Tepnel Life Sciences - Re Loan Facility, etc.
December 08 1999 - 7:53AM
UK Regulatory
RNS Number:1720C
Tepnel Life Sciences PLC
8 December 1999
TEPNEL LIFE SCIENCES
("the Company")
#2.2m convertible secured loan facility and issue of
warrants to subscribe for up to 2.2m Ordinary Shares
The Company announces that, subject to shareholder
approval, it has arranged a convertible secured loan
facility of #2.2m to provide additional working
capital.
Background
The Company has continued to develop the food testing
business which was acquired in June 1999, integrated
into Tepnel BioSystems, and which has traded profitably
since then. The Company has also been progressing its
DNA technologies and in particular the development of
its automated DNA purification machine for the research
and clinical markets. Following a positive reception
for its prototype 96 sample automated purification
machine for the clinical research market at the
American Association of Clinical Chemists' Exhibition
in July 1999, the Company is currently in early stage
discussions with a number of international companies
regarding distribution of the equipment. The Company
also has plans to develop equipment which would enable
DNA to be extracted from whole blood.
Cash at 30 June 1999 was #2.1m and the Company has
continued to make overall losses since then as it has
continued the development of its DNA products. The
directors believe it is in shareholders' interests to
continue its research and development and marketing
expenditure at their current levels, but this strategy
would mean that the Company would not have sufficient
funds to continue beyond 30 June 2000. The Company
hopes to conclude at least one distribution arrangement
for its purification equipment by the end of the end of
the Company's current financial year, which would start
the commercialisation of the products and lead to
revenues from them being generated in the second half
of 2000.
Whilst the Company has considered various additional
financing options prior to concluding such marketing
arrangements, the directors believe that the
availability of the facility will provide additional
financial strength in negotiations with potential
distribution partners as well as securing working
capital which the directors anticipate will last until
at least 30 June 2001 if the facility is fully drawn
down. The Company has therefore conditionally entered
into the agreement with BF Finance Limited ("BFF"), a
special purpose company, for the provision of this
facility and the grant of the warrants.
The Facility
The facility from BFF will be available for draw-down
at the Company's discretion over a period of two years
from 7 January 2000 in minimum tranches of #25,000 and
a maximum of #200,000 per calendar month. The facility
will be secured by an assignment of the intellectual
property rights of the Company.
The facility will be repayable either in whole or in
part by the Company at any time prior to 31 December
2001. If the loan has not been repaid prior to 31
December 2001, BFF will be entitled to demand repayment
of the facility in whole or in part and/or to convert
the amount of the facility then outstanding into
Ordinary Shares at a price equal to the greater of #1
per Ordinary Share and the average mid-market closing
price of the Ordinary Shares on the four Fridays
immediately preceding the date of conversion less 15%
of such average price. Interest will be payable at the
rate of 12% per annum on the amounts drawn down. The
facility will become immediately repayable on the
occurrence of certain events, including the acquisition
or merger of Tepnel and certain fund raising events.
In consideration for the provision of the facility, the
Company has agreed to grant warrants to BFF. The
warrants enable the holders to subscribe for 2.2m
Ordinary Shares, of which 1.1m are at a price of #1 per
Ordinary Share and 1.1m are at a price of 48p per
Ordinary Share (being the price of the Ordinary Shares
on the date on which the proposals were agreed in
principle). The warrants, which will be unlisted, are
exercisable at any time up to 31 December 2004 in
minimum tranches of 25,000 Ordinary Shares. Assuming
the exercise of all the warrants and the conversion of
the whole of the facility, the maximum equity dilution
would be 9.017% of the existing equity. The Ordinary
Shares to be issued as a result of both the conversion
of the facility and the warrants will rank pari passu
with the existing Ordinary Shares. Exercise of the
warrants would raise #1.480m for the Company.
The Extraordinary General Meeting
Resolutions will be put to shareholders at an
Extraordinary General Meeting to be held on 7 January
2000 at 30 Lombard Street, London, EC3V 9EN at 10am for
the purpose of obtaining shareholder consent to the
facility.
Mr Peter Raymond, Chairman, commented:
"The facility provides us with the additional working
capital we require to continue focusing on the
commercialisation of our nucleic acid purification
technology with only modest potential dilution of
shareholders' interests. Most importantly, it gives us
time to select the best commercial partner for both the
short and long term future of Tepnel."
For further information, please contact:
Tepnel Life Sciences PLC
Tel: 0161 445 9457
Peter Raymond, Chairman
Mike Billingham, Commercial Director
Jeremy Lee, Finance Director
Rawlings Financial PR Limited
Tel: 01756 770 376
Catriona Valentine
Notes to Editors
This facility provides Tepnel with stability in the final
development stages of its automated DNA purification
system. It also gives the Company enough time to
establish a strong working relationship with potential
partner(s), who have the capability to commercialise the
technology for sale directly into the research market.
Following a successful feasibility programme, this
facility will allow the Company to initiate a development
programme targeting DNA purification from blood for the
clinical market. This development programme would ideally
be undertaken with a partner company.
Furthermore, the facility will enable the Company to
continue the development of its strategy for introducing
DNA testing into the food industry.
Additional information is available from the Company.
END
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