Venn Life Sciences Holdings PLC Sale of Innovenn & Notice of General Meeting (5712L)

TIDMVENN

RNS Number : 5712L

Venn Life Sciences Holdings PLC

04 October 2016

Venn Life Sciences Holdings Plc

("Venn Life Sciences" or the "Company" or the "Group")

Sale of Innovenn UK Limited

& Notice of General Meeting

Venn Life Sciences (AIM: VENN), a growing Contract Research Organisation providing drug development, clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device clients, announces that its wholly owned subsidiary, Venn Life Sciences Limited, has entered into a conditional agreement under which it and Lynchwood Nominees Limited, as custodian for the Helium Rising Stars Fund, would sell the entire issued share capital of Innovenn UK Limited for a total consideration of up to GBP4,740,000.

Overview

Information on Innovenn

Innovenn was founded by Venn in 2014 as an innovation vehicle dedicated to the development and marketing of healthcare products and technologies. The business acquired Labskin, a living skin model, and an anti-acne formulation and since acquisition has invested in the further development and commercialisation of these assets.

Prior to the Sale, the Subsidiary has converted its loan to Innovenn of GBP1,294,491 into ordinary shares of GBP0.001 each of Innovenn, increasing its shareholding to 70% of the issued share capital of Innovenn. The other shareholder of Innovenn is the Helium Rising Stars Fund. The Helium Rising Stars Fund is a Cayman-domiciled fund that invests in small UK companies. The fund is managed by ISPartners, a hedge fund manager based in Zurich. The fund is co-managed by David Newton and Christian Benz.

Within the Company's consolidated accounts for the financial year 2015, the Innovenn division reported a loss before tax of GBP385,000 and had net liabilities of GBP121,000. Based on the position as at 31st December 2015, the terms described above would crystalise a gain on disposal in the Company's consolidated accounts of approximately GBP959,000. Post the sale Innovenn will fund its activities from existing cash resources and a EUR1m 5 year bank loan which is currently guaranteed by Venn (the "Guarantee"). The provision of the Guarantee is a related party transaction as defined in the AIM Rules and the ESM Rules. Subject to bank approval it is intended that post-IPO Integumen will replace Venn as guarantor for this facility.

The Sale

The consideration for Innovenn has been agreed at GBP4,740,000, subject to adjustment depending on the level of Innovenn' s current liabilities as at completion. Part of the consideration for the Sale will be settled by the assumption by Integumen of GBP146,032 of Innovenn's debt, with the balance of GBP4,593,968 being settled by the allotment of ordinary shares of GBP1.00 each in the capital of Integumen at par credited as fully paid. At completion an initial sum of GBP3,675,174 will be settled by the issue of ordinary shares in the capital of Integumen proportionately to the Subsidiary and Helium Rising Star Fund with further shares (if appropriate) being issued to the Subsidiary and the Helium Rising Star Fund once the level of current liabilities has been ascertained.

Under the terms of the SPA the Subsidiary has given Integumen customary warranties and indemnities in respect of Innovenn' s business and assets.

The Directors believe the Sale will allow the Group to concentrate on its core activities of drug development and clinical research services. The Sale will help to simplify the financial affairs of Venn allowing for a clearer communication and understanding of the underlying value in its core business.

Under the provisions of section 190 of the Act a company may not enter into an arrangement under which a director of the company or of its holding company, or a person connected with such a director, acquires or is to acquire a non-cash asset valued at more than GBP100,000 unless the arrangement is conditional upon the approval of that company's shareholders and the shareholders of its holding company.

As Anthony Richardson is a director and shareholder of Integumen and a director of both the Company and the Subsidiary and the share capital of Innovenn has been valued at more than GBP100,000, the Sale must be approved by the Company's shareholders pursuant to Section 190 of the Act. Such approval must be given by a simple majority of Shareholders voting at a duly convened general meeting.

On completion of the Sale, Anthony Richardson, a Director of Venn, will be a non-executive director of Integumen and will serve on the board of Integumen as Venn's nominee. Declan Service is a Director of Innovenn, a subsidiary of Venn and a Director of Integumen. Accordingly, Anthony Richardson and Declan Service are related parties of the Company as defined in the AIM Rules and the ESM Rules. As a result, the Sale is treated as a "related party transaction" under the AIM Rules and the ESM Rules.

Furthermore, the Sale, because of its size relative to the Company is a substantial transaction in accordance with rule 12 of each of the AIM Rules and ESM Rules.

Information on Integumen Limited

Integumen has been established for the purpose of building a business in the area of human surface science. Anthony Richardson and Declan Service are the founding directors of Integumen. Anthony Richardson will serve as a Non-Executive Director of Integumen on completion of the Sale. Declan Service will fulfil an executive management role.

Integumen plans to acquire the business of Innovenn and complementary businesses in the areas of Skin Science, Oral-health and Woundcare. Integumen has two subscriber shares in issue, one owned by Anthony Richardson and one owned by Declan Service. The acquisition of Innovenn and other businesses is to be completed by way of the issue of new shares in Integumen. The allocation of a subscriber share to Anthony Richardson and Declan Service was to facilitate the creation of Integumen as a legal entity and not for the purposes of financial reward. It is calculated that Anthony Richardson and Declan Service will each (and other than through the Company) own less than 1% of the enlarged Integumen business. Integumen plans to seek admission of its shares to trading on AIM in due course and plans to raise capital to fund the future development and commercialisation of the technology portfolio. Integumen has appointed advisors in this regard. Prior to a potential listing and fundraise Integumen will fund its activities out of existing cash reserves and a bank loan facility for EUR1m which Venn currently guarantees.

In addition to the acquisition of Innovenn, Integumen is in the process of acquiring three additional businesses. The first of these transactions will be completed by way of the purchase of assets of a skin-care company, currently listed on US OTC and owner of a consumer skincare brand. The agreement to acquire these assets is will be conditional on the approval of shareholders in the target company.

In addition to Innovenn and the asset purchase described above, Integumen has agreed terms to acquire a European based Oralhealth company. The purchase will be by way of a purchase of shares and Integumen is targeting the completion of this transaction in the coming weeks. The target currently has an oral hygiene product in the market place with strong international distribution.

Finally Integumen will complete the acquisition of a woundcare business with products in development in the areas of wound diagnostics and infection control. This acquisition will be completed by way of a purchase of shares and Integumen expects to complete this transaction in the coming days.

On completion of the aforementioned transactions, Integumen will have a portfolio of intellectual property and products across four complementary healthcare sectors. On completion of all four transactions Venn would own 30% of the equity of the combined businesses.

Although the Board understands that Integumen intends to enter into the above transactions there is no guarantee that all or any of these will be completed. If Integumen is unsuccessful in acquiring the other businesses and/or concluding a fundraise then the Venn board will consider other options regarding the disposal of its investment. In the event that integumen completes the aforementioned transactions and successfully lists its shares, the board of Venn will decide whether to retain the investment in Venn or distribute the shares to Venn's shareholders.

Recommendation

The Independent Directors, being Allan Wood, Jonathan Hartshorn, Gracielle Schutjens, Cornelius Groen, Michael Ryan, Paul Kennedy and Mary Sheahan, who are not related parties under the AIM Rules and ESM Rules for the purpose of the Sale and the Guarantee, having consulted with Davy, the company's NOMAD and ESM adviser, for the purpose of the AIM Rules and ESM Rules, consider that the Sale and Guarantee are fair and reasonable insofar as the shareholders of the company are concerned. Anthony Richardson has not taken part in the Board's consideration of these matters.

The Independent Directors consider the Sale to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend that Shareholders vote in favour of the Resolution to be proposed at the General Meeting as they intend to do in respect of their own beneficial holdings amounting, in aggregate, to 6,199,655 Ordinary Shares, representing approximately 10.29% per cent. of the Ordinary Shares in issue.

General Meeting

A General Meeting, notice of which has been sent to shareholders today, is to be held at 12 noon on 26 October 2016 at the offices of Jeffries Henry, Finsgate, 5-7 Cranwood Street, London EC1 9VE.

The full Circular to Shareholders is available on the Company's website:

http://www.vennlifesciences.com/shareholder-information/

Tony Richardson, Chief Executive Officer of Venn, said: "As shareholders know, Innovenn has made significant progress in moving from its development phase into commercialisation and that it was our intention to set this business on an independent footing, with its own source of funding and a value that can be clearly established. This transaction will also allow the strong performance of Venn's core CRO business to be seen more clearly."

 
  Venn Life Sciences Holdings            www.vennlifesciences.com 
   Plc 
  Tony Richardson, Chief Executive           Tel: [phone] 
   Officer 
 
  Davy (Nominated Adviser, ESM 
   Adviser and Joint Broker) 
  Fergal Meegan / Matthew de Vere            Tel: [phone] 
   White (Corporate Finance) 
  Paul Burke (Corporate Broking) 
 
  Hybridan LLP (Co-Broker) 
  Claire Louise Noyce                     Tel: [phone] 
 
  Walbrook PR Ltd                      Tel: [phone] or 
                                              [e-mail] 
  Paul McManus                           Mob: [phone] 
 
 

About Venn Life Sciences: Venn Life Sciences is a Contract Research Organisation providing drug development, clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device organisations. With dedicated operations in France, Germany, the Netherlands, the UK, Ireland and Europe wide representation - Venn specialises in rapid deployment and management of multisite projects. Venn also has an innovation division - Innovenn - focused primarily on breakthrough development opportunities in Skin Science.

DEFINITIONS

The following words and expressions shall have the following meanings in this document, the Notice of General Meeting and the Form of Proxy unless the context otherwise requires:

 
 "Act"                     the Companies Act 2006 
 "AIM Rules"               the AIM Rules for Companies as published 
                            by the London Stock Exchange plc 
                            from time to time 
 "Board" or "Directors"    the directors of the Company 
 "certificated"            a share or other security which 
  or "in certificated       is not in uncertificated form (that 
  form"                     is, not in CREST) 
 "Company" or "Venn"       Venn Life Sciences Holdings plc, 
                            a public limited company registered 
                            in England and Wales with a registered 
                            number 07514939 
 "ESM"                     the Enterprise Securities Market 
                            of the Irish Stock Exchange 
 "ESM Rules"               the ESM Rules for Companies as published 
                            from time to time by the Irish Stock 
                            Exchange 
 "Form of Proxy"           the form of proxy for use at the 
                            General Meeting which accompanies 
                            this document 
 "General Meeting"         the general meeting of the Company, 
                            notice of which is set out at the 
                            end of this document 
 "Group"                   the Company and its subsidiary undertakings 
 "Guarantee"               the guarantee by Venn of a EUR1m, 
                            5 year bank loan to Innovenn 
 "Helium Rising            Helium Rising Stars Fund is a Cayman-domiciled 
  Star Fund"                fund launched in January 2014 as 
                            the follow-on venture of the Helium 
                            Special Situations Fund originally 
                            launched in July 2006. The Helium 
                            Rising Stars Fund invests in quoted 
                            small companies and up to 30% of 
                            NAV in private equity type of investments, 
                            predominantly pre-IPO situation, 
                            public-to-private transactions and 
                            private placements. Its focus is 
                            on UK companies with a market cap 
                            of less that GBP50m across all sectors 
                            excluding mining and natural resources. 
                            The fund is managed by ISPartners, 
                            a hedge fund manager based in Zurich. 
                            The fund is co-managed by David 
                            Newton and Christian Benz. 
 "Independent Directors"   being Allan Wood, Jonathan Hartshorn, 
                            Gracielle Schutjens, Cornelius Groen, 
                            Michael Ryan, Paul Kennedy and Mary 
                            Sheahan 
 "Innovenn"                Innovenn UK Limited 
 "Integumen"               Integumen Limited, a company owned 
                            and controlled by Anthony Richardson 
                            and Declan Service for the purpose 
                            of facilitating the acquisition 
                            of Innovenn and other businesses 
 "London Stock Exchange"   London Stock Exchange plc 
 "Lynchwood Nominees       a custodian for the Helium Rising 
  Limited"                  Stars Fund 
 "Notice of General        the notice of the General Meeting, 
  Meeting"                  which is set out at the end of this 
                            document 
 "Ordinary Shares"         ordinary shares of 0.1 pence each 
                            in the share capital of the Company 
 "Registrars"              SLC Registrars at 42-50 Hersham 
                            Road, Walton-on-Thames, Surrey KT12 
                            1RZ 
 "Resolution"              the resolution to be proposed at 
                            the General Meeting, as set out 
                            in the Notice of General Meeting 
 "Sale"                    the sale of all the issued share 
                            capital of Innovenn UK Limited to 
                            Integumen Limited 
 "Shareholder(s)"          holder(s) of Ordinary Shares 
 "SPA"                     the share purchase agreement dated 
                            3 October 2016 between (1) the Company 
                            and Lynchwood Nominees Limited (as 
                            custodian for the Helium Rising 
                            Stars Fund) and (2) Integumen Limited 
 "Subsidiary"              Venn Life Sciences Limited, a wholly 
                            owned subsidiary of the Company 
 "UK" or "United           the United Kingdom of Great Britain 
  Kingdom"                  and Northern Ireland 
 "uncertificated"          a share or security recorded in 
  or "in uncertificated     the Company's register of members 
  form"                     as being held in uncertificated 
                            form, title to which may be transferred 
                            by means of CREST 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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October 04, 2016 02:00 ET (06:00 GMT)