), the Company will complete the Demerger, whereby not
less than 660,593,556 of the Consideration Shares (the "Demerger
Shares") will be distributed to Qualifying Shareholders on a
pro-rata basis, as explained below (the number of Demerger Shares
increasing by 18 Portage Shares for each new Ordinary Share issued
by the Company on exercise of the Northland Warrants prior to the
Demerger Record Date).
The Demerger of the Consideration Shares is a condition of the
Sale Agreement. Accordingly Shareholders are required to approve
the Demerger as a condition of approving the Disposal (should they
wish to do so). In particular, in relation to the Demerger,
Shareholders are required to approve:
a) the Company undertaking the Share Split, pursuant to which
(i) Qualifying Shareholders will receive one Redeemable Share for
each Ordinary Share recorded against their name in the Shareholder
Register on the Demerger Record Date and (ii) each Qualifying
Shareholder shall continue to hold the same number of Ordinary
Shares of the same nominal value per share; and
b) immediately following the Share Split, the Company redeeming
all Redeemable Shares and, in consideration for the Redemption, the
Company shall transfer the Demerger Shares to Qualifying
Shareholders on the basis of eighteen (18) Demerger Shares for each
Redeemable Share held.
Portage is seeking the authority of its shareholders at the
Portage Meeting of Shareholders to consolidate its issued and to be
issued share capital by a ratio of up to 120:1 Portage Shares at a
future date which currently remains to be determined (the "Portage
Consolidation"). The Portage Consolidation, if approved and
implemented by the Portage board, would result in an adjustment to
any Demerger Shares and New Option Shares on the effective date of
the Portage Consolidation. Further details in relation to the
Portage Consolidation are set out in the Portage Shareholder
Circular, which will be available for Shareholders to download,
without charge, at the following web addresses as from 26 November
2018:
https://www.portagebiotech.com/investors/shareholder-circular.html
https://thecse.com/en/listings/life-sciences/portage-biotech-inc
At the Portage Share Price (being, US$0.089), the Disposal
valued the Company's interest in Target at US$67.5 million. As at
the close of trading on 19 March 2018, the value of Portage Shares
on the OTC was US$0.087. The "A" Independent Directors and the
Portage Independent Director agreed to use US$0.089 as the implied
value of Portage Shares for the purpose of the Disposal, reflecting
share prices and volumes of trading on this date.
The closing price of Portage Shares on the OTC on 10 August 2018
(being the last practicable trading date prior to announcement of
the Disposal by the Company) was US$0.10, valuing the Consideration
Shares at approximately US$75,794,000. Trading in Portage Shares on
the CSE remains subject to a temporary suspension imposed by IIROC,
whereas trading on the OTC was subject to a temporary suspension
during the period 10 August 2018 to 20 November 2018. Portage will
release an announcement on or around the date of this Document to
confirm the date of the Portage Meeting of Shareholders and a trade
resumption date for the CSE. As at the close of trading on 10
August 2018, the last recorded trading price of Portage Shares on
CSE was US$0.105 and was, therefore, marginally higher than the
closing price for Portage Shares on the OTC on 10 August 2018. On
10 August 2018, the market capitalisation of the Company at the
Exchange Rate was approximately US$21,046,000.
As at the date of this Document, there are 2,949,803 Options
over Ordinary Shares issued and outstanding and held by directors,
management, consultants, advisers and other persons who have
contributed to the growth of the Company.
On 14 August 2018, the Board approved a decision allowing all
Option Holders (excluding Northland) to sell back a total of
2,676,470 vested and unvested Options to the Company (the
"Redemption Options") in consideration for the transfer by the
Company to each New Option Holder of a number Consideration Shares
(each transferred at an implied price equal to the Portage Share
Price) as reflected the value of the Redemption Options (over and
above the respective exercise prices) based on the Per Share
Consideration Value. This would have resulted in the Company
transferring a total of 40,692,697 Consideration Shares, in
consideration for the sale and purchase of their Redemption
Options.
Following recent advice from the Company's tax advisers, the
Board has formed the view that the New Option Holders can be
compensated on a more tax efficient basis by exchanging their
Redemption Options for New Options, subject to certain vesting
conditions. Applying the same basis of valuation of the Redemption
Options (outlined in the paragraph, above), the Company shall,
instead, grant options over 40,692,697 Consideration Shares held by
the Company to the New Option Holders (the "New Options") in
consideration for the sale and purchase of their Redemption
Options.
Accordingly, the Company entered into option purchase agreements
with each of the New Option Holders on 26 November 2018, pursuant
to which the New Option Holders have agreed to sell, and the
Company has agreed to purchase their respective Redemption Options
(the "Option Purchase Agreements") in consideration for the grant
of the New Options. Subject to completion of the purchase of the
Redemption Options by the Company, the Board has resolved to cancel
all Redemption Options irrevocably. The Option Purchase Agreements
and the terms governing the grant of the New Options are summarised
in paragraph 8 below.
Following the Disposal and the Demerger, the Company shall
retain up to 56,657,531 Consideration Shares (the "Retained
Shares"), to meet its working capital requirements, and the number
of Retained Shares may increase by up to 40,692,697 Consideration
Shares in the event that certain New Options remain unexercised by
5.00 p.m. on 8 January 2020. The number of Retained Shares shall
decrease by 18 Portage Shares for each new Ordinary Share issued by
the Company to Northland in the event of the exercise of the
Northland Warrants prior to the Demerger Record Date. At the
Portage Share Price, and on the basis that no further Ordinary
Shares are issued, the Retained Shares are valued at approximately
US$5,043,000 (GBP3,897,000 at the Exchange Rate). Based on the
closing price of Portage Shares of US$0.10 on the OTC on 10 August
2018 (being the last practicable trading date prior to announcement
of the Disposal by the Company), the Retained Shares had a market
value of approximately US$5,666,000 (GBP4,379,000 at the Exchange
Rate).
The Disposal and the Demerger are both subject to the Rule 15
Approval, and the Disposal is also subject to the Portage
Approval.
Given the relatively disappointing share price of the Company's
shares on AIM prior to the announcement of the Disposal on 14
August 2018, the Directors determined that the Disposal and the
Demerger was the best way to unlock and maximise value for
Shareholders without causing dilution through raising additional
funds at a price which the Directors believed did not reflect the
value of the Company's underlying assets. The Company is,
therefore, seeking the approval of Shareholders to undertake the
Disposal and the Demerger at the AGM.
The Disposal and the Demerger will constitute a fundamental
change of business under Rule 15 of the AIM Rules. On completion of
the Disposal and the Demerger, the Company would cease to own,
control or conduct all, or substantially all, of its existing
trading business activities or assets. It would therefore be
classified as an AIM Rule 15 cash shell and as such will be
required to make an acquisition or acquisitions which constitutes a
reverse takeover under AIM Rule 14 (or seek re-admission as an
investing company (as defined under the AIM Rules)) on or before
the date falling six months from completion of the Disposal and the
Demerger failing which the Company's Ordinary Shares would then be
suspended from trading on AIM pursuant to AIM Rule 40. Admission to
trading on AIM would be cancelled six months from the date of
suspension should the reason for the suspension not have been
rectified.
The purpose of this Document is to:
-- set out the background and reasons for the Disposal and the Demerger;
-- explain why the Board believes that the Disposal and the
Demerger are in the best interests of Shareholders as a whole;
-- explain how the Disposal and the Demerger will impact the Company;
-- explain the Option Redemption by the Company and terms on
which the New Options are granted;
-- explain the resolutions to be put to Shareholders at the AGM
of the Company to be held on 8 January 2019;
-- explain how Shareholders can deal in their Demerger Shares
and/or New Option Shares; and
-- set out the US securities law restrictions on all
Shareholders and the safe-keeping and custody arrangements approved
by the Company in relation to US Persons.
2. Background and Reasons for the Disposal and the Demerger
The Directors anticipate that Target will require significant
funding over the next several years to support the businesses
forming part of its portfolio, to develop clinical proof of concept
in cancer immunotherapies and, in addition, to undertake further
investments in and/or acquisitions of businesses which are
complementary to the Target Portfolio.
The value of the Company's Ordinary Shares on the AIM Market
prior to the announcement of 14 August 2018 did not, in the opinion
of the Directors, reflect the true value of the Target Portfolio.
Despite the Company undergoing a restructuring exercise in March
2017 resulting in all investments being transferred to Target, the
Company had not been able to secure additional third party funding
for the Target Portfolio, or for new businesses and/or investment
opportunities, at a valuation which the Directors consider
acceptable for Shareholders. Any funding proposals which the
Company had received were at valuations that cause significant
dilution to Shareholders.
Given the difficulty in funding the Target Portfolio (and
potential new acquisition or investment opportunities) the Board
executed the LOI and commissioned the Valuation Report. The
Valuation Report, by PharmaVentures, provided a range of valuations
for the Target Portfolio of between US$67,000,000 and
US$188,000,000 (or between approximately GBP51,777,000 and
GBP145,286,000 at the Exchange Rate).
Following receipt of the Valuation Report, the "A" Independent
Directors negotiated with the Portage Independent Director and
agreed the terms of the Sale Agreement. This included a review by
the "A" Independent Directors of the Portage Portfolio, its current
and future value (further details of which are set out at paragraph
3 below).
Portage has a history of creating value for its shareholders.
One of its portfolio companies, Biohaven Pharmaceutical Holding
Company Ltd (NYSE: BHVN) ("Biohaven"), was the second largest
biotech IPO on NYSE in 2017, generating gross proceeds of
approximately US$193.5 million from the fundraising. On 24 January
2018, Portage announced a distribution in specie of its stock in
Biohaven to its shareholders.
The "A" Independent Directors believe that the terms of the
Disposal and the Demerger will enable Shareholders to realise the
value of the Target Portfolio without significant dilution caused
by equity fundraising directly by the Company. In addition, as the
Consideration is to be satisfied by issue of the Consideration
Shares, Shareholders may retain their interest in the Target
Portfolio (through their resultant interest in Portage following
completion of the Demerger).
3. Financial Information on Portage
Portage recently published its: (a) audited consolidated
financial statements for the years ended 31 March 2018 and 31 March
2017; (b) annual report in Form F-20 for the year ended 31 March
2018; (c) unaudited consolidated interim financial statements for
the three months ended 30 June 2018 (published on 28 August 2018);
(d) discussion and analysis by management of the financial
condition and financial results for Portage for the three months
ended 30 June 2018; and (e) unaudited consolidated interim
financial statement for the three and six months ended 30 September
2018.
The audited accounts of Portage for the period to 31 March 2018
and the unaudited interim financial statements for the three month
period ended 30 June 2018 are hereby incorporated by reference and
are available for Shareholders to download, without charge, at the
following web addresses:
https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00008656
http://thecse.com/en/listings/life-sciences/portage-biotech-inc
Shareholders can also view historic financial information and
reports relating to Portage, by going to the 'financial and
regulatory reports' section of the Portage website, located at the
follow web address:
https://www.portagebiotech.com/investors/financial-and-regulatory-reports.html
For the financial year ended 31 March 2018, Portage had net
operating costs of approximately US$2.3 million and realised gain
on disposal of investment of US$126 million resulting in net income
of US$124 million compared to an operating cost of US$36 million
and a net loss of US$0.6 million in the year ended 31 March 2017.
Portage had net assets of approximately US$9.6 million as at 31
March 2018 of which cash on hand was US$7.5 million.
A significant decline in overall expenses during the fiscal year
2018 compared to prior years was mainly due to non-consolidation of
Biohaven. There was also a slow-down in development activities at
PPL and EyGen during the fiscal year 2018 compared to prior years
as Portage sought to raise the funds needed to complete potential
IND filings and partnership possibilities with other pharmaceutical
companies.
During the fiscal year 2018, Portage distributed 6,102,730
shares of Biohaven held by it as an investment to its shareholders
on a pro-rata basis as a dividend and sold 236,770 shares of
Biohaven in the open market for an average price of US$30.79 per
share for total proceeds of approximately US$7.3 million.
Portage invested US$950,000 in iOx by way of a convertible note
and acquired an equity interest in an associate, Stimunity SAS, for
approximately US$681,000.
The Portage Directors believe that Portage and the Portage
Portfolio are well placed for strong growth in the coming years and
beyond, as a result of the track record and strength of the
team.
Portage's investment of US$7 million in Biohaven between the
years 2014 and 2016, and guidance from the Portage Directors, led
to the second largest biotech IPO on the Nasdaq Stock Exchange in
2017. Portage's investment in Biohaven was worth in excess of
US$100 million at the time of the IPO in 2017, and has almost
doubled since then. Biohaven is now worth approximately US$1.3
billion, and Portage distributed the majority of these gains (as
outlined above) to its shareholders and sold some of these shares
to fuel the growth of the next round of companies. Portage has
provided seed capital to four other biotech companies, and will
seek to evaluate new opportunities with the help of Target's CEO,
Dr Ian Walters.
Due to their track record and the company's cash reserves, the
Portage management is confident in their ability to further support
the development of Target and the Target Portfolio.
4. Summary of the Sale Agreement
The Company, James Mellon, Dr Greg Bailey and Portage have
entered into the Sale Agreement, pursuant to which the Company,
James Mellon and Dr Greg Bailey have together agreed to sell to
Portage the entire issued share capital of Target. Mr Mellon and
Dr. Bailey each hold 2,000 shares of Target representing in
aggregate approximately 5.8 per cent. of Target's issued shares.
Accordingly each of Mr Mellon and Dr. Bailey shall receive
23,563,141 Portage Shares as consideration for the disposal of
their interest in Target subject to approval of the proposed
Disposal.
The Sale Agreement is conditional upon the satisfaction of
certain Conditions Precedent, including inter alia: (i) issuing and
allotting the Consideration Shares to the Company; (ii) receipt of
the Portage Approval; (iii) receipt of the Rule 15 Approval; and
(iv) approval of the Demerger.
The Conditions Precedent under the Sale Agreement are required
to be satisfied by no later than midnight on 31 January 2019.
Under the Sale Agreement, the Company, James Mellon, Dr Bailey
and Portage have each provided basic title and capacity warranties,
and the Company is providing other limited warranties in relation
to Target relating to such matters as their solvency, certain
accounting and financial information, litigation and disputes.
5. Demerger
The Demerger is to be undertaken immediately following
completion of the Disposal. The only condition to the Demerger is
completion of the Disposal (the "Demerger Condition"). The Demerger
is a contractual obligation of the Sale Agreement.
Subject to the approval of the Demerger Condition, the Demerger
shall result in:
(i) Adoption of the new memorandum and articles will be
New Articles adopted by the Company setting out the
rights of Shareholders and the Company
in relation to a new class of Redeemable
Shares
(ii) Share Split Each Qualifying Shareholder will be
allotted one Redeemable Share for each
Ordinary Share recorded against their
name in the Shareholder Register as
at the Demerger Record Date (1)
(iii) Redemption of immediately following the allotment
Redeemable Shares of the Redeemable Shares (in accordance
with (ii)), the Company shall redeem
all Redeemable Shares in accordance
with the New Articles
(iv) Transfer of Portage the Redemption of the Redeemable Shares,
Shares will be satisfied by the Company transferring
to each Qualifying Shareholder 18 Demerger
Shares for each Redeemable Share recorded
against their name in the Shareholder
Register as at the Demerger Record Date
(2)
Notes:
(1) Qualifying Shareholders will not receive a share certificate
in respect of their Redeemable Shares.
(2) At the Portage Share Price of US$0.089 (based on a valuation
of US$25 million as agreed by the parties on the date of the
LOI), this will constitute a distribution to Qualifying Shareholders
of approximately US$1.60 per Ordinary Share.
Qualifying Shareholders will receive their pro-rata entitlement
to Demerger Shares in certificated form, and will have to make
arrangements with their own broker to dematerialise certificates
should they so wish. The Applicable Restrictions described in
paragraph 6 below shall apply to the Consideration Shares during
the Restricted Period. Further details regarding the
dematerialisation of Portage Shares is set out at paragraph 8
below.
The Redeemable Shares issued pursuant to the Share Split shall
be subject to the following rights and restrictions: (a)
non-voting; (b) non-transferrable other than to the Company; and
(c) the Company has a right to redeem the Redeemable Shares at any
time, in its absolute discretion on such terms as it sees fit. The
Redeemable Shares will not be admitted to trading on AIM or on any
other exchange or trading platform.
All Ordinary Shares shall be subject to the same rights and
restrictions as under the existing articles of association and will
continue to be traded on AIM.
6. Applicable Restrictions, Safe-Keeping and Custody
Arrangements and Rights of Demerger Shares
Applicable Restrictions
For a period of six months from the date of the Demerger (the
"Restricted Period"), Demerger Shares (a) are not permitted to be
held by, transferred to, or in any way benefit (whether by way of
legal, beneficial or economic ownership or control), any person,
company, limited partnership or other undertaking, who or which is
a US national or otherwise domiciled or resident anywhere in the US
or holds a US passport; and (b) may not be traded on the OTC market
or any other trading platform in the United States (including by
Shareholders resident or domiciled in the United Kingdom) ((a) and
(b) together the "Applicable Restrictions")). It is illegal for any
Demerger Share to be distributed in any way by any Shareholder into
the United States for the duration of the Restricted Period.
Any purported transfer of Demerger Shares in breach of the
Applicable Restrictions will be rejected by the Company, Portage
and TSX Trust.
During the Restricted Period, the Demerger Shares may be traded
by any non-US Person (such as a Shareholder resident or domiciled
in the United Kingdom), other than "Control Persons" (as defined
under Canadian securities laws, if any), through the facilities of
the CSE.
All Demerger Shares will carry the following legend:
"FOR A PERIOD OF SIX MONTHS FROM THE DATE OF ISSUE BY THE
COMPANY (THE "RESTRICTED PERIOD"), THE SECURITIES REPRESENTED
HEREBY ARE NOT PERMITTED TO BE HELD BY, TRANSFERRED TO, OR IN ANY
WAY BENEFIT (WHETHER BY WAY OF LEGAL, BENEFICIAL OR ECONOMIC
OWNERSHIP OR CONTROL), ANY PERSON, COMPANY, LIMITED PARTNERSHIP OR
OTHER UNDERTAKING, WHO OR WHICH IS A US NATIONAL OR OTHERWISE
DOMICILED OR RESIDENT ANYWHERE IN THE US OR HOLDS A US PASSPORT.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMED
(THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. DURING THE
RESTRICTED PERIOD, THESE SECURITIES (A) ARE NOT PERMITTED TO TRADE
THROUGH THE FACILITIES OF ANY STOCK EXCHANGE OR QUOTATION SYSTEM IN
THE UNITED STATES (B) MAY ONLY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED OUTSIDE THE UNITED STATES IN CONFORMITY WITH RULE 904
OF REGULATION S UNDER THE 1933 ACT, (C) IN CONFORMITY WITH AN
EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, IF AVAILABLE, AND
IN CONFORMITY WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) IN
A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE 1933 ACT
OR ANY APPLICABLE STATE LAWS AND REGULATIONS, GOVERNING THE OFFER
AND SALE OF SECURITIES.
SUBJECT TO COMPLIANCE WITH APPLICABLE CANADIAN SECURITIES LAWS,
THE SECURITIES REPRESENTED HEREBY MAY BE FREELY TRADED BY ANY
NON-US PERSON THROUGH THE FACILITIES OF THE CSE OR ANY OTHER
CANADIAN STOCK EXCHANGE UPON WHICH THE SECURITIES BECOME
LISTED."
Safe-Keeping and Custody Arrangements in respect of the Demerger
Shares applicable to US Persons
To ensure compliance with Applicable Restrictions (including but
not limited to the restrictions under the Securities Act)
Qualifying Shareholders who are US Persons will not receive their
Demerger Shares and will be prohibited from dealing in Demerger
Shares for the duration of the Restricted Period. Under the terms
of the New Articles, consideration paid by the Company on
redemption of the Redeemable Shares can be held in escrow, or
subject to safe-keeping and custody arrangements on such terms and
for such period as the Company determines in its sole
discretion.
The Company has accordingly agreed to the appointment of the
Custodian who shall hold in custody all Demerger Shares which
cannot be held by US Persons for the duration of the Restricted
Period. Accordingly, US Persons will not receive possession or have
entitlement to Demerger Shares until expiry of the Restricted
Period. Portage has approved the appointment of the Custodian and
the arrangements to ensure its continued compliance with the
Securities Act and will direct its transfer agent to send relevant
share certificates directly to the Custodian on completion of the
Demerger.
For further details regarding the safe-keeping and custody
arrangements, US Persons should contact the Custodian directly by
email to michael.corcoran@hilldickinson.com.
Rights of Demerger Shares
In addition to the Applicable Restrictions, the Demerger Shares
received by Shareholders of the Company will be subject to the
following rights and restrictions:
(i) Rights on Voting: each Demerger Share shall entitle the
holder to one vote per Demerger Share on any resolution put to the
shareholders of Portage.
(ii) Rights on Income: each Demerger Share confers an equal
right to participate in any dividend declared by Portage.
(iii) Rights in the event of a winding-up of Portage: in the
event of a winding up and a distribution of assets, each Demerger
Share shall have equal rights with regard to the distribution of
the surplus assets of Portage.
(iv) Rights on Transfers: the Demerger Shares are transferrable
provided that the transfer is made pursuant to an appropriate
instrument of transfer, subject to the memorandum and articles of
Portage.
(v) Rights of Pre-emption (first refusal): in respect of any
future issue by Portage of any equity securities, rights of
pre-emption under BVI Companies Act 2004 do not apply to
Portage.
Subject to approval of the Disposal and the Demerger, it is
expected that share certificates in respect of the Demerger Shares
will be posted on or around 15 January 2019. Share certificates in
respect of Demerger Shares which are subject to safe-keeping and
custody arrangements will be held by the Custodian until the
expiration of the Restricted Period.
The CSE is a junior stock market in Canada and is not widely
traded by investors in the UK. A number of UK-based brokers do,
however, offer a trading platform for investors to dematerialise
their Demerger Shares (should they wish to do so) and deal in
Portage Shares electronically. Shareholders wishing to hold their
Demerger Shares in dematerialised form should, in the first
instance, speak to their existing broker to see whether they
provide this service. If they do not provide this service, such
Shareholders should contact other brokers. The Company makes no
recommendation regarding which brokers Shareholders should contact
regarding new accounts (if their existing brokers do not provide a
CSE trading facility), but the Company has contacted an established
London broker, Peterhouse Capital Limited ("Peterhouse"), who have
consented to their contact details being included in this Document.
Any engagement is subject to the standard terms and conditions of
Peterhouse for new clients and Shareholders should satisfy
themselves in this regard that they understand and accept the
proposed terms. The Company accepts no liability or responsibility
for the appointment of any broker, or the terms of such
appointment, by Shareholders.
Contact Name Email Telephone
Lucy Williams lw@peterhousecap.com +44 (0)20 7469 0930
-------------------------------- ------------------------------
Duncan Vasey dv@peterhousecap.com +44 (0)20 7469 0930
-------------------------------- ------------------------------
7. The Company's operations following the Disposal and the Demerger
The Disposal and the Demerger, if approved, will result in the
divestment of substantially all of the Company's existing business,
assets and investments. Thereafter, the Company will be classified
as an AIM Rule 15 cash shell and as such will be required to make
an acquisition or acquisitions which constitutes a reverse takeover
under AIM Rule 14 (or seek re-admission as an investing company (as
defined under the AIM Rules)) on or before the date falling six
months from completion of the Disposal failing which the Ordinary
Shares would then be suspended from trading on AIM pursuant to AIM
Rule 40. Admission to trading on AIM would be cancelled six months
from the date of suspension should the reason for the suspension
not have been rectified.
On 26 June 2018, Jim Mellon (via Galloway Limited) and Dr Greg
Bailey each agreed to loan US$500,000 to the Company (the
"Shareholder Loans") to fund the operational activities and the
investments of the Company. The Shareholder Loans are required to
be repaid by the Company within twelve months (the "Loan Term")
from the date of the loan and shall accrue interest at a rate of 7
per cent. per annum in the first twelve months. If the Shareholder
Loans are not repaid within the Loan Term, the interest rate shall
be increased to 18 per cent. per annum. Unless new debt or equity
funding is available to the Company during the Loan Term, it is
expected that the Shareholder Loans will be repaid prior to expiry
of the Loan Term out of the proceeds of sale of some or all of the
Retained Shares.
The Shareholder Loans have been reduced by, in aggregate,
approximately GBP40,000 following the exercise of options by Jim
Mellon and Dr Greg Bailey, as detailed in the announcement released
by the Company on 6 November 2018.
In the event that the Disposal and the Demerger are approved,
the Directors will ensure that steps are taken to minimise the
Company's costs and to preserve capital.
Dr Ian Walters, Kam Shah, Richard Armstrong and Colin Weinberg
shall each resign as Directors of the Company with immediate effect
from the conclusion of the AGM. By recommendation of the Board,
Denham Eke shall stand for appointment as a director of the Company
at the AGM. A biography for Denham Eke is set out in paragraph 10
below. As from the conclusion of the AGM, the Company shall have no
independent directors and the Company is therefore seeking to
appoint at least one independent non-executive director. The
Company will release an announcement reporting on the progress with
regard to such an appointment or appointments in due course.
In addition to the Shareholder Loans and the fees of Directors,
the Company will otherwise be required to meet its general
overheads and the costs of maintaining a listing of the Company's
shares on AIM.
Following the completion of the Disposal and the Demerger, the
Company will have limited cash reserves and its principal assets
will be up to 56,657,531 Retained Shares worth approximately
US$5,043,000 at the Portage Share Price (approximately,
GBP3,897,000 at the Exchange Rate), which are to be set aside for
general working capital requirements. In the event that the New
Options remain unexercised by 5.00 p.m. on 8 January 2020 the
number of Retained Shares could increase by up to 40,692,697
Portage Shares. The number of Retained Shares shall decrease by 18
Portage Shares (US$1.60 at the Portage Share Price) for each new
Ordinary Share issued by the Company following any exercise of the
Northland Warrants prior to the Demerger Record Date.
The Company's available resources to undertake an evaluation of
and to complete a reverse takeover will depend upon the value of
the Retained Shares (to the extent they continue to be held by the
Company at such time) and its existing cash reserves. In the event
that the cash reserves and any value realised from the Retained
Shares are insufficient to undertake a reverse takeover, the
Directors may seek further funding, including by a further issue of
Ordinary Shares.
8. Company Options, the Option Redemption and New Options
There are 2,949,803 Options over Ordinary Shares outstanding as
at the date of this Document. The Options were granted to the
directors, management team, consultants and to certain advisers of
the Company during the period from 29 April 2015 to 23 March 2016.
As at the date of this Document, 2,113,539 of the outstanding
Options have vested; a further 836,264 Options will vest on the
third anniversary of the RTO Admission.
Existing Company Options
The table below provides a summary of the Options currently in
issue:
Name of Option Date of Exercise Number of Number of
Holder Grant Price vested unvested
Options Options
Richard
Armstrong 29.04.2015 23.2p 86,231 -
---------------------- ------------------- ------------------------ --------------------
Colin Weinberg 29.04.2015 23.2p 86,231 -
---------------------- ------------------- ------------------------ --------------------
Catalyst
Corporate
Consultants
Limited 29.04.2015 23.2p 86, 231 -
---------------------- ------------------- ------------------------ --------------------
Northland
Capital
Partners
Limited 22.03.2016 71p 182,333 -
---------------------- ------------------- ------------------------ --------------------
Anthony Chow 22.03.2016 35.5 p 243,110 121,556
---------------------- ------------------- ------------------------ --------------------
Declan Doogan 22.03.2016 35.5 p 243,110 121,556
---------------------- ------------------- ------------------------ --------------------
Alexander
Pickett 22.03.2016 35.5 p 243,110 121,556
---------------------- ------------------- ------------------------ --------------------
Kam Shah 22.03.2016 35.5 p 243,110 121,556
---------------------- ------------------- ------------------------ --------------------
Dr Ian Walters
* 22.03.2016 35.5 p 285,857 142,929
---------------------- ------------------- ------------------------ --------------------
Robert Kramer
** 22.03.2016 35.5p 171,109 85,555
---------------------- ------------------- ------------------------ --------------------
Catalyst
Corporate
Consultants
Limited 22.03.2016 35.5 p 121,555 60,778
---------------------- ------------------- ------------------------ --------------------
Richard
Armstrong 22.03.2016 35.5p 60,776 30,389
---------------------- ------------------- ------------------------ --------------------
Colin Weinberg 22.03.2016 35.5 p 60,776 30,389
---------------------- ------------------- ------------------------ --------------------
Totals: 2,113,539 836,264
------------------- ------------------------ --------------------
Total Options: 2,949,803
------------------- ----------------------------------------------
*granted to his personal services company Value Driven Drug
Solutions LLC
**granted to his personal services company RA Kramer Consulting
LLC
Should Northland exercise some or all of the Northland Warrants
prior to the Demerger Record Date, the new Ordinary Shares issued
to it would be eligible for the Demerger and the number of Retained
Shares would therefore decrease by 18 Portage Shares for each new
Ordinary Share issued by the Company.
Option Redemption and grant of New Options
The table below summarises the number of Redemption Options held
by each Option Holder and the number of New Options each New Option
Holder will be granted, in accordance with the terms of the Option
Purchase Agreements referred to in paragraph 1 above:
Name of New Option Number of Implied gain on Number of New
Holder Redemption sale of Redemption Options granted
Options Options based
on value of
Consideration
Shares on the
Diluted Basis
Richard Armstrong 177,396 US$243,202 2,730,871
---------------------- ------------------------------- ---------------------------
Colin Weinberg 177,396 US$243,202 2,730,871
---------------------- ------------------------------- ---------------------------
Catalyst Corporate
Consultants
Limited 268,564 US$361,251 4,056,417
---------------------- ------------------------------- ---------------------------
Anthony Chow 364,666 US$472,187 5,302,094
---------------------- ------------------------------- ---------------------------
Declan Doogan 364,666 US$472,187 5,302,094
---------------------- ------------------------------- ---------------------------
Alexander Pickett 364,666 US$472,187 5,302,094
---------------------- ------------------------------- ---------------------------
Kam Shah 364,666 US$472,187 5,302,094
---------------------- ------------------------------- ---------------------------
Dr Ian Walters* 428,786 US$555,213 6,234,373
---------------------- ------------------------------- ---------------------------
Robert Kramer** 256,664 US$332,341 3,731,789
---------------------- ------------------------------- ---------------------------
Totals: 2,767,470 US$3,623,959 40,692,697
---------------------- ------------------------------- ---------------------------
*granted to his personal services company Value Driven Drug
Solutions LLC
**granted to his personal services company RA Kramer Consulting
LLC
Terms of New Options
Subject to the approval of the Demerger, the Company shall grant
the New Options to the New Option Holders on the following terms
and conditions:
(a) Exercise Period: the New Options are exercisable during the
period commencing three months from the Date of Grant and expiring
on the first anniversary of the Date of Grant, being, 5.00 p.m. on
8 January 2020; and
(b) Vesting Condition: the Portage Shares have traded above
US$0.03 (three cents) for a period of at least five consecutive
trading days during the Exercise Period.
The New Options will lapse irrevocably in the event that they
are not exercised before the expiry of the Exercise Period.
Safe-Keeping and Custody Arrangements in respect of the New
Option Shares
To the extent that New Option Holders who are US Persons
exercise their New Options during the Restricted Period, any New
Option Shares issued will be subject to the following safe-keeping
and custody arrangements during the Restrictive Period.
To ensure compliance with Applicable Restrictions (including but
not limited to the restrictions under the Securities Act) Option
Holders (who are US Persons) who elect to exercise their New
Options will not receive certificates representing their New Option
Shares and will be prohibited from dealing in their New Option
Shares for the duration of the Restricted Period.
The Company has accordingly agreed to the appointment of the
Custodian who shall hold in custody any New Option Shares which
cannot be held by US Persons for the duration of the Restricted
Period. Accordingly, New Option Holders who are US Persons will not
receive possession or have entitlement to New Option Shares
required to be issued pursuant to the exercise of the New Options
until expiry of the Restricted Period. Portage has approved the
appointment of the Custodian and the arrangements to ensure its
continued compliance with the Securities Act and will direct its
transfer agent to send relevant share certificates, representing
New Option Shares, pursuant to the exercise of New Options by US
Persons during the Restricted Period directly to the Custodian on
completion of the Option Redemption.
For further details regarding the safe-keeping and custody
arrangements, affected New Option Holders should contact the
Custodian directly by email to
michael.corcoran@hilldickinson.com.
All New Option Shares will carry the legend described in
paragraph 8 of this Document.
9. Related Party Transactions
The Disposal
The Disposal is a related party transaction under Rule 13 of the
AIM Rules by virtue of the commonality in the share ownership
structure and management boards of Portage and the Company.
The Directors of the Company hold the following positions on the
senior management board of Portage: (i) Dr Greg Bailey, Chairman;
(ii) Kam Shah, Chief Financial Officer; (iii) Jim Mellon, Director;
and (iv) Dr Ian Walters, Director.
As at the date of this Document, Dr Greg Bailey and Jim Mellon,
respectively, hold a legal and beneficial interest in approximately
23.92 per cent. and 16.38 per cent. of the issued share capital of
Portage, and are also vendors under the Sale Agreement in relation
to their personal holdings of shares in Target. Shareholders should
also be aware that the Acquisition constitutes a related party
transaction for Portage under Canadian securities legislation and,
as such, approval is required from a majority of the disinterested
Portage shareholders. Portage shares held by Messrs. Bailey and
Mellon will therefore not be eligible to vote on the Portage
Approval.
Kam Shah and Dr Ian Walters each hold a minority interest of
less than 3 per cent. of the issued share capital of Portage, as at
the date of this Document.
Richard Armstrong, and Colin Weinberg, being the "A" Independent
Directors for the purposes of AIM Rule 13, having consulted with
Northland, the Company's Nominated Adviser, consider that the terms
of the Disposal are fair and reasonable insofar as Shareholders are
concerned. In particular, it is noted that the value of the
Disposal values the Target Portfolio at substantially more than the
Company's valuation on the AIM Market on 13 August 2018, the date
before the announcement by the Company of the terms of the
Disposal.
The Option Redemption
The Option Redemption is a related party transaction under Rule
13 of the AIM Rules.
Mr James Mellon and Dr Greg Bailey are deemed to be independent
directors for the purposes of the Option Redemption. Mr James
Mellon and Dr Greg Bailey, being the "B" Independent Directors for
the purposes of AIM Rule 13, having consulted with Northland, the
Company's Nominated Adviser, consider that the terms of the Option
Redemption are fair and reasonable insofar as Shareholders are
concerned, particularly noting:
(a) key management and consultants who hold Redemption Options
are to transfer to Portage (subject to completion of the
transaction) in order to continue to operate the Target Portfolio
and are standing down from their respective duties with the Company
on completion. During the course of negotiations with Portage it
was made clear that the services of such parties were required for
the continued development of the Target Portfolio and the value of
their respective Options should be respected (as the burden of
rewarding each individual for past endeavour should not rest with
Portage and was the responsibility of the Company);
(b) as the holders of Redemption Options will not be involved in
the day-to-day operations and management of the Company following
completion of the Disposal, the "B" Independent Directors do not
believe that it will be beneficial to Shareholders as a whole for
such holders to exercise their options to be eligible for Demerger
Shares (given the likelihood that such holders will dispose of
their Ordinary Shares post-transaction which would have a negative
impact on the Company's share price); and
(c) the advice of the Company's UK legal counsel that the
existing option holders would not be compensated in the event of a
transfer of assets by the Company as a distribution in specie
(thereby reducing the value of the Company's assets and its net
asset value per share) under the terms of the existing option
arrangements, and that it was common for option schemes in the UK
to provide for terms to be adjusted or to permit a "cashless
exercise" in such circumstances (and in this regard the "B"
Independent Directors considered the terms of the existing option
arrangements to be unfair as management and consultants and
advisers were not protected where assets were transferred by the
Company as a distribution in specie).
10. AGM
Resolution 1 - Receiving the Financial Statements and Reports
for 2017
Shareholders are being asked to receive the financial statements
of the Company for the year ended 31 December 2017 (including the
Directors' and auditors' reports thereon).
Resolution 2 - Appointment of a Director and Note on Retirement
of Directors
In accordance with the Current Articles and corporate governance
policy, one third of the Directors are required to stand for
re-election by rotation at every annual general meeting.
On this occasion, Kamlesh Shah and Dr Ian Walters have agreed to
retire by rotation but not to offer themselves for re-appointment
at the AGM. Richard Armstrong and Colin Weinberg will also retire
as directors of the Company with effect from the conclusion of the
AGM.
The Board are therefore proposing the appointment of Denham Eke
as the chief financial officer and as a director of the Company at
the AGM in accordance with article 88 of the Current Articles. The
board of directors following the AGM will comprise James Mellon, Dr
Greg Bailey and, if elected, Denham Eke. A biography for Denham Eke
is set out below.
Biography - Denham Eke
Denham Eke is the Managing Director of Burnbrae Group Limited, a
private international asset management company. He began his career
in stockbroking with Sheppards & Chase before moving into
corporate planning for Hogg Robinson Plc, a major multinational
insurance broker. He is a director of many years' standing of both
public and private companies involved in the financial services,
property, mining, and manufacturing sectors. He is chairman of
Webis Holdings Plc, chief executive officer of Manx Financial Group
Plc, chief finance officer of Port Erin Biopharma Investments
Limited, and a non-executive director of Billing Services Group
Limited - all quoted on the London AIM market. Mr Eke is also a
non-executive director of Juvenescence Ltd., a life science and
artificial intelligence company focussed on advancements in the
field of longevity.
Resolution 3 - Appointment of Auditors and Determination of
their Remuneration
The Company is required to appoint or re-appoint auditors at
each general meeting at which financial statements are presented.
It is proposed that RSM UK Audit LLP be re-appointed as the
Company's auditors, and to authorise the Board to determine their
remuneration.
Resolution 4 - Disapplication of pre-emption rights
Article 4.2 of the Company's Current Articles and Article 4.2 of
the New Articles contain pre-emption rights that require all shares
which the Company proposes to allot for cash to be first offered to
existing Shareholders in proportion to existing shareholdings,
unless a special resolution is passed to dis-apply such rights.
Such rights do not apply to an issue otherwise than for cash, such
as an issue in consideration of an acquisition.
It is proposed that the Directors be authorised to allot for
cash, on a non-pre-emptive basis, ordinary shares in the capital of
the Company for an aggregate par value of up to GBP500,000, as if
the pre-emption rights of the Shareholders contained in Current
Articles and the New Articles did not apply to such allotment(s),
such authority to expire (unless and to the extent previously
revoked, varied or renewed by the Company in a general meeting) at
the conclusion of the next annual general meeting of the Company.
The purpose of this special resolution is to give the Directors the
flexibility to take advantage of specific investment and funding
opportunities as they arise, without the need to revert to
Shareholders for further approval.
Resolution 5 - Adoption of New Articles
Resolution 5 which will be proposed as a special resolution is
to approve the adoption of the New Articles in substitution and to
the exclusion of the Current Articles.
Resolution 6 - Disposal and Demerger
Resolution 6 which will be proposed as a special resolution and
which is conditional on the passing of Resolution 5, is to approve:
(i) the Disposal in accordance with the terms of the Sale Agreement
and as required under Rule 15 of the AIM Rules; (ii) the Share
Split, resulting in the creation of the Redeemable Shares; and
(iii) the redemption of the Redeemable Shares by the Company in
consideration for the transfer of the Demerger Shares to
Shareholders.
Resolution 7 - Redemption of Options
Resolution 7 which will be proposed as a special resolution and
which is conditional on the passing of Resolutions 5 and 6 is to
approve and authorise the purchase of the Redemption Options in
consideration of the grant of the New Options to the New Option
Holders.
11. Action to be taken
A Form of Proxy for use at the AGM is enclosed with this
Document.
Shareholders holding Ordinary Shares in certificated form should
complete and sign the Form of Proxy and return it to Link Asset
Services, PXS, 34 Beckenham Road, Kent BR3 4TU as soon as possible
but in any event to be received not later than 3.00 p.m. on 4
January 2019 or 48 hours before any adjourned meeting.
The return of a Form of Proxy will not, however, prevent a
Shareholder from attending the AGM and voting in person, should
he/she wish to do so. Shareholders who wish to attend in person
should contact Link Asset Services in advance to confirm what
identity documents they should bring with them and to complete a
form of representation (available on request from Link Asset
Services) if necessary.
Shareholders holding their interest in uncertificated form may
vote via their CREST provider (please see CREST instructions in the
Notice of Meeting notes section).
12. Recommendation
The Board considers that the resolutions to be proposed at the
AGM are in the best interests of Shareholders as a whole. In
relation to the Rule 15 Approval and the Demerger Resolution, for
the reasons set out in paragraph 2 of this Document and following
the process undertaken by the Board, the Board is of the view that
the proposals are in the best interests of Shareholders.
Accordingly, the Board recommends that Shareholders vote in
favour of the Resolutions to be proposed at the AGM as they intend
to do in respect of their own beneficial holdings of 26,920,780
Ordinary Shares in aggregate representing 73.35 per cent. of the
current issued share capital of the Company.
13. Undertakings
The Company has received signed irrevocable undertakings from
James Mellon and Dr Greg Bailey, shareholders holding, in aggregate
26,813,042 Ordinary Shares as at the date of this Document and
which together represents 73.12 per cent. of the current issued
ordinary share capital of the Company, confirming that they shall
vote in favour of all Resolutions being proposed at the AGM.
On the basis of the signed irrevocable undertakings, it is
likely that the Resolutions put to Shareholders at the AGM will be
approved.
DEFINITIONS
The following definitions apply throughout this Document unless
the context requires otherwise:
""A" Independent Director" Colin Weinberg and Richard Armstrong,
being the independent directors of
the Company for the purpose of the
Disposal, being a related party transaction
pursuant to Rule 13 of the AIM Rules
"Acquisition" the proposed acquisition from the
Company of a 94.2 per cent. interest
in Target by Portage in accordance
with the terms of the Sale Agreement
"AGM" the annual general meeting of Shareholders
to be held at 3.00 p.m. on 8 January
2019, notice of which is set out
at Part III of this Document, or
any adjournment of that meeting
"AIM" the AIM Market operated by the London
Stock Exchange
"AIM Rules" together the AIM Rules for Companies,
the AIM Rules for Nominated Advisers
and the AIM Dis-ciplinary Procedures
and Appeals Handbook as published
from time to time
"Applicable Restrictions" any restrictions on Shareholders
under the Securities Act (as more
particularly set out at paragraph
6 of this Document)
"Articles Resolution" the resolution numbered 5 set out
in the Notice in relation to the
approval and adoption of the New
Articles
"B" Independent Director" James Mellon and Dr Greg Bailey,
being independent directors of the
Company for the purpose of the Option
Redemption, a related party transaction
pursuant to Rule 13 of the AIM Rules
"BVI" the British Virgin Islands
"Company" SalvaRx Group Plc, a company incorporated
and domiciled in the Isle of Man
with Company Number 000258V
"Conditions Precedent" the conditions precedent to the Disposal
by the Company, and the Acquisition
by Portage, set out in the Sale Agreement
and as more particularly set out
at paragraph 4 of this Document
"Consideration" US$67.5 million to be satisfied by
the issue of the Consideration Shares
"Consideration Shares" 757,943,784 Portage Shares, issued
as fully paid shares at an implied
price per share equal to the Portage
Share Price
"CREST" the computerised settlement system
used to facilitate the transfer of
title to shares in uncertificated
form
"CSE" the Canadian Securities Exchange
"CREST Regulations" the Uncertificated Securities Regulations
2006 (SD No. 743/06) of the Isle
of Man
"Current Articles" the current Articles of Association
of the Company as at the date of
this Document
"Custodian" Hill Dickinson LLP, the Company's
UK legal counsel
"Date of Grant" 8 January 2019, subject to the approval
of the Resolutions
"Demerger" together the proposed Share Split
and Redemption in accordance with
the Demerger Resolution to be considered
and, if thought fit, approved by
Shareholders at the AGM
"Demerger Record Date" 5.00 p.m. on 8 January 2019
"Demerger Resolution" the resolution numbered Error! Reference
source not found. set out in the
Notice
"Demerger Shares" not less than 660,593,556 Portage
Shares, to be distributed to Shareholders,
as part of the Demerger (such figure
increasing by 18 Portage Shares for
each new Ordinary Share issued by
the Company on exercise of any Northland
Warrants prior to the Demerger Record
Date)
"Diluted Basis" 39,234,089 Ordinary Shares, representing
the total number of Ordinary Shares
in issue as at 14 August 2018 (being
36,466,619 Ordinary Shares) plus
2,767,470 Ordinary Shares in respect
of the notional exercise of the Redemption
Options
"Directors" or the "Board" the directors of the Company whose
names are set out on page 11 of Part
I of this Document
"Disposal" the proposed sale by the Company
of its 94.2 per cent. interest in
Target to Portage in accordance with
the terms of the Sale Agreement
"Document" this document
"Euroclear" Euroclear UK & Ireland Limited, a
company incorporated in England and
Wales and the operator of CREST
"Exchange Rate" GBP1: US$1.294, being the Sterling
/ US Dollar exchange rate as published
by The Financial Times, London, on
7 August 2018 as at 3.00 p.m.
"Existing Ordinary Shares" the 36,699,642 Ordinary Shares of
the Company in issue at the date
of this Document
"EyGen" EyGen Limited, a company incorporated
and registered in the BVI
"Form of Proxy" the form of proxy for use by the
Shareholders in connection with the
AGM
"Group" the Company and its subsidiary undertaking
at the date of this Document
"Intensity" Intensity Therapeutics Inc., a company
incorporated and domiciled in Delaware,
USA
"Immunova" Immunova LLC, a company incorporated
and domiciled in Delaware, USA
"IOM" the Isle of Man
"iOx" IOX Therapeutics Ltd, a company incorporated
and registered in England and Wales
with company number 09430782
"IIROC" Investment Industry Regulatory Organization
of Canada
"LOI" the non-binding letter of intent
dated 19 March 2018 between the Company
and Portage in relation to the Disposal
"Nekonal" Nekonal SARL, a company incorporated
in Luxembourg, focused on developing
antibodies for autoimmune diseases
"Nekonal Oncology" Nekonal Oncology Ltd, a company incorporated
and registered in the BVI
"New Articles" subject to approval of the Resolutions,
the new memorandum and articles of
association to be adopted by the
Company at the AGM
"New Option Holders" means the holders of New Options
as set out at paragraph 8 of this
Document
"New Options" the new options over 40,692,697 Consideration
Shares granted by the Company to
the New Option Holders, as set out
at paragraph 8 of this Document
"New Option Shares" means up to 40,692,697 Portage Shares
capable of being transferred by the
Company to the New Option Holders,
pursuant to the exercise of the New
Options
"Northland" Northland Capital Partners Limited,
the Company's Nominated Adviser as
at the date of this Document
"Northland Warrants" outstanding warrants held by Northland
over 182,333 Ordinary Shares as at
the date of this Document (more particularly
set out at paragraph 8 of this Document)
"Notice" the notice of the AGM set out at
the end of this Document
"NYSE" the New York Stock Exchange
"Option Holders" the holders of Redemption Options
as set out at paragraph 8 of this
Document
"Option Purchase Agreements" the agreements between the New Option
Holders and the Company in connection
with the Option Redemption
"Option Redemption" the purchase of the Redemption Options
from the New Option Holders in consideration
of the grant of the New Options as
set out at paragraph 8 of this Document
"Options" all options and warrants over Ordinary
Shares outstanding as at the date
of this Document and more particularly
as set out at paragraph 8 of this
Document
"Ordinary Shares" the ordinary shares of the Company
of 2.5 pence each
"OTC" the stock market operated in the
USA by the OTC Markets Group
"Overseas Shareholders" Shareholders with registered addresses
outside the UK or who are incorporated
in, registered in or otherwise resident
or located in, countries outside
the UK
"Per Share Consideration Value" US$1.75 per Ordinary Share, being
the value of the Consideration divided
by the number of Ordinary Shares
in issue at 13 August 2018 (after
allowing for the notional exercise
of the Redemption Options)
"PGL" Portage Glasgow Limited, a company
incorporated in Scotland with company
number SC583928
"PharmaVentures" PharmaVentures Limited, a company
incorporated and registered in England
and Wales with registered number
03419584 and having its registered
office at Triumph House, Parkway
Court, Oxford Business Park, Oxford
OX4 2JY
"Portage" Portage Biotech Inc., a company incorporated
and domiciled in the BVI with company
registration no. 1784969
"Portage Approval" approval of the Acquisition by a
majority of the disinterested Portage
shareholders at the Portage Meeting
of Shareholders
"Portage Independent Director" Steven Mintz (for the purpose of
the Acquisition)
"Portage Meeting of Shareholders" the Annual and Special Meeting of
Portage for the purpose of, inter
alia, considering and if thought
fit approving the Acquisition
"Portage Portfolio" the portfolio of investments, subsidiaries
and interests of Portage
"Portage Shareholder Circular" the circular to Portage shareholders
dated 26 November 2018 setting out
the reasons for, and terms of, the
Acquisition, and including notice
of the Portage Meeting of Shareholders
"Portage Share Price" US$0.089, being the implied valuation
of each Portage share agreed between
the parties on 19 March 2018, being
the date of the LOI (giving an aggregate
value for Portage of approximately
US$25 million)
"Portage Shares" the common shares in the issued share
capital of Portage of no par value,
which shares are traded on the CSE
and the OTC
"PPL" Portage Pharmaceuticals Limited,
a company incorporated in the BVI
"Prohibited Territories" Australia, Canada, Japan, the Republic
of South Africa and the US
"Qualifying Shareholders" Shareholders of the Company recorded
on the Shareholder Register on the
Demerger Record Date
"Redeemable Shares" subject to approval of the Share
Split Resolution at the AGM, the
redeemable shares of no par value
each in the Company, with the rights
set out in the New Articles
"Redemption" subject to approval of the Resolutions,
the redemption of all Redeemable
Shares by the Company on the date
of the Demerger in consideration
of the transfer to shareholders of
not less than 660,593,556 Demerger
Shares in aggregate (such figure
increasing by 18 Portage Shares for
each new Ordinary Share issued by
the Company on exercise of the Northland
Warrants prior to the Demerger Record
Date)
"Redemption Options" Options over a total of 2,767,470
new Ordinary Shares outstanding as
at the date of this Document (being
all of the outstanding Options other
than Northland Warrants), as more
particularly set out at paragraph
8 of this Document
"Resolutions" the resolutions set out in the Notice
to be proposed at the AGM
"Restricted Period" the period of six months from the
date of completion of the Demerger
"Retained Shares" up to 56,657,531 Portage Shares not
subject to New Options to be retained
by the Company following completion
of the Demerger and Option Redemption,
such figure decreasing by 18 Portage
Shares for each new Ordinary Share
issued by the Company on exercise
of a Northland Warrant prior to the
Demerger Record Date)
"Rift" Rift Biotherapeutics Inc., a company
incorporated and registered in Delaware,
USA
"RTO Admission" the re-admission of the Ordinary
Shares of the Company to trading
on AIM on 22 March 2016
"Rule 15 Approval" approval by Shareholders of the disposal
by the Company of its interest in
Target (pursuant to Rule 15 of the
AIM Rules)
"Sale Agreement" the conditional sale agreement between
the Company, James Mellon, Dr Greg
Bailey and Portage dated 13 August
2018 setting out the terms of the
Disposal and Acquisition, and the
Conditions Precedent to the transaction
"Saugatuck" Saugatuck Therapeutics Ltd, a company
incorporated and registered in the
BVI
"Securities Act" the United States Securities Act
of 1933, as amended, and the rules
and regulations promulgated thereunder
"Sentien" Sentien Biotechnologies Inc., a company
incorporated and registered in Delaware,
USA
"Shareholder Loans" the aggregate loan of US$1m from
James Mellon (via Galloway Limited)
and Dr Greg Bailey to the Company
"Shareholder Register" the register of members of the Company
"Shareholders" holders of Ordinary Shares in the
Company
"Share Split" the allotment of one Redeemable Share
for each Ordinary Share in issue
as at the Demerger Record Date
"Share Split Resolution" the resolution numbered 6 set out
in the Notice
"Stimunity" Stimunity S.A.S. a company incorporated
and registered in France
"Target" SalvaRx Limited, a company incorporated
and registered in the BVI with Company
Registration Number 1873006
"Target Portfolio" the portfolio of investments and
interests held by Target as at the
date of this Document
"TSX Trust" TSX Trust Company, being the registrar
and transfer agent of Portage
"uncertificated" or "in uncertificated recorded on the Shareholder Register
form" as being held in uncertificated form
in CREST, entitlement to which, by
virtue of the CREST Regulations,
may be transferred by means of CREST
"US Person" a US Person under the definition
set out in Regulation S of the Securities
Act, including inter alia any person,
company, limited partnership or other
undertaking, who or which is a US
national or otherwise domiciled or
resident anywhere in the US or holds
a US passport
"Valuation Report" the independent valuation report
prepared by PharmaVentures in relation
to the Target Portfolio dated 23
July 2018, jointly commissioned by
the Company and Portage in accordance
with the terms of the LOI
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCLFFIFLILRFIT
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