UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 18, 2011
CPEX Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
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1-33895
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26-1172076
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(Commission file number)
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(IRS Employer Identification Number)
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2 Holland Way, Exeter, New Hampshire
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03833
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: (603) 658-6100
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 8.01. Other Events.
On March 18, 2011, the Board of
Directors (the “Board”) of CPEX Pharmaceuticals, Inc. (“CPEX”) completed its review of the unsolicited non-binding
letter (the “Revised Mangrove Letter”) received from Mangrove Partners (“Mangrove”) on March 16, 2011 revising the
terms of the potential alternative transaction involving a recapitalization of CPEX (the “Revised Alternative
Proposal”) that Mangrove had originally proposed on March 14, 2011. Consistent with its fiduciary duties and the Agreement and Plan
of Merger by and among FCB I Holdings Inc. (“FCB”), FCB I Acquisition Corp. and CPEX, dated as of January 3, 2011
(the “Merger Agreement”), the CPEX Board reviewed the Revised Mangrove Letter in consultation with outside legal
counsel and financial advisors and based on its evaluation determined that engaging in discussions with Mangrove
regarding the Revised Alternative Proposal is not, and is not reasonably likely to lead to, a Superior Proposal
(as that term is defined in the Merger Agreement). The Board concluded that the Merger Agreement continues to
be the most compelling opportunity for stockholders to immediately and with certainty realize the maximum after-tax
value for their shares. Accordingly, the Board reaffirmed its recommendation that stockholders vote FOR the merger
agreement with FCB. On March 18, 2011, CPEX issued a press release which is attached hereto as Exhibit 99.1 and is
hereby incorporated into this report by reference.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
CPEX has filed with the Securities and Exchange Commission (the “SEC”) and furnished to its
stockholders a definitive proxy statement in connection with the proposed transaction with FCB (the
“Definitive Proxy Statement”). This communication may be deemed to be solicitation material in
respect of the merger with FCB. Investors and security holders of CPEX are urged to read the
Definitive Proxy Statement and the other relevant materials (when they become available) because
such materials will contain important information about CPEX and the proposed transaction with FCB.
The Definitive Proxy Statement and other relevant materials (when they become available), and any
and all other documents filed by CPEX with the SEC, may be obtained free of charge at the SEC’s
website at
www.sec.gov
. In addition, investors and security holders may obtain free copies
of the documents CPEX files with the SEC by directing a written request to CPEX Pharmaceuticals,
Inc., 2 Holland Way, Exeter, NH 03833, Attention: Chief Financial Officer. Copies of CPEX’s
filings with the SEC may also be obtained at the “Investors” section of CPEX’s website at
www.cpexpharm.com/investor.htm
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INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND THE OTHER
RELEVANT MATERIALS (WHEN THEY BECOME AVAILABLE) BEFORE MAKING ANY VOTING OR INVESTMENT DECISION
WITH RESPECT TO THE PROPOSED TRANSACTION WITH FCB.
CPEX and its directors and executive officers may be deemed to be participants in the
solicitation of proxies from the security holders of CPEX in connection with the proposed
transaction with FCB. Information about those directors and executive officers of CPEX, including
their ownership of CPEX securities, is set forth in the Definitive Proxy Statement (filed with the
SEC on February 4, 2011) and in the proxy statement for CPEX’s 2010 Annual Meeting of Stockholders
(filed with the SEC on April 9, 2010), as supplemented by other CPEX filings with the SEC.
Investors and security holders may obtain additional information regarding the direct and indirect
interests of CPEX and its directors and executive officers in the proposed transaction with FCB by
reading the proxy statements and other public filings referred to above.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Certain items in this document may constitute forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve certain risks and uncertainties that could cause
actual
results to differ materially from those indicated in such forward-looking statements,
including, but not limited to: the proposed transaction with FCB; the performance of CPEX; the
benefits of the proposed transaction with FCB and such other risks and uncertainties as are
detailed in the Definitive Proxy Statement, in CPEX’s Annual Report on Form 10-K filed with the SEC
on March 29, 2010, and in the other reports that CPEX periodically files with the SEC. Copies of
CPEX’s filings with the SEC may be obtained by the methods described above. CPEX cautions
investors not to place undue reliance on the forward-looking statements contained in this document
or other filings with the SEC.
The statements in this document reflect the expectations and beliefs of CPEX’s management only
as of the date of this document and subsequent events and developments may cause these expectations
and beliefs to change. CPEX undertakes no obligation to update or revise these statements, except
as may be required by law. These forward-looking statements do not reflect the potential impact of
any future dispositions or strategic transactions, including the proposed transaction with FCB,
that may be undertaken. These forward-looking statements should not be relied upon as representing
CPEX’s views as of any date after the date of this document.
Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits
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Exhibit
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Number
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Description
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99.1
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Press release issued on March 18, 2011 by CPEX Pharmaceuticals, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CPEX PHARMACEUTICALS, INC.
Registrant
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By:
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/s/ Robert P. Hebert
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Robert P. Hebert
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Vice President and Chief
Financial Officer
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Dated: March 18, 2011
Index to Exhibits
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Exhibit
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Number
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Description
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99.1
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Press release issued on March 18, 2011 by CPEX Pharmaceuticals, Inc.
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Exhibit 99.1
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Investor Contacts:
Bob Hebert
Chief Financial Officer
CPEX Pharmaceuticals, Inc.
603.658.6100
Amy Bilbija
MacKenzie Partners
212.929.5802
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Press Contacts:
Andrew Cole/Chris Kittredge
Sard Verbinnen & Co
212.687.8080
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CPEX PHARMACEUTICALS AFFIRMS RECOMMENDATION THAT
STOCKHOLDERS VOTE FOR MERGER AGREEMENT WITH FCB
CPEX Believes that Mangrove Partners’ Revised Alternative Proposal
Would Not Lead to a Transaction Superior to the Merger with FCB
Cites Significant Execution Risks and Credibility Issues
Exeter, NH, March 18, 2011
— CPEX Pharmaceuticals, Inc. (NASDAQ: CPEX) today
announced that its Board of Directors has completed its review of the unsolicited, non-binding
letter (the “Revised Mangrove Letter”) received from Mangrove Partners (“Mangrove”) on March 16,
2011 revising the terms of the potential alternative transaction involving a recapitalization of
CPEX (the “Revised Alternative Proposal”) that Mangrove had originally proposed on March 14, 2011.
The Board has concluded that the merger agreement with FCB I Holdings Inc. (“FCB”) continues to be
the most compelling opportunity for stockholders to immediately and with certainty realize the
maximum after-tax value for their shares. Accordingly, the Board has reaffirmed its recommendation
that stockholders vote FOR the merger agreement with FCB.
Consistent with its fiduciary duties and CPEX’s merger agreement with FCB, the CPEX Board
reviewed the Revised Mangrove Letter in consultation with outside legal counsel and financial
advisors and based on its evaluation believes that engaging in discussions with Mangrove regarding
the Revised Alternative Proposal is not, and is not reasonably likely to lead to, a transaction
that is both financially more favorable to the CPEX stockholders than the merger with FCB and
reasonably capable of being consummated. In reaching this conclusion, the Board concluded that the
Revised Alternative Proposal exposes significant credibility and execution concerns:
Loss of Two Financing Sources Highlights Credibility and Execution Risks
— In the two
days since Mangrove sent its original Alternative Proposal to the CPEX Board, Mangrove has
inexplicably lost two proposed financing sources, thereby reducing the amount of financing
available to fund the Revised Alternative Proposal. The Board believes that the loss of
these proposed financing sources confirms the Board’s belief that the proposal is highly
suspect and casts doubt on Mangrove’s ability to successfully execute its Revised
Alternative Proposal.
There is Still No Firm Financing Commitment and the Financing is Highly Conditional
—
There are still no commitment letters from Mangrove’s supposed financing sources and the
Revised Alternative Proposal is subject to due diligence.
The Board also reiterated that the Revised Alternative Proposal continues to contain the same
flawed valuation assumptions included in the original Alternative Proposal:
Dividend Amount and Equity Values Remain Overstated
— The Board believes the Revised
Alternative Proposal would not generate sufficient cash to pay the $28.00 special dividend.
Mangrove’s terms still do not appear to properly contemplate expected cash uses such as
transaction fees and expenses, financing fees, Mangrove’s own proposed interest reserve
requirements, the merger agreement termination fee, or any cash reserves for operations.
When properly considered, the special dividend would be approximately $2.30 per share less
than suggested in Mangrove’s Revised Alternative Proposal. Additionally, Mangrove’s assumed
valuations for the proposed warrants and equity in CPEX after the recapitalization are
overly optimistic and do not account for the fact that actual debt service consumes all cash
flows for the next six to seven years. Any residual equity value would be contingent on
cash flows being generated beyond that period.
Value of Notes at Risk of Impairment —
Mangrove’s Revised Alternative Proposal
requires that CPEX operate with a less than appropriate amount of cash on hand. Maintaining
insufficient cash significantly increases the risk of financial distress and possibly
default, which would impair the value of the Notes in the Rights offering, further
diminishing the implied value of this proposal.
Therefore, the CPEX Board continues to believe that the merger with FCB is in the best
interests of CPEX stockholders and reaffirms its unanimous recommendation that stockholders vote
FOR the proposal to approve the merger agreement. Stockholders will receive $27.25 per share in
cash for each of their CPEX shares if the merger is approved. This is a 142% premium over the price
of CPEX shares on January 7, 2010, the day prior to the date a third party publicly stated its
intention to make an unsolicited offer for CPEX, and a premium of approximately 12% over the
60-trading day average closing price of CPEX’s shares on the date prior to the announcement of the
merger with FCB.
On March 24, 2011, CPEX is holding a special meeting of stockholders to vote on the proposal
to approve the FCB merger agreement. Adoption and approval of the transaction requires the
affirmative vote of a majority of the outstanding shares of CPEX common stock entitled to vote at
the special meeting. Therefore, failure to vote will have the same effect as a vote against the
adoption of the merger agreement. Whether or not stockholders are able to attend the special
meeting in person, stockholders should follow the instructions on the form of proxy mailed to them
and submit their proxy via the Internet or by telephone, or complete, sign and date the proxy and
return it in the envelope provided as soon as possible. If stockholders have Internet access, they
are encouraged to record their vote via the Internet. This action will not limit stockholders’
rights to vote in person at the special meeting. If stockholders have any questions or need
assistance voting their shares, they should contact MacKenzie Partners, Inc., the Company’s proxy
solicitor, at (800) 322-2885 or (212) 929-5500 (call collect) or at cpex@mackenziepartners.com.
About CPEX Pharmaceuticals, Inc.
CPEX Pharmaceuticals, Inc. is an emerging specialty pharmaceutical company focused on the
development, licensing and commercialization of pharmaceutical products utilizing CPEX’s validated
drug delivery platform technology. CPEX has U.S. and international patents and other proprietary
rights to technology that facilitates the absorption of drugs. CPEX has licensed
applications of its proprietary CPE-215
®
drug delivery technology to Auxilium
Pharmaceuticals, Inc. which launched Testim, a topical testosterone gel, in 2003. CPEX maintains
its headquarters in Exeter, NH. For more information about CPEX, please visit
www.cpexpharm.com
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ADDITIONAL INFORMATION AND WHERE TO FIND IT
CPEX has filed with the Securities and Exchange Commission (the “SEC”) and furnished to its
stockholders a definitive proxy statement in connection with the proposed transaction with FCB (the
“Definitive Proxy Statement”). This communication may be deemed to be solicitation material in
respect of the merger with FCB. Investors and security holders of CPEX are urged to read the
Definitive Proxy Statement and the other relevant materials (when they become available) because
such materials will contain important information about CPEX and the proposed transaction with FCB.
The Definitive Proxy Statement and other relevant materials (when they become available), and any
and all other documents filed by CPEX with the SEC, may be obtained free of charge at the SEC’s
website at
www.sec.gov
. In addition, investors and security holders may obtain free copies
of the documents CPEX files with the SEC by directing a written request to CPEX Pharmaceuticals,
Inc., 2 Holland Way, Exeter, NH 03833, Attention: Chief Financial Officer. Copies of CPEX’s
filings with the SEC may also be obtained at the “Investors” section of CPEX’s website at
www.cpexpharm.com/investor.htm
.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND THE OTHER
RELEVANT MATERIALS (WHEN THEY BECOME AVAILABLE) BEFORE MAKING ANY VOTING OR INVESTMENT DECISION
WITH RESPECT TO THE PROPOSED TRANSACTION WITH FCB.
CPEX and its directors and executive officers may be deemed to be participants in the
solicitation of proxies from the security holders of CPEX in connection with the proposed
transaction with FCB. Information about those directors and executive officers of CPEX, including
their ownership of CPEX securities, is set forth in the Definitive Proxy Statement (filed with the
SEC on February 4, 2011) and in the proxy statement for CPEX’s 2010 Annual Meeting of Stockholders
(filed with the SEC on April 9, 2010), as supplemented by other CPEX filings with the SEC.
Investors and security holders may obtain additional information regarding the direct and indirect
interests of CPEX and its directors and executive officers in the proposed transaction with FCB by
reading the proxy statements and other public filings referred to above.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Certain items in this document may constitute forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve certain risks and uncertainties that could cause actual results
to differ materially from those indicated in such forward-looking statements, including, but not
limited to: the proposed transaction with FCB; the performance of CPEX; the benefits of the
proposed transaction with FCB and such other risks and uncertainties as are detailed in the
Definitive Proxy Statement, in CPEX’s Annual Report on Form 10-K filed with the SEC on March 29,
2010, and in the other reports
that CPEX periodically files with the SEC. Copies of CPEX’s filings
with the SEC may be obtained by the methods described above. CPEX cautions investors not to place
undue reliance on the forward-looking statements contained in this document or other filings with
the SEC.
The statements in this document reflect the expectations and beliefs of CPEX’s management only
as of the date of this document and subsequent events and developments may cause these
expectations and beliefs to change. CPEX undertakes no obligation to update or revise these
statements, except as may be required by law. These forward-looking statements do not reflect the
potential impact of any future dispositions or strategic transactions, including the proposed
transaction with FCB, that may be undertaken. These forward-looking statements should not be relied
upon as representing CPEX’s views as of any date after the date of this document.
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