Issue of Equity

 

TIDMPYN 
 
RNS Number : 5415R 
Phynova Group PLC 
01 May 2009 
 

1 May 2009 
 
 
Phynova Group plc 
("Phynova" or "the Company" or "the Group") 
 
 
Placing and debt capitalisation to raise approximately GBP540,000, board changes 
and broker appointment 
 
 
Phynova announces that John East & Partners Limited ("JEP") has conditionally 
raised approximately GBP540,000, before expenses, from a placing of 8,952,836 
ordinary shares of 1p each in the capital of the Company ("Ordinary Shares") at 
6p per share with investors ("the Placing"). Of which, directors and senior 
management of the Company have agreed to subscribe for 1,163,799 Ordinary Shares 
at 6p, the proceeds of which will be utilised to satisfy, in aggregate, 
GBP69,827.94 of accrued salaries and fees due from the Company (the "Debt 
Capitalisation"). The Placing and Debt Capitalisation are conditional on, 
amongst other things, admission of the new Ordinary Shares to trading on AIM 
becoming effective ("Admission"). 
 
 
Investors, directors and senior management who subscribe under the Placing or 
Debt Capitalisation will also receive one warrant for every Ordinary Share 
subscribed for ("Warrants"). The Warrants are exercisable at 10 pence per 
Ordinary Share at any time from Admission until three years thereafter. 
Application will not be made for the Warrants to be admitted to trading on any 
recognised stock exchange. 
 
 
The net proceeds of the Placing, amounting to approximately GBP470,000, will be 
used to provide working capital for the Company. The Board believes, having made 
due and careful enquiry and having regard to discussions with potential 
licensees and development partners, that the Group will have sufficient working 
capital for its present and reasonably foreseeable future requirements, that is 
for at least the next six months from Admission. In addition, the proceeds of 
the Placing will be used to fund the Company's proposed investment of GBP100,000 
in Botanic Century (Beijing) Limited (the Company's joint venture in China) and 
to pay GBP51,000 to a former director in accordance with the terms of a 
compromise agreement entered into between that director and the Company. 
 
 
The placing 
 
 
Pursuant to the terms of a placing agreement dated 30 April 2009 ("Placing 
Agreement"), JEP has conditionally placed, as agent for the Company, 8,952,836 
Ordinary Shares at the Placing Price to raise approximately GBP540,000 (gross) 
and approximately GBP470,000 (net of expenses) for the benefit of the Company. 
 
 
The Placing of the new Ordinary Shares will take place in two tranches: 
 
 
(a)the placing of 4,452,370 Ordinary Shares ("First Placing"); and 
 
 
(b)the placing of 4,500,466 Ordinary Shares ("Second Placing"). 
 
 
The First Placing is reserved for investors intending to seek tax relief under 
the Enterprise Investment Scheme, although the availability of such relief 
cannot be guaranteed. The receipt of the full amount of Placing proceeds is 
conditional, inter alia, upon the admission of the first tranche of placing 
shares to trading on AIM ("First Admission") becoming effective by 8:00am on 
6 May 2009 (or such later date as the Company and JEP may agree, being not later 
than 28 May 2009) and the admission of the second tranche of placing shares to 
trading on AIM ("Second Admission") becoming effective by 8:00am on 7 May 2009 
(or such later date as the Company and JEP may agree, being not later than 29 
May 2009,). 
 
 
The Placing Agreement contains provisions entitling JEP to terminate the Placing 
Agreement at any time prior to First Admission in certain circumstances. If this 
right is exercised, the First Placing and the Second Placing will lapse. The 
Placing Agreement also contains provisions entitling JEP to terminate its 
obligations in respect of the Second Placing in certain circumstances between 
First Admission and Second Admission. The First Placing is not dependent upon 
the Second Placing occurring. However the Second Placing cannot occur unless the 
First Placing has occurred. 
 
 
The new Ordinary Shares to be issued in connection with the Placing will, when 
issued and fully paid, rank equally in all respects with the existing issued 
Ordinary Shares, including the right to receive all dividends and other 
distributions declared, made or paid after the relevant Admission. 
 
 
It is expected that First Admission will become effective and dealings in the 
first tranche of placing shares will commence on 6 May 2009 and that Second 
Admission will become effective and dealings in the second tranche of placing 
shares will commence on 7 May 2009. 
 
 
Directors' and senior management's Debt Capitalisation 
 
 
Certain directors of the Company have agreed to subscribe for Ordinary Shares 
under the Debt Capitalisation. The total number of Ordinary Shares subscribed 
for and the subsequent holdings of the directors concerned as a percentage of 
the issued ordinary share capital as enlarged by the Placing and the Debt 
Capitalisation ("Enlarged Issued Share Capital") are as follows: 
 
 
+--------------------+------------+--------------+------------+--------------+ 
|                    |   Ordinary |   Percentage |  Total no. |   Percentage | 
|                    |     Shares |  of enlarged |         of |    of voting | 
|                    | subscribed |        share |   Ordinary |        share | 
|                    |        for |      capital |     Shares |      capital | 
|                    |            |     acquired |       held |     now held | 
+--------------------+------------+--------------+------------+--------------+ 
| Michael Martin     |    125,000 |         0.40 |  1,178,830 |         3.74 | 
+--------------------+------------+--------------+------------+--------------+ 
| Robert Miller      |    383,333 |         1.22 |  1,129,186 |         3.58 | 
+--------------------+------------+--------------+------------+--------------+ 
| John Pool          |    130,000 |         0.41 |    130,000 |         0.41 | 
+--------------------+------------+--------------+------------+--------------+ 
| Steve Harris       |    151,683 |         0.48 |    151,683 |         0.48 | 
+--------------------+------------+--------------+------------+--------------+ 
| Jin Li             |    151,683 |         0.48 |    151,683 |         0.48 | 
+--------------------+------------+--------------+------------+--------------+ 
| Tony Mills         |    110,483 |         0.35 |    133,763 |         0.42 | 
+--------------------+------------+--------------+------------+--------------+ 
 
 
In addition, Hongwen Yu, an employee of the Company, has agreed to subscribe 
under the Debt Capitalisation for 111,617 Ordinary Shares at the Placing Price, 
which will represent 0.35 per cent. of the Enlarged Issued Share Capital. 
Immediately following Second Admission, Hongwen Yu will hold 262,257 Ordinary 
Shares, equivalent to 0.83 per cent. of the Enlarged Issued Share Capital. 
 
 
The new Ordinary Shares to be issued under the Debt Capitalisation will form 
part of the Second Placing. 
 
 
Following the proposed Placing, the Company will have 31,522,520 ordinary voting 
shares in issue. Application has been made for all the new Ordinary Shares to be 
admitted to trading on AIM. 
 
 
 
 
Trading update 
The Company continues to progress the commercial interests in its pipeline 
referred to in the Company's report and accounts for the year ended 30 September 
2008. Further savings are being made to the Company's operating costs, so that 
the funds raised will assist the business in achieving its commercial targets. 
Since 1 October 2008, the Company's trading losses have amounted to 
approximately GBP0.5 million. 
 
 
The funds currently being raised are intended to provide working capital for the 
Company The Board believes, having made due and careful enquiry and having 
regard to discussions with potential licensees and development partners, that 
the Group will have sufficient working capital for its present and reasonably 
foreseeable future requirements, that is for at least the next six months from 
Admission. The Company's cash and net assets will continue to be depleted in the 
ordinary course of business until such time as the Company achieves revenue from 
the commercialisation of its pipeline of compounds. 
 
 
Board changes 
John Pool, the current Executive Chairman, intends to step down from the Board 
immediately for personal reasons. The Board would like to thank John for his 
strong contribution to Company during the three years he has been a member of 
the Board. 
 
 
Steve Harris, currently a Non-Executive Director, will now become Non-Executive 
Chairman. Steve has over 40 years' experience in the pharmaceutical industry and 
has held a variety of positions in both the prescription and consumer healthcare 
sectors with sales, marketing and general management experience with Merck Sharp 
and Dohme, Eli Lilly, Boots and Reckitt & Colman (now Reckitt Benckiser). He is 
currently Chairman of Aquapharm Bilodiscovery Limited, Proteome Sciences plc 
(AIM: PRM), Cyprotex plc (AIM: CRX) and a Non-Executive Director of Advanced 
Medical Solutions plc (AIM: AMS). 
 
 
Broker appointment 
Phynova announces that it has appointed JEP as its sole broker with immediate 
effect. JEP continues as the Company's nominated adviser. 
 
 
Shareholder enquires 
Shareholders are encouraged to contact the Company to discuss the content of 
this announcement. 
 
 
Robert Miller commented: 
"We are delighted with the support shown by a number of our major shareholders 
during this difficult time. We can now get on with a number of exciting projects 
that we have in hand and that are capable of generating revenue in the short 
term." 
 
 
For further information, please contact: 
 
 
+--------------------------------------------+----------------------------+ 
| Phynova Group PLC                          |        [phone] | 
+--------------------------------------------+----------------------------+ 
| Steve Harris (Non-Executive Chairman)      |                            | 
+--------------------------------------------+----------------------------+ 
| Tony Mills (CEO Phynova Limited)           |                            | 
+--------------------------------------------+----------------------------+ 
| Robert Miller (CEO Phynova China Limited)  |                            | 
+--------------------------------------------+----------------------------+ 
|                                            |                            | 
+--------------------------------------------+----------------------------+ 
| Nominated Adviser and Broker:              |                            | 
+--------------------------------------------+----------------------------+ 
| John East & Partners Limited               |       [phone] | 
+--------------------------------------------+----------------------------+ 
| John East/Simon Clements                   |                            | 
+--------------------------------------------+----------------------------+ 
|                                            |                            | 
+--------------------------------------------+----------------------------+ 
 
 
 
 
Notes to Editors: 
 
 
About Phynova 
Phynova is a UK company developing new prescription pharmaceuticals derived from 
plants used in Chinese medicines. The Company is focused on viral and bacterial 
diseases, metabolic diseases and cancer. Phynova's lead product for hepatitis C 
has now completed a Phase I/II trial in the US. One further product, for 
post-operative ileus, is targeted for entry to the clinic and there are a 
further four products in preclinical development. 
 
 
For further information please visit www.phynova.com. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
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