RNS Number:9096R
Arthro Kinetics plc
27 February 2007
Arthro Kinetics plc (the "Company")
Approval of waiver of Rule 9 of the Takeover Code; Subscription of 44,402,685
New Shares ("Subscription") and Placing of 16,000,000 New Shares ("Placing") at
10p per share; Issue of Warrants; Grant of new Share Options; Sub-division of
Share Capital
Arthro Kinetics plc is an orthopaedics company dedicated to regenerating joint
mobility.
* The Company is raising a total of Euro9 million (#6.04 million) before
expenses through a Subscription for 44,402,685 shares at 10 pence each to,
amongst others, funds controlled by Heidelberg Innovation ("Heidelberg"),
and the Placing of a further 16,000,000 shares at 10 pence each by Nomura
Code Securities Limited with institutional investors.
* Although the company has cash of approximately Euro2.8 million (#1.9
million), the proceeds of the Subscription and Placing are essential if the
Company is to implement its stated strategy.
* Each investor subscribing to the Subscription and Placing will receive a
warrant carrying the right to subscribe for one share at 20 pence each for
every 2 shares subscribed.
* Following the Subscription and Placing, Heidelberg, and certain
investors with whom Heidelberg is acting in concert (the "Concert Party"),
will control a total of 56.7 per cent of the enlarged share capital. The
Takeover Panel has approved a waiver, in respect of the Concert Party's
shareholding, from the obligation that would otherwise arise under Rule 9 of
the Takeover Code. As a result of this waiver the Concert Party will not be
required to make a general offer to all shareholders. This waiver is subject
to the approval of the Company's shareholders at the EGM to be held on 22
March 2007.
* The Subscription and Placing price is below the nominal value of the
Company's shares of 20 pence. Therefore, it is proposed to sub-divide each
unissued share into 4 new shares of 5 pence each. Existing shares will be
divided into one new share of 5 pence plus a deferred share, which will be
worthless, of 15 pence.
* The Board proposes the appointment of Mr. Berthold Hackl, Managing
Partner of Heidelberg Innovations, as a Non Executive Director of the
Company.
* An EGM will take place on 22 March 2007 to seek shareholder approval,
inter alia, for the Rule 9 Waiver, the Subscription and Placing, and the
sub-division of shares.
CONTACTS
Doug Quinn
CFO, Arthro Kinetics Mobile: +44 (0) 7790 772 758
Richard Potts
Clare Terlouw
Nomura Code Securities Limited. Tel: +44 (0) 20 7776 1200
Simon Bloomfield
Bankside Consultants Tel: +44 (0) 20 7367 8888
Introduction
The Company announced today that it is intending to raise a total of Euro9 million
(#6.04 million) before expenses by means of a Subscription and Placing of new
ordinary shares of 5p each ("Shares") in order to provide further working
capital.
Heidelberg Innovation BioScience Venture II GmbH & Co. KG, Heidelberg Innovation
Parallel-Beteiligungs GmbH & Co. KGaA and Heidelberg Innovation Fonds Management
GmbH are shareholders of the Company currently holding 19.29 per cent., 4.31 per
cent. and 2.58 per cent. respectively of the Company's allotted and issued share
capital and have agreed, subject to the approval of the Company's shareholders,
to subscribe for a further 41,883,021 new Shares representing 47.6 per cent. of
the Company's enlarged issued share capital at a price of 10p per Share. Such
Subscription would increase HI's shareholding to 55.8 per cent. of the Company's
enlarged issued share capital. As a consequence of HI's proposed shareholding
increasing to 30% or more of the Company's issued share capital, HI would
ordinarily incur an obligation under Rule 9 of the Takeover Code to make a
general offer to all shareholders of the Company. However, the Panel on
Takeovers and Mergers (the "Panel") has agreed to waive this obligation subject
to the approval of the independent shareholders voting on a poll. Further
details are set out below.
Under the Takeover Code, certain other subscribers are deemed to be acting in
concert with Heidelberg Innovation. These parties, together with Heidelberg
Innovation are referred to as the Concert Party throughout this announcement.
Subject to the resolutions being passed at the Company's Extraordinary General
Meeting ("EGM") to be held on 22 March 2007, the Concert Party will subscribe
for an aggregate number of 42,624,325 new Shares representing 48.4 per cent of
the Company's enlarged issued share capital.
In addition to the amount subscribed by the Concert Party, certain parties to
the Subscription agreement who are not members of the Concert Party will
subscribe for an aggregate number of 1,778,360 new Shares pursuant to the
Subscription representing 6.4 per cent of the Company's enlarged share capital.
In addition to the Subscription, Nomura Code has, on behalf of the Company,
conditionally placed 16,000,000 new Shares, representing 18.2 per cent. of the
Company's enlarged share capital, with institutional investors at a price of 10p
per Share. The Placing has been underwritten by Nomura Code.
Each of the investors subscribing for new Shares pursuant to the Subscription
and the Placing will receive one warrant for every two new Shares subscribed
("Warrants"). Each warrant carries the right to subscribe for one new Share at a
price of 20p per Share up to and including 17 December 2008.
The new shares to be issued pursuant to the Subscription and the Placing are to
be issued at 10 pence per Share. The nominal value of the Company's share
capital is currently 20 pence per share. So that the new Shares can be issued at
a price below the nominal value, it is proposed to effect a share subdivision.
It is proposed that existing Shareholders will be issued with one ordinary share
of 5 pence each and one deferred share of 15 pence each in substitution for
their existing ordinary shares of 20 pence each. Further details are set out
below.
At the EGM of the Company, the independent shareholders will be asked to
consider and, if thought fit, pass the required resolutions to provide the
requisite waiver of Rule 9 of the Takeover Code and to provide the Directors
with the relevant authorities, inter alia, to allot and issue the Placing
Shares, the Subscription Shares and the associated warrants. In view of their
interest in the matter under consideration, all of the members of the Concert
Party have undertaken not to vote on the resolution to approve the waiver of the
obligation under Rule 9 of the Takeover Code at the EGM.
In addition, the approval of shareholders is being sought for the grant of share
options to key Company personnel, including Biomedical Capital Limited, a member
of the Concert Party, details of which are set out below.
It is also proposed that Mr Berthold Hackl, a director of Heidelberg Innovation,
join the Board as a Non-executive Director. Further details are set out below.
Background
Arthro Kinetics plc was admitted to AIM on 2 March 2006 raising Euro8.4m (#5.8m)
before expenses. During the course of 2006, the Company made use of a
significant proportion of these funds to grow its three core business areas:
biologic implants, ESS instrumentation and allograft bone processing.
Mr. Robert Guilleaume resigned from his position as Chief Executive of the
Company on 3 November 2006 and was replaced by Dr. Jason Loveridge with
immediate effect. Dr. Loveridge had previously been appointed a Non-Executive
Director of the Company at the time of its admission to AIM.
On commencement of his appointment, Dr. Loveridge initiated a strategic review
of the business addressing each of the core business areas as detailed below.
The results of the strategic review and the subsequent restructuring plan were
announced 30 November 2006.
On 28 November 2006, following a regulatory interpretation by the German
Ministry of Health, the Company was obliged to advise its client hospitals in
Germany that they should no longer take patient biopsies for inclusion in the
Company's CaReS biologic knee product. On 30 January 2007 the Company announced
authorisation of the first German hospital for the procurement of cartilage cell
and blood for the production of CaReS. The Company is continuing to work with
the regulatory authorities for the approval of additional hospitals.
Reasons for the Placing and Subscription
The Company generates revenues through the sale of; CaReS, its articular
cartilage implant (ACI), Endoscopic Spine Surgery instrumentation and allograft
bone.
The Company's patented collagen matrix technology provides the basis for all of
its marketed regenerative products, such as CaReS, and for its new product
pipeline, including Cartiplug and a nucleus replacement implant. To date, CaReS
is sold in 10 countries with successful implants in over 1,000 patients. Whilst
continuing to market CaReS the Company has also been appraising the feasibility
of its acellular matrix product, Cartiplug, to treat cartilage defects of the
knee of up to 2cm2. In its press release of 28 November 2006, the Company
announced that the European launch of Cartiplug had been postponed pending an
assessment of the market and investment requirements. As a result of the success
of its ongoing development programme with the matrix, the Company now believes,
that subject to further work, it may be possible to economically produce a
sterile packed Cartiplug that could be approved as a medical device in both the
US and Europe.
Further research on the acellular matrix in a 12 month animal study demonstrated
that the matrix can be actively repopulated in-situ by local condrocytes derived
from the sub-chondral bone and that the degree of repopulation achieved is
similar to that achieved with a CaReS implantation. The Company believes,
therefore, that there is the potential to utilise the Cartiplug product to treat
defects of the articular cartilage of the knee of up to 10cm2. This offers the
potential to market an implant that is an off the shelf medical device,
requiring no biopsy or cell culturing and which could be implanted in a single
procedure. The Company is continuing its European approval process for Cartiplug
which will require additional animal and human studies and expects to have CE
approval in Q4 2007.
In 2006, the Company successfully completed the enrolment of a Phase I pilot
study for CaReS in the US and is currently preparing to discuss with the FDA the
requirements for a Phase III trial and biological license application (BLA),
which is subject to agreement with the FDA, the Company is forecasting to
commence in H2 2007. However, in light of the progress with the accellular
matrix the Company is now reviewing the potential to pursue a pre-marketing
approval route (PMA) with the acellular matrix for approval as a medical device
in the US. The Company forecasts that the time and cost of a PMA would be
considerably less than for a BLA. The Company will not pursue the approval in
the US of both product candidates, but forecasts that pursuit of a US approval
down either route would lead to a market introduction in the US in the first
half of 2009.
The Company continues to collect data from its CaReS 203 patient multi-centre
trial conducted in nine centres across Germany. The full 36 month data set will
be available in the second half of 2007, but data collected to date continues to
support the value of CaReS as an articular cartilage implant.
During 2006, the Company entered into a number of third party agreements for the
manufacture and sale of CaReS in territories outside of Europe. The Company will
continue to provide collagen matrix to those facilities currently producing
CaReS, but as the acellular matrix avoids the need for local manufacturing the
Company will not sign any additional agreements and will consider bringing to a
close those agreements which are at an early phase of implementation.
As stated earlier, the collagen matrix also provides a platform for product
development outside of the knee. In this respect, the Company is continuing to
pursue development of its spinal nucleus replacement implant and expects to
begin animal studies in the first half of 2007 which would hopefully lead to
initiating human clinical studies at the end of 2008.
Previously referred to as Minimally Invasive Spinal Surgery (MISS), the Company
generates revenues from the sale of instruments used in the performance of
Endoscopic Spine Surgery (ESS). The Company remains positive about this
opportunity and expects a significant increase in revenues in 2007. Marketing
approval for a sub-set of the instruments in the US is expected to conclude in
Q2 2007.
The Company continues to provide allograft bone processing services. Whilst the
supply of donor material remains an issue the Company believes it can source
sufficient material for an increase in revenues in 2007 and is working with the
regulatory authorities in Germany for the approval of hospitals to provide donor
material. In conjunction with this the Company is also pursing the development
of an osteoinductive bone filler by combining the collagen matrix with processed
bone allograft. This is an early stage development project for which the Company
is seeking external finance and is forecasting to begin animal studies in Q3
2007.
The Company believes its long term future is dependent on the successful
introduction of an acellular implant and has established this as the key
priority for the current fundraising event.
Whilst the Company remains positive about the potential for both ESS and
allografts it is questionable that either will prove a significant revenue
generator for the business in the medium term. Consequently, management will
review carefully the trading position and future commitment to each segment
during 2007.
Working Capital
At the date of this announcement, the Company has cash of approximately Euro2.8
million (#1.9 million). For the Company to be able to progress its stated
strategy, it is essential that the Company raises the proceeds of the Placing
and the Subscription.
The Company's shareholders should be aware that if the resolutions to approve
the proposals described in this announcement are not passed the Company will
have insufficient resources to continue to trade. In the absence of securing the
proceeds of the Subscription and the Placing, the Company will shortly become
insolvent with insufficient cash to support its ongoing operations.
The Directors believe that the proceeds of the Placing and the Subscription will
raise sufficient working capital for the Company's present requirements and for
at least 12 months from the date of this announcement.
Subscription and Placing
Under the Subscription and the Placing, the Company is proposing to issue and
allot 60,402,685 new shares (together with the associated warrants) at 10p per
share to raise Euro9 million (#6.04 million). It is proposed that the Concert Party
members will subscribe for 42,624,325 Subscription Shares at 10p per share to
raise Euro6.35 million (#4.26 million) and that further subscribers subscribing
pursuant to the Subscription will subscribe for 1,778,360 Subscription Shares at
10p per Share to raise Euro265,000 (#178,000). Further, Nomura Code has
conditionally placed all of the Placing Shares with institutional investors. The
Placing and Subscription price of 10p per share represents a discount of 31.0
per cent. to the closing mid-market share price as at 26 February 2007 (the
latest practicable date prior to the publishing of this announcement) of 14.5p
per share. The Subscription shares and the Placing shares will represent 68.6
per cent. of the Company's enlarged allotted and issued share capital.
Each placee and subscriber will receive warrants to subscribe for one further
share at 20 pence per share for every two new shares allotted to them. If all
the warrants are exercised, the shares allotted pursuant to such exercise will
represent a further 34.3 per cent of the Company's enlarged allotted and issued
share capital. The Subscription shares, the Placing shares and shares allotted
pursuant to the warrants will be credited as fully paid in cash and will rank
pari passu in all respects with the existing shares.
It is expected that the new shares will be admitted to AIM, and that dealings
will commence, on 23 March 2007.
Sub-division of share capital
The Placing shares and Subscription shares will be issued at a discount to the
current 20p nominal value of the existing shares. However, as the Companies Act
prohibits the issue of shares at a price below their nominal value, and,
accordingly, a capital reorganisation will be necessary to allow the Placing and
Subscription to progress. Consequently, it is proposed to sub-divide each
existing share in issue into one new share of 5p and one effectively worthless
deferred share of 15p, and each unissued share into four new shares of 5p each.
The new shares will retain all the rights currently attaching to the existing
shares in respect of dividends and votes and will rank ahead of the deferred
shares on a winding up such that the deferred shares will only rank for
repayment of their nominal value once all sums due on the shares have been paid
and #1 million (plus the amount paid up thereon) has been paid in respect of
each new share. Other than the change in nominal value, the new shares will be
identical to the existing shares. No new certificates will be issued in respect
of the 5p ordinary shares and the existing share certificates in respect of the
existing shares will be valid and will continue to be accepted as evidence of
title for the 5p ordinary shares.
The deferred shares will have no voting rights, no rights to dividends and
negligible rights on a return of capital. The deferred shares will not be listed
on any stock exchange and will not be freely transferable. No share certificates
will be issued for any of the deferred shares. The Company will have the right
at any time to purchase all the deferred shares for an aggregate consideration
of 1p. There are no immediate plans to purchase or to cancel the deferred
shares, although the Directors propose to keep the situation under review.
Warrants
The Company is proposing that warrants should be issued to each placee and
subscriber. The warrants issued to each placee and subscriber would give that
placee or subscriber the right to subscribe for one share for every two new
shares as are allotted and issued to that investor or subscriber pursuant to the
Subscription and/or Placing.
Although members of the Concert Party will receive warrants, each member has
undertaken that it will not at any time exercise its rights under those warrants
and that no other member of the Concert Party (details of which are set out
below) who receives a warrant will exercise any such rights. However, Heidelberg
Innovation and each member of the Concert Party shall be entitled to transfer
the warrants to any unconnected third party which will, if it so chooses, be
entitled to exercise the warrants. The warrants are freely transferable.
As the issue of the Warrants is not the subject of the waiver of the Rule 9
obligation (further details of which are set out below), any exercise of
Warrants by Heidelberg Innovation or any person acting in concert with
Heidelberg Innovation will give rise to an obligation under Rule 9 (assuming
that, at the time of such exercise, Heidelberg Innovation or any person acting
in concert with Heidelberg Innovation holds shares in the Company equal to or
greater than 30% of the issued share capital).
Use of the proceeds
The proceeds of the Subscription and the Placing will be used to strengthen the
Company's balance sheet and to raise working capital to both finance the
restructuring and support the ongoing operations of the business. The Company
will also continue to finance the development and regulatory approval of
promising products in its pipeline; including Cartiplug in Europe, U.S. approval
for either CaReS or CartiPlug, a spinal nucleus replacement implant and an
allograft bone filler.
The additional funds to be received through the exercise of the warrants will
also be applied to further strengthen the Company's balance sheet and to raise
further working capital.
In the absence of securing the proceeds of the Subscription and Placing, the
Company will shortly become insolvent with insufficient cash to support its
ongoing operations.
Current trading and prospects
In the period since the trading statement announced on 30 November 2006, the
Company has initiated its restructuring plan and has issued redundancy notices
to certain employees of its German and Austrian subsidiaries.
On 30 January 2007, the Company announced authorisation of the first German
hospital for the procurement of cartilage cell and blood for the production of
CaReS compliant with Paragraph 13 of the German Pharmaceutical Manufacturing
Act. The Company is continuing to work with hospitals and the regulatory
authorities for the timely approval of additional hospitals.
The Company is continuing to work with a small subset of its suppliers for the
regulatory approval of certain elements of its ESS system and expects to have
completed recruitment of its key US spine distributors in the first half of
2007.
Board appointment
The Board is pleased to propose Mr. Berthold Hackl as a Non-Executive Director
of the Company. Mr. Hackl, Dipl.-Biol., MBA, aged 47, is a director of HIAM. Mr.
Hackl was part of the management team responsible for the repositioning of
Stratec Medical (Synthes-Stratec; the orthopaedic implant company) ahead of its
public offering in 1996. Mr. Hackl joined Heidelberg Innovation in 2000 and
currently serves as Managing Partner. His appointment is subject to the approval
of the Shareholders at the EGM of the Company to be held on 22 March 2007.
Directors and employees share options
The Directors consider share options a necessary and important way of rewarding,
retaining and attracting key Company personnel. Consequently, it is proposed
that the share option pool be increased to 8,173,332 shares being 9.29 per cent.
of the Company's enlarged issued share capital.
The Directors propose to grant 3,400,000 new options to Biomedical Capital
Limited of which Dr. Loveridge is the sole shareholder by means of a one-off
share option agreement which will contain the same terms and conditions as the
Non-Employee Option Scheme. New options granted to Biomedical Capital Limited
will vest on achievement of the following milestones:
Number of Options Vesting Milestone
400,000 On Admission
600,000 The Company's share price reaching 15p
600,000 The Company's share price reaching 20p
600,000 The Company's share price reaching 30p
600,000 The Company's share price reaching 40p
600,000 The Company's share price reaching 50p
The vesting period of the new options extends until 31 December 2010 or for a
period of 12 months following termination of the consultancy agreement if the
agreement is terminated before 31 December 2009. New options shall be
exercisable at a price of 10p per Share.
The balance of new options to subscribe for 4,077,455 Shares are to be granted
to current and future employees of the Group at the discretion of the
Remuneration Committee.
The Takeover Code
The terms of the fund raising and the grant of certain options give rise to
certain considerations under the Takeover Code. Brief details of the Panel, the
Takeover Code and the protection they afford are given below.
The Takeover Code is issued and administered by the Panel. The Company is a
company to which the Takeover Code applies and as such, its shareholders are
entitled to the protections afforded by the Take over Code. The Takeover Code
and the Panel operate principally to ensure that shareholders are treated fairly
and are not denied an opportunity to decide on the merits of a takeover and that
shareholders of the same class are afforded equivalent treatment by an offeror.
The Takeover Code also provided an orderly framework in which takeovers are
conducted. In addition, it is designed to promote, in conjunction with other
regulatory regimes, the integrity of the financial markets.
Under Rule 9 of the Takeover Code, where any person acquires an interest in
shares which (taken together with shares in which persons acting in concert with
him are interested) carry 30 per cent. or more of the voting rights of a company
which is subject to the Takeover Code, that person, and any person acting in
concert with him, is normally required by the Panel to make a general offer in
cash to the shareholders for the remaining shares in that company not held by
him and his concert party at not less than the highest price paid by him or any
person acting in concert with him, within the 12 months preceding the date of
the announcement of such offer.
Rule 9 of the Takeover Code further provides that, amongst other things, where
any person, together with persons acting in concert with him, is interested in
shares which in aggregate carry not less than 30 per cent. of the voting rights
of a company but does not hold an interest in shares carrying more than 50 per
cent. of such voting rights and such person, or any such person acting in
concert with him, acquires a further interest in such shares such person or
persons acting in concert with him is normally required by the Panel to make a
general offer in cash to all shareholders of the company for the shares not
already owned by him or any other person acting in concert with him at not less
than the highest price paid by him or any person acting in concert with him
within the 12 months preceding the date of the announcement of such offer.
Under the Takeover Code, a concert party arises when persons who, pursuant to an
agreement or understanding (whether formal or informal), co-operate, to obtain
or consolidate control of that company. Under the Takeover Code, control means
an interest, or interests, in shares carrying in aggregate 30 per cent. or more
of the voting rights of a company, irrespective of whether such interest or
interests give de facto control. In this context, voting rights means all the
voting rights attributable to the capital of a company which are currently
exercisable at a general meeting.
By virtue of the relationships between the members of the Concert Party as
described below, such persons are deemed to be acting in concert as defined in
the Takeover Code.
Following the issue of the Subscription Shares the Concert Party (as described
below) will between its members hold than 50 per cent. of the Company's voting
share capital and (for so long as the members of the Concert Party continue to
be treated as acting in concert) the Concert Party may increase its aggregate
interest in Shares without incurring any obligations under Rule 9 to make a
general offer, although individual members of the Concert Party will not be able
to increase their percentage interests in Shares through or between the Rule 9
threshold without Panel consent.
Following the admission of the new shares to AIM, the Concert Party will own in
aggregate shares representing approximately 56.7 per cent. of the enlarged share
capital of the Company. Additionally, Biomedical Capital Limited, of which Jason
Loveridge is the sole shareholder, will have been granted 3,400,000 new Options.
The Panel has been consulted by Nomura Code on behalf of the Company and the
Panel has agreed subject to the relevant resolution being passed on a poll by
the independent shareholders to waive the obligation to make a general offer for
the shares in the Company which might otherwise arise as a result of the Placing
and Subscription or as a result of the exercise of the new options granted to
Biomedical Capital Limited. To be passed, this resolution will require a simple
majority of the votes cast. As the waiver of the obligation to make a general
offer must be approved by the independent shareholders, none of the members of
the Concert Party will be able to vote on this resolution.
Details of each of the members of the Concert Party, their relationship with
each other and their interests in the Company, are as follows:
Heidelberg Innovation Fonds Management GmbH
Registration number: HRB 336489
Registered address: Im Neuenheimer Feld 581, D-69120 Heidelberg, Germany
Established: 29/11/1999
Directors: Dr. Christoph Kronabel (Managing Director)
Heidelberg Innovation Fonds Management GmbH (HIFM) was founded in 1999 to advise
venture capital funds investing exclusively in healthcare companies. As a
general partner the company advises two funds, namely BSV II and HIPB. HIFM
prepares investment decisions for the managing limited partner of BSV II, HIAM,
and monitors the portfolio companies after the execution of investments.
Investment decisions of HIFM on its own account are made by its Managing
Director, Dr. Christoph Kronabel, who is also a Managing Limited Partner of
HIAM.
Heidelberg Innovation Asset Management GmbH & Co. KG
Registration number: HRA 332951
Registered address: Im Neuenheimer Feld 581, D-69120 Heidelberg, Germany
Established: 12/10/2000
Directors: Prof. Dr. Ulrich Abshagen (Managing Limited Partner)
Berthold Hackl (Managing Limited Partner)
Dr. Christoph Kronabel (Managing Limited Partner)
HIAM is the managing limited partner of BSV II and thus the sole decision maker
regarding all BSV II investments. As HIPB invests exclusively in parallel with
BSV II it therefore acts under the investment advice of HIAM.
Heidelberg Innovation BioScience Venture II GmbH & Co. KG
Registration number: HRA 332993
Registered address: Im Neuenheimer Feld 581, D-69120 Heidelberg, Germany
Established: 5/2/2001
Directors: Heidelberg Innovation Asset Management GmbH & Co. KG
(Managing Limited Partner)
BSV II is a German venture capital fund with a fund size of Euro93 million
dedicated exclusively to European life science investments.
Heidelberg Innovation Parallel-Beteiligungs GmbH & Co. KGaA
Registration number: HRB 337381
Registered address: Im Neuenheimer Feld 581, D-69120 Heidelberg, Germany
Established: 25/4/2001
Non-Executive Directors: Heidelberg Innovation Fonds Management GmbH (General
Partner)
Berthold Hackl, Prof. Dr. Ulrich Abshagen.
HIPB is a venture capital fund investing exclusively in parallel with BSV II.
HIPB is exclusively funded by subordinated loans granted from Kreditanstalt fur
Wiederaufbau (KfW), the main state bank of Germany. HIPB has not granted any
legal or equitable security to KfW over its holding of shares in the Company.
Equally, following completion of the Subscription, HIPB will not grant any legal
or equitable security to KfW over any of the Subscription Shares.
The investments in the following companies and subsequent trade sales and
initial public offers provide examples of Heidelberg Innovation's investment
history:
* Axovan AG: BSVII and HIPB invested Euro4.1 million on 11 April 2002. Axovan
was sold to Actelion on 5 November 2003 in an all-cash earn-out deal.
* Microcuff GmbH: BSVII and HIPB invested Euro3.5 million on 10 May 2001 and
8 April 2003. Microduff was sold to Kimberley-Clark on 19 October 2005 in an
all-cash deal.
* Berlin Heart GmbH: BSVII and HIPB invested Euro5.8 million on 26 March
2002. Berlin Heart was sold to a German industrial family on 12 October 2006
in an all-cash deal.
* Santhera Pharmaceuticals Holding Limited: BSVII and HIPB invested Euro6.9
million on 12 April 2001 and 29 August 2002. Santhera executed an IPO on SWX
on 3 November 2006.
* Biofrontera AG: BSVII and HIPB invested Euro7.5 million on 5 June 2003 and
16 July 2003. Biofrontera executed a listing on Duesseldorf Stock Exchange
and Xetra on 30 October 2006.
Jason Loveridge
Jason Loveridge, Chief Executive Officer of the Company, is a member of the
Supervisory Board of Biofrontera AG, an investee company of Heidelberg
Innovation, and as such, he is deemed to be acting in concert with Heidelberg
Innovation. As a consequence, he has undertaken to take no part in the Board
decision to recommend the Subscription and the Placing. He is also a director of
Warambi Sarl, whose company number is 48072517500024 and whose registered office
is at 7 sente du Grand Champtier, Chambourcy, 78240 France. The recommendation
to shareholders of the Company will be given by the independent directors, as so
advised by Nomura Code. Warambi Sarl intends to subscribe for 291,304 new Shares
in the Company.
Berthold Hackl
Berthold Hackl is a proposed director of Arthro Kinetics. He is also the sole
shareholder and a director of Sorrento Investment GmbH ("Sorrento"). Sorrento
intends to subscribe for 200,000 new Shares in the Company. Sorrento's
registration number is HRB 6822. It was established on 5 May 2006 and is
registered at Ludwig-Sauer-Str. 35, 61476 Kronberg, Germany. Mr Hackl intends to
subscribe for 100,000 new Shares in the Company.
Abshagen-Consulting GmbH ("Abshagen")
Dr. Ulrich Abshagen is the sole shareholder and a director of Abshagen. He is
also a director of HIAM. Professor Abshagen is also a founder and managing
partner of HIFM. Abshagen intends to subscribe for 100,000 new Shares in the
Company. Abshagen's registration number is HRB 6811. It was established 7
September 1995 and is registered at Neustadter Strasse 41, 68309 Mannheim,
Germany.
Dr. Birgit Kraeling intends to subscribe for 15,000 Shares in the Company. Dr.
Kraeling is an employee of Heidelberg Innovation.
Mrs. Helga Ruppert intends to subscribe for 35,000 Shares in the Company. Mrs.
Ruppert is an employee of Heidelberg Innovation.
Biomedical Capital Limited
Biomedical Capital Limited is wholly owned by Jason Loveridge. Subject to the
passing of the relevant resolutions to be proposed at the EGM, Biomedical
Capital Limited will hold 3,400,000 new Options. Subject also to the passing of
the appropriate resolutions at the EGM, the exercise by Biomedical Capital
Limited of any such new Options will not give rise to an obligation under Rule 9
of the Takeover Code. The Company is registered in the British Virgin Islands
with company number 651642.
Allotment of Placing and Subscription Shares
For the purposes of the Takeover Code, and assuming that the Subscription and
Placing are duly completed, the Placing shares and Subscription shares are
allotted and admission of the new shares to AIM becomes effective, details of
the individual holdings of the Concert Party in the existing shares and the
enlarged share capital are shown below:
At Present: % Following %
Existing Placing and
Shares Subscription
Heidelberg Innovation Fonds Management
GmbH 713,226 2.58 1,719,937 1.95
Heidelberg Innovation BioScience Venture II
GmbH & Co. KG 5,323,821 19.29 38,022,239 43.21
Heidelberg Innovation Parallel-Beteiligungs
GmbH & Co. KGaA 1,188,472 4.31 9,366,364 10.64
Jason Loveridge /Warambi Sarl 0 0 291,304 0.33
Sorrento Investment GmbH /Berthold Hackl 3,125 0.01 303,125 0.34
Abshagen-Consulting GmbH 0 0 100,000 0.11
Dr. Birgit Kraeling 0 0 15,000 0.02
Mrs. Helga Ruppert 0 0 35,000 0.04
On the basis that the Placing has been fully underwritten and that the new
Options to be granted to Biomedical Capital Limited have been exercised at a
time when there has been no further division of the Company's share capital, the
maximum holding position of the members of the Concert Party will not exceed
58.3 per cent of the issued share capital of the Company.
Through their investment in Heidelberg Innovation, The European Investment Fund
will have an indirect interest of 5 per cent. or more in the capital of the
Company.
Biomedical Capital Limited will, subject to the passing of the resolution at the
EGM to approve the waiver of the obligation arising under Rule 9 of the Takeover
Code, hold 3,400,000 new Options.
As each member of the Concert Party who will receive warrants has agreed not to
exercise its warrants, the percentage figures given in the table above will not
increase as a result of exercise of the warrants.
Under the provisions of the Takeover Code, only independent shareholders, being
those existing shareholders who are not also members of the Concert Party, are
able to vote on the resolution to approve the waiver of the obligation arising
under Rule 9 of the Takeover Code at the EGM.
Following the issue of the Subscription Shares, the Concert Party will, between
its members, hold more than 50 per cent. of the Company's voting share capital
and (for as the members of the Concert Party continue to be treated as acting in
concert) the Concert Party may increase its aggregate interest in shares without
incurring an obligation under Rule 9 to make a general offer, although
individual members of the Concert Party will not be able to increase their
percentage interests in shares through or between the Rule 9 threshold without
Panel consent.
Settlement
The new shares will be settled in CREST. CREST is a paperless settlement
procedure which allows securities to be evidenced without a certificate and
transferred other than by written instrument. CREST is a voluntary system and
Shareholders who wish to receive and retain share certificates will be able to
do so. It is expected that share certificates in relation to the Placing and
Subscription Shares will be dispatched by the Company's Registrars no later than
30 March 2007.
Admission to AIM
Application for the admission of the new Shares to AIM will be made as soon as
practicable following the EGM. It is expected that Admission will become
effective at 8.00am on 23 March 2007.
END
27 February 2007
This information is provided by RNS
The company news service from the London Stock Exchange
END
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