Arix Bioscience Share Discussion Threads

[ntv] 12/11/2023 17:05

Exactly SKYSHIP
Makes you wonder what has been going on behind the scenes and it is incredible at an investment trust of all things
It stinks

[skyship] 12/11/2023 15:59

This para below is absolute cr#p. The BoD has no right to accede to the wishes of a 25% shareholder. They can implement a return of capital through a Tender WITHOUT A VOTE.

A 1/3 at 175p would cost just £72.5m of our cash balance. Give us that then continue on with an orderly wind-down. Doesn't have to be overnight so no need to slash and burn as they state!

"A partial return of capital and orderly management of the portfolio to generate returns to shareholder would have had attractions as an outcome to the strategic review. However, the desire of our largest shareholder to see a rapid return of capital made it difficult to execute on a wind down process which the board would have considered responsible."

[+eysenck] 12/11/2023 12:28

Here's the reply I received - this seems to sum it up "Although our largest shareholder is a minority, their substantial shareholding would have made it difficult to pass any shareholder resolutions necessary to affect a way forward other than the rapid wind down which they favoured."

Thank you for your email.

We are conscious of the differing treatment offered to Acacia; however, this was not a choice of the Arix board but was a factor in a transaction presented to Arix by RTW and was not something which the Arix board could negotiate or alter. The Board was obliged to consider the executable transactions presented to it, alongside wind-up scenarios and to weigh these up against the likely future value which could be delivered by supporting the portfolio and following the investments Arix has made to their logical conclusion.



Following the announcement of the Strategic Review, the Arix Board received a strong request from Arix’s largest shareholder to see a rapid return of capital. However, secondary sales of private positions and large listed holdings (many of which are illiquid) could only be achieved at a discount to our holding value. This discount would likely be very significant indeed for the private assets, with only a fraction of the book value realised. Unfortunately, it is not possible to liquidate a portfolio such as Arix’s in short order and deliver the full NAV per share to shareholders. Indeed, given the current weakness in biotech markets, the Arix board did not consider now to be a responsible time to be liquidating positions.



A partial return of capital and orderly management of the portfolio to generate returns to shareholder would have had attractions as an outcome to the strategic review. However, the desire of our largest shareholder to see a rapid return of capital made it difficult to execute on a wind down process which the board would have considered responsible. Although our largest shareholder is a minority, their substantial shareholding would have made it difficult to pass any shareholder resolutions necessary to affect a way forward other than the rapid wind down which they favoured. In this context, the transaction presented to Arix by RTW was judged to be superior to the other executable ways forward.



We appreciate your feedback and engagement and hope that future communications on this matter will help demonstrate the potential value this transaction can create.



I will of course be sharing yours, and other shareholder feedback, with the Arix board and RTW.



Kind regards,

Laura

[skyship] 11/11/2023 09:06

Well done Peel Hunt ..... shame on Jefferies for valuing their fees more than their reputation.

[ohisay] 11/11/2023 02:06

One of Arix Bioscience’s joint-brokers quit on the morning it announced a contentious takeover deal in protest at its inequitable treatment of shareholders.

Peel Hunt demanded that its name and that of its two healthcare bankers be taken off the release for the sale of the company’s assets to the rival life sciences investment company RTW Biotech.

It resigned with immediate effect hours later.

The investment bank, which had been brought into the deal late in the process, is understood to have told Arix that it could not sanction a deal that discriminated against three quarters of its shareholders to provide a cash exit on better terms to its 25.5 per cent activist investor Acacia Research.
Moncreiffe hailed the deal as “the best outcome for Arix shareholders”. However, several shareholders are known to be livid with the board over the unequal terms and what they feel is a low-ball price when Arix is sitting on £106 million of cash. Arix needs the support of 75 per cent of voting shareholders for the deal to succeed.

A day after quitting, the Peel Hunt analyst Miles Dixon published an excoriating note, saying the deal was “opportunist and undervalues Arix’s portfolio”. He said the terms were so skewed that Acacia had managed to secure “1.7 times its share of Arix’s cash”, while RTW was effectively gaining control of Arix’s portfolio of unlisted investments “for just 30 cents on the dollar”.

Getting to be embarassing now.Board should just fess up and insist RTW improve the offer.

[skyship] 10/11/2023 20:58

I received a very detailed response to my email to:

[e-mail]

Laura Craig said a lot; but the crux was:

"Although our largest shareholder is a minority, their substantial shareholding would have made it difficult to pass any shareholder resolutions necessary to affect a way forward other than the rapid wind down which they favoured. In this context, the transaction presented to Arix by RTW was judged to be superior to the other executable ways forward."

"WHICH THEY FAVOURED" - So at the end of the day Pergrine Moncrieffe waved the white flag, lets Acacia get their money and RTW wins the day provided he can stay on as Chairman of the combined entity. I smell something rather wrong here.

The Chairman is acting in his best interest, not ours...

[reabank] 10/11/2023 18:23

Yeah, good point. Reading back through it it does seem that way - seems to envisage a situation where the scheme is voted down but the share purchase from Acacia goes ahead. I'll still be voting against.

[cousinit] 10/11/2023 17:15

Reabank - I'm not sure if the deal completing is a condition for Acacia.

The one condition for receiving the cash is getting change of control approval from the FCA. I figured that was a precursor to the vote on the deal, so with that they could get the cash from RTW even if the deal itself failed? RTW would then become the dominant shareholder instead...

[reabank] 10/11/2023 16:42

On the substantive issue of the scheme. I'm against and will vote no. I think a price in the £1.30s for Arix isn't unreasonable (a bit skinny but that's the way it goes.) But everybody should get the same deal and if it costs me a few quid to annoy Accacia that's a price I'm prepared to pay.

[orinocor] 10/11/2023 15:54

So you see it now which is good but it's taken you a good few attempts. I'm glad you're not managing my money.

[skyship] 10/11/2023 14:11

OK, OK - a small point.

Anyway, the most important thing facing ARIX shareholders is what to do when we see the Circular next month. It will include a date (likely January) for the first vote - FOR or AGAINST the proposed scheme.

Q: Is there anyone on this thread intending to vote FOR?

[orinocor] 10/11/2023 13:59

They define in the 1st paragraph what each company are to be referred as.

Arix Bioscience plc ("Arix" or the "Company")
Aura Biosciences (NASDAQ: AURA) ("Aura")

That means all references to the word "Company" in any text following refer to Arix. It's not ambiguous and that's the whole point. Yet they've messed it up.

[skyship] 10/11/2023 13:47

orinocor - I've read through it again....inc. the important intro and closure. If you find it misleading, well, nothing to say really!

[orinocor] 10/11/2023 13:03

Are you serious? That news release clearly says Arix have received $92.6 million.

[skyship] 10/11/2023 12:23

Reads perfectly correctly - AURA rec'd the proceeds of their placing.

[orinocor] 10/11/2023 11:53

The Company cannot be both Arix and Aura

[orinocor] 10/11/2023 11:50

LONDON, 10 November 2023: Arix Bioscience plc ("Arix" or the "Company") (LSE: ARIX), a transatlantic venture capital company focused on investing in breakthrough biotechnology companies

then just a little further down they say

The Company received net proceeds from the Offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company, of approximately USD92.6 million.

[hpcg] 10/11/2023 11:41

orinocor - in what way? I can't see anything different between the Arix announcement and the one from Aura.

[orinocor] 10/11/2023 08:50

omg there is an enormous faux pax in that Aura news

[ohisay] 10/11/2023 01:02

Well done Sky ...!
Somebody else isnt impressed either...



RTW is buying out Acacia for cash at 143p per share. But, as for Arix’s other shareholders, they’re merely being offered the same illiquid RTW paper that’s halved in value since 2021: 1.4633 new RTW shares for each Arix one. Using dubious 30-day averages, the Arix board claims this also equates to 143p a share. But it doesn’t, not least with RTW shares down from $1.18 to $1.11. For most Arix shareholders, this deal’s now worth only 132p.

It gets worse. RTW is funding the purchase of Acacia’s stake. But, if the deal goes through, it’s reimbursed. Arix is sitting on £106 million cash. After RTW’s bought out Acacia and paid deal costs, it’ll still have about £49 million of Arix cash, plus its £51.7 million of listed assets and unlisted ones valued at £67.8 million. Even Arix’s house broker Peel Hunt says the deal’s “opportunist and undervalues Arix’s portfolio”.

Moncreiffe needs 75 per cent of shareholder votes for the deal to go through. But even if they vote it down, he’s thrown in another egregious twist. He’s agreed to appoint RTW’s investment manager — RTW Investments — to manage Arix’s assets. RTW will have to use its own money to buy out Acacia if the deal fails. But it will still end up with 25.5 per cent of Arix and its own manager to vote its stake.

RTW says none of that matters because interests “would be aligned”. And, in Arix’s view, the alternative to the deal is an asset fire sale — not helped by its chief executive Robert Lyne jumping ship for a new job. But there must be a better solution than this: a deal that shafts three quarters of Arix’s share register for the benefit of Acacia and RTW. Shareholders should kick out Moncreiffe if he can’t find one.

[skyship] 09/11/2023 14:24

Email sent to [e-mail]
===================================

I am appalled at the RNS issued on 1st November.


The proposal quite clearly deprives shareholders of their legitimate rights. To agree a proposal that provides one shareholder with a cash deal, then use subterfuge to deny the same terms to all other shareholders is totally indefensible. You are driving a coach & horses through the City Code by claiming exemption under the Insolvency Act.


Shareholders will reject this “Deal”; and when they do the BoD must take the rebuff as a rejection of their position as Directors of ARIX. You must resign en masse.


There is only one way you can put this right; and that is quite obviously to advise RTW that the cash alternative must be extended to ALL shareholders, not just to Acacia.

[ntv] 06/11/2023 13:20

If i have the right stock listing RTW. The return in the last few years if gauged by the share price is not very impressive. So not not sure why we need them?

[rambutan2] 04/11/2023 20:30

RTW are a very high quality bio manager, predominantly of a top performing hedge fund. They have access to pretty much all the deal flow in the States. They are young and ambitious. What with the bio index (XBI) right at the bottom of a very long bear mkt, and plenty of stocks quite capable of jumping upwards of 50% on a whim, I can see why Peregrine is eager to take advantage of RTW's skillset, and on such a discount. Let the shares double over the next couple of years and then think about selling a few when the trust is much nearer to nav.

Also, it reads to me as though RTW have got the management contract for ARIX, whatever the outcome. So, much more efficient to combine the two vehicles into one more attractive, larger one. Aimho

[hpcg] 04/11/2023 17:26

frazboy - both the price action and the analysis, but more the analysis. Not totally insane like the sellers in July, and not entirely wrong.

I don't think many people have looked at RTW. It is on a 23% discount, the NAV has gone steadily up this year, and it has 12.3% of NAV in cash of which at least some will be used for buy backs. The stock is close to multi year lows. So whilst the short term upside from 120p is not huge it is still an upside, with likely more to come.

I do agree that if all ARIX holders just want to cash in then that would pressures the RTW price, and I do agree in nominal terms that the largest shareholder is getting a better deal. I just don't see this offer as a bad thing like many appear to.