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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Oxeco | LSE:OXE | London | Ordinary Share | GB00B1J5QT30 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMOXE
RNS Number : 9864M
Oxeco PLC
03 June 2010
Oxeco Plc (the "Company")
Proposed acquisition of Tissue Regenix Limited
Proposed 1 for 5 Share Consolidation
Proposed placing of 106,712,800 New Ordinary Shares
at 5 pence per share
Proposed change of name to Tissue Regenix Group Plc
Adoption of New Articles of Association
Application for Admission to AIM
and
Notice of General Meeting
Transaction highlights:
· Conditional acquisition of Tissue Regenix, a company engaged in the
production of biocompatible
regenerative tissue implants using its
proprietary platform dCELL Technology
· The consideration for the Acquisition is to be satisfied by the issue of
240 million New Ordinary Shares to
the shareholders of Tissue Regenix
· Gross proceeds of the placing of GBP4.5 million following which the
Enlarged Group will have net funds of
approximately GBP7.4 million
· The Acquisition constitutes a reverse takeover under the AIM Rules
· Following Admission, the Continuing Board will comprise John Samuel as
Executive Chairman, Antony
Odell as Managing Director, Michael Bretherton
as Finance Director and Alan Miller, Alex Stevenson and
Alan Aubrey as
Non-Executive Directors.
· It is expected that dealings in the New Ordinary Shares of the Enlarged
Group will become effective on 29
June 2010
· The Enlarged Issued Share Capital on Admission will be 466,712,800 New
Ordinary Shares
The Company is pleased to announce that terms have been agreed for the
conditional acquisition of Tissue Regenix, a company engaged in the production
of biocompatible regenerative tissue implants using its proprietary platform
dCELL Technology. The aggregate consideration for the Acquisition is GBP12
million to be satisfied by the allotment of 240,000,000 New Ordinary Shares to
be issued and credited as fully paid at 5 pence per New Ordinary Share.
The Company also announces that it has conditionally raised GBP4.5 million
(before expenses) by way of a Placing. The funds from the Placing will be used
to meet the costs of the Proposals and to provide additional working capital for
the Enlarged Group.
In view of the size of Tissue Regenix in relation to the Company, the
Acquisition is classified as a reverse takeover under the AIM Rules and is
therefore conditional, inter alia, on the approval of Shareholders in general
meeting. A copy of the Admission document along with the notice of General
Meeting is being sent out to shareholders today and will be available on the
Company's website www.oxecoplc.com.
Information on Tissue Regenix
Tissue Regenix was incorporated in May 2006 to commercialise the academic
research of Professor Eileen Ingham and Professor John Fisher of the University
of Leeds in the field of tissue decellularisation.
The dCELL Technology comprises a patented process which removes cells and other
components from animal and human tissue allowing it to be used without
anti-rejection drugs to replace worn out or diseased body parts. The potential
applications of this process are diverse and address many critical clinical
needs such as vascular disease, heart valve replacement and knee repair. Of the
range of potential applications, Tissue Regenix is currently focused on
delivering its lead product, the dCELL Vascular Patch, onto the market and the
current timetable envisages Tissue Regenix making its final submission for a CE
Mark shortly. It is the Continuing Board's intention to use the proceeds of the
Placing to complete the application process and commence the marketing of the
dCELL Vascular Patch and to develop further follow-on products in the vascular,
cardiac and orthopaedic areas.
The Continuing Board believe that medical products based on the dCELL
Technology have the potential to deliver long term solutions to major clinical
problems due to their ability to regenerate inside the human body using the
patient's own cells thereby avoiding the need for re-treatment.
John Samuel, Tissue Regenix Chairman, commented:
"This acquisition represents the next milestone in Tissue Regenix's
development. Admission to the AIM Market of the London Stock Exchange allows
Tissue Regenix to continue to strengthen its shareholder base and balance sheet
and gives the company the resources needed to fund the further development of
the dCELL Technology and the securing of regulatory approval for marketing for
its dCELL Vascular Patch."
Michael Bretherton, Oxeco Chairman, Commented:
"The opportunity with Tissue Regenix will provide an exciting new start for the
Company."
Admission Statistics
Number of Existing Ordinary Shares
600,000,000
(post Share Consolidation)
120,000,000
Number of Consideration Shares proposed to be issued
240,000,000
Number of Placing Shares proposed to be issued*
106,712,800
Placing Price
5 pence
Enlarged Issued Share Capital
466,712,800
Gross proceeds of the Placing*
GBP4.5
million
Net proceeds of the Placing available to the Company*
GBP4.03 million
Market capitalisation of the Company immediately following Admission
GBP23.3 million
International Security Identification Number (ISIN)
GB00B5SGVL29
TIDM Symbol
TRX
Percentage Percentage
of Enlarged of fully diluted
Issued Enlarged Issued
Share Capital Share Capital
+-----------------------------------------------+--------------+--------+
| | % | % |
+-----------------------------------------------+--------------+--------+
| Percentage of Enlarged Issued Share Capital | | |
| and fully diluted | | |
+-----------------------------------------------+--------------+--------+
| Enlarged Issued Share Capital represented by: | | |
+-----------------------------------------------+--------------+--------+
| Existing Ordinary Shares | 25.71 | 24.93 |
+-----------------------------------------------+--------------+--------+
| Consideration Shares | 51.42 | 49.86 |
+-----------------------------------------------+--------------+--------+
| Placing Shares | 22.86 | 22.17 |
+-----------------------------------------------+--------------+--------+
* Includes 16,712,800 Placing Shares proposed to be issued to the Tissue Regenix
Group Plc Employee Benefit Trust in respect of which the GBP835,640 of
subscription monies will be loaned to the EBT by the Company and which monies
are therefore excluded from the proceeds of the Placing.
Expected Timetable of Principal Events
Event
Publication date of the Admission Document
3 June 2010
Latest time and date for receipt of Forms of Proxy in respect
of the General Meeting
10.00 a.m. on 26 June 2010
Record Date for Consolidation
6.00 p.m. on 28 June 2010
General Meeting
10.00 a.m. on 28 June 2010
Completion of the Acquisition, Admission and dealings in the Enlarged
Issued Share Capital expected to commence on AIM
29 June 2010
Expected crediting of CREST accounts (where applicable) by
29 June 2010
Expected despatch of definitive share certificates (where applicable) by
6 July 2010
For further details of the transaction please see below. For the full admission
document, please visit the Company's website: www.oxecoplc.com.
The terms used in this announcement have the same meaning as in the admission
document.
Contact
+----------------------------------------+----------------------------------------+
| Michael Bretherton | +44 (0) 20 7099 7266 |
| Oxeco plc | |
| www.oxecoplc.com | |
| | |
+----------------------------------------+----------------------------------------+
| Graeme Thom/ Sarang Shah | +44 (0) 20 7060 2220 |
| ZAI Corporate Finance Ltd | |
| | |
+----------------------------------------+----------------------------------------+
LETTER FROM THE CHAIRMAN OF OXECO PLC
Oxeco Plc
Dear Shareholder,
Proposed acquisition of Tissue Regenix Limited
Proposed 1 for 5 Share
Consolidation
Proposed placing of 106,712,800 New Ordinary Shares
at 5
pence per share
Proposed change of name to Tissue Regenix Group
Plc
Adoption of New Articles of Association
Application for Admission to
AIM
and
Notice of General Meeting
1. INTRODUCTION
The Company has today announced that terms have been agreed for the conditional
acquisition of Tissue Regenix, a company engaged in the production of
biocompatible regenerative tissue implants using its proprietary platform dCELL
Technology. The aggregate consideration for the Acquisition is GBP12 million to
be satisfied by the allotment of 240,000,000 New Ordinary Shares to be issued
and credited as fully paid at 5 pence per New Ordinary Share.
Tissue Regenix was incorporated in May 2006 to commercialise the academic
research of Professor Eileen Ingham and Professor John Fisher of the University
of Leeds in the field of tissue decellularisation. Its dCELL Technology
comprises a patented process which removes cells and other components from human
and animal tissue allowing it to be used without anti-rejection drugs to replace
worn out or diseased body parts.
The Company has also today announced that it has conditionally raised GBP4.5
million (before expenses) by way of the Placing. The funds from the Placing will
be used to meet the costs of the Proposals and to provide additional working
capital for the Enlarged Group.
In view of the size of Tissue Regenix in relation to Oxeco, the Acquisition is
classified as a reverse takeover under the AIM Rules and is therefore
conditional, inter alia, on the approval of Shareholders in general meeting.
Such approval is being sought at the General Meeting, notice of which is set out
at the end of this document.
Immediately following Admission, the Consideration Shares will comprise
approximately 51.42 per cent. of the Enlarged Issued Share Capital.
The purpose of this document is to: (i) provide you with the background to and
to set out the reasons for, and details of, the Proposals; (ii) explain why the
Directors consider the Proposals are in the best interests of the Company and
its Shareholders as a whole; and (iii) seek Shareholder approval for the
Proposals. This document also contains the Directors' recommendation that you
vote in favour of the Resolutions to be proposed at the GM, notice of which is
set out at the end of this document.
This document comprises an Admission Document in respect of the Enlarged Group
prepared in accordance with the AIM Rules.
2. BACKGROUND TO AND REASONS FOR THE PROPOSALS
Oxeco was admitted to AIM in December 2006. At the same time, the Company
outlined a strategy of investing in, or acquiring assets, businesses or
companies in the technology and science sectors.
On 6 June 2007, the Company completed its acquisition of the entire issued share
capital of Oxray, a start up business which had the objective of becoming a
provider of molecular structure determination services to both industry and
academic institutions. Oxray pursued this objective by developing novel X-ray
crystallography structure determination software but, notwithstanding
substantial completion of such development, was unable to establish a solid
customer base nor had it been able to develop its product service offering by
bolt-on acquisitions in the same field as had been envisaged at the time of its
acquisition. Further, the Directors were not able to secure a commercial exit
from Oxray and thus concluded (as announced on 23 July 2009) to cease any
further investment in Oxray. Oxray has since been a dormant subsidiary retaining
control of its underlying Intellectual Property Rights and the Company has
completed the transfer of an equity stake of 15 per cent. in Oxray to Oxray's
former Commercial Manager, Richard Cooper, as an incentive to help potentially
realise some future value from such Intellectual Property Rights.
In the announcement relating to Oxray on 23 July 2009, the Company confirmed
that it would continue with its outline strategy of seeking investments in the
general science and technology sector. In line with such strategy, the Directors
have indentified Tissue Regenix as a suitable acquisition for the Company and
believe that its platform technology, the dCELL Technology, has the potential
to significantly increase Shareholder value.
3. INFORMATION ON TISSUE REGENIX
Tissue Regenix was incorporated in May 2006 to commercialise the academic
research of Professor Eileen Ingham and Professor John Fisher of the University
of Leeds in the field of tissue decellularisation. The Founders commenced their
work on the core process comprised within the dCELL Technology approximately 6
years prior to Tissue Regenix's incorporation and the ensuing discoveries were
the result of the combination of their respective expertise in the biology and
engineering disciplines, together with their collaboration with leading
physicians in the UK and Brazil.
The Institute of Medical and Biological Engineering at the University of Leeds
is a recognised centre of excellence in the field of regenerative medicine and
advanced biomaterials. During the development of the dCELL Technology, grants
totalling GBP2 million have been received from the EPSRC, Yorkshire Children's
Heart Foundation, BBSRC and others and these have enabled the Founders and their
research teams at the IMBE to develop and refine the technology.
In December 2006 and under investment rights vested in it pursuant to the
Technology Transfer Framework Agreement, Techtran, together with the White Rose
Technology Fund, invested in a seed financing round of GBP685,000, the proceeds
of which were used to progress the dCELL Technology towards a pre-clinical
study that demonstrated the early promise of the underlying process.
Between the end of 2007 and May 2008, Tissue Regenix completed a further funding
round raising approximately GBP3.3 million in aggregate in which John Samuel,
the current chairman of Tissue Regenix and proposed Executive Chairman of the
Company, participated. The proceeds were used to commence the first clinical
trial on the dCELL Vascular Patch which began in August 2009 and is continuing
towards developing the quality systems necessary to securing a CE Mark. In
October 2008, Antony Odell was appointed chief executive officer after working
as a consultant to Tissue Regenix since early 2008.
The dCELL Technology comprises a patented process which removes cells and other
components from animal and human tissue allowing it to be used without
anti-rejection drugs to replace worn out or diseased body parts. The potential
applications of this process are diverse and address many critical clinical
needs such as vascular disease, heart valve replacement and knee repair. Of the
range of potential applications, Tissue Regenix is currently focused on
delivering its lead product, the dCELL Vascular Patch, onto the market and the
current timetable envisages Tissue Regenix making its final submission for a CE
Mark shortly. It is the Continuing Board's intention to use the proceeds of the
Placing to complete the application process and commence the marketing of the
dCELL Vascular Patch and to develop further follow-on products in the vascular,
cardiac and orthopaedic areas.
The Continuing Board believe that medical products based on the dCELL
Technology have the potential to deliver long term solutions to major clinical
problems due to their ability to regenerate inside the human body using the
patient's own cells thereby avoiding the need for re-treatment.
4. THE dCELL PROCESS AND VASCULAR PATCH
The process comprised within the dCELL Technology involves the production of
biological scaffolds created by taking a piece of animal or human tissue that is
equivalent to the diseased or damaged body part which is being replaced,
treating such tissue with a series of chemical washes to decellularise it and
then sterilising the tissue. The end product is a scaffold which can be stored
under normal conditions at room temperature like any synthetic medical device
and, when it is implanted into the body, it repopulates with the patient's own
cells using natural biological repair mechanisms.
The key benefits of the scaffold include the following:
· it provides strength and support to the repair site within the body;
· it is biocompatible, meaning that is compatible with living cells,
tissues, organs or systems and posing little risk of injury toxicity or
rejection by the immune system; and
· it incorporates into the patient's tissue allowing it to regenerate and
is cell friendly.
· dCELL Vascular patch
Tissue Regenix's dCELL Vascular Patch is a sterile, non-cellular biological
scaffold which is intended to be permanently implanted into the human body for
vascular repair. An example of its use is as a patch to close a blood vessel
after the surgical removal of plaque in an artery that has become narrow or
blocked due to peripheral vascular disease. The use of a biological patch for
such closure is just one or several clinical options, which include primary
closure, use of an autologous vein or use of a prosthetic (synthetic) patch.
Patching has been routinely used as early as 1965 and there is strong evidence
that carotid patching provides long-term benefits for patient care.
Tissue Regenix has recently completed the six month follow up to its clinical
trial on the dCELL Vascular Patch and will shortly be submitting its dossier of
data from the clinical trial to the regulatory authority as part of its
application for a CE Mark in Europe. Subsequent to attaining approval, it is the
Continuing Board's intention to start marketing the dCELL Vascular Patch in
Europe and to file for regulatory approval in the US.
5. THE REGULATORY ENVIRONMENT
Tissue Regenix operates in a highly regulated environment and, as such, all of
its products are subject to external governmental approval. In regulatory terms,
Tissue Regenix's products are regarded as medical devices by EU and US
regulators because they either treat/alleviate disease or because they
replace/modify the anatomy in a way that does not achieve its principal intended
action in or on the human body by pharmacological, immunological or metabolic
means.
Within the EU, medical devices must be compliant to the European Council
Directive 93/42/EEC of 14 June 1993 which concerns medical devices, plus a range
of subsequent amendments to the Directive. Devices are regulated by EU member
state competent authorities, which in the UK is the Medicines & Healthcare
Regulatory Agency. These competent authorities in turn designate notified bodies
to audit medical device manufacturing facilities and to assess product
information dossiers. Tissue Regenix's notified body is Intertek, formerly known
as Amtac Certification Services Ltd. Council Directive 93/42/EEC includes
non-viable animal tissue devices in its scope and thus covers Tissue Regenix's
products. Specifically, Tissue Regenix's dCELL products are Class III medical
devices in the EU and are regarded as higher risk medical devices due to their
animal derived nature (Class III being the highest risk medical device class).
As such, Tissue Regenix operates under stringent controls and its registration
design dossier (a comprehensive product information package) for the dCELL
Vascular Patch product is currently being examined by Intertek to enable Tissue
Regenix to gain approval to place the product on the market and to affix a CE
mark to the product. As part of the approval process, Tissue Regenix's
manufacturing facilities have also been assessed by Intertek and Tissue Regenix
will gain certification to the ISO 13485: 2003 medical devices quality
management systems standard as part of the approval process.
Within the US, medical devices must be compliant to the Federal Food, Drug and
Cosmetic Act. Procedural regulations relating to medical devices in the US are
documented in the Code of Federal Regulations 21 Part 800-898 for Medical
Devices (Sub Chapter H). Devices in the US are all regulated by the FDA.
Specifically, Tissue Regenix's dCELL products are either Class II or Class III
products in the US (with Class III being the highest risk medical device class).
Classification is generally dependent on the intended purpose of the device and
also whether the devices are substantially equivalent to other Class II devices
already cleared by the FDA (rather than being based on whether the material is
of animal origin). Both Class II and III products require a data package
submission to the FDA prior to placing the product on the market, however, the
types of submission (and data requirements) differ depending on the class. The
Proposed Directors believe that the dCELL Vascular Patch is substantially
equivalent to other products on the US market place and will be a Class II
product.
To help ensure that Tissue Regenix's products will meet global regulatory
standards, it designs its devices to meet a number of key medical device
standards, including but not limited to ISO 10993 (biological evaluations), ISO
14971 (application of risk management), ISO 22442 (animal tissues and their
derivatives) and ISO EN ISO 14160 (sterilisation).
6. INTELLECTUAL PROPERTY RIGHTS
The Tissue Regenix patent portfolio is based around the two initial patent
filings made by the University of Leeds in 2001 and 2003 and covering the basic
methodology of preparing tissue matrices for subsequent implantation. The method
patent covers (i) the use of single low concentration of an anionic detergent
"SDS" and (ii) the use of ultra-sound energy for recellularisation. Both of
these inventions have now progressed through the International PCT Phase and are
granted in certain jurisdictions. The detailed status of each of these patents
in the various jurisdictions in which they have been filed, referred to as
Patent Family 1 and Patent Family 2, is set out in paragraphs 1 and 2 of Part II
of this document.
Since the initial two patents were filed, applications for two further patent
families have been filed demonstrating improvements to the basic methodology in
order to prepare specific tissues with unique properties. The detailed status of
each of these patent applications in the various jurisdictions in which they
have been filed, referred to as Patent Family 3 and Patent Family 4, is set out
in paragraphs 3 and 4 of Part II of this document.
Each of Patent Family 1, Patent Family 2 and Patent Family 3 have been filed in
the name of the University of Leeds and licensed to Tissue Regenix on an
exclusive world-wide royalty free basis for the lifetime of: the granted
patents; any further patents granted pursuant to the pending patent
applications; and any further applications made claiming priority from these.
Further details of the IPR Licence are set out in paragraph 12 of Part VII of
this document.
Patent Family 4 was originally filed in 2006 jointly in the names of the
University of Leeds and the University of York. The patents and patents
applications comprised within this family were assigned to Tissue Regenix on 28
May 2010. Further details of this assignment are set out in paragraph 12 of Part
VII of this document.
In addition to the Owned Patents and Licensed Patents, the Know How forms an
integral part of the Intellectual Property Rights of Tissue Regenix.
Tissue Regenix also have a European Community Trade Mark registration for the
trade mark "dCELL ". An application for this trade mark is also currently
pending in the US.
As Tissue Regenix grows and further develops its dCELL Technology and products
using the technology, it will continue with its strategy of filing patents to
protect any improvements to existing methods and also to file specific product
patents.
7. STRATEGY OF THE ENLARGED GROUP AND USE OF PROCEEDS
The strategy of the Enlarged Group will be to continue to use its core dCELL
Technology as a platform to develop a range of products using the established
medical device regulatory pathway to deliver solutions to unmet clinical needs.
The three priority markets for the application of the technology are:
· Vascular (e.g. vascular patches);
· Cardiac (e.g. heart valves); and
· Orthopaedics (e.g. meniscus).
The lead product is the dCELL Vascular Patch which is described further in
paragraph 4 above. The Continuing Board's intention with the dCELL Vascular
Patch is to secure regulatory approval in Europe and, subsequently, the US in
order for it to commence marketing in these jurisdictions and also to explore
other potential applications of the dCELL Vascular Patch in addition to the
vascular application, for example, in neurosurgery and hernia repair. Each of
these new applications will increase the available market opportunity for the
product.
The next product on which the Enlarged Group intends to focus following
Admission is the dCELL Meniscus. The dCELL Meniscus is a device made from
porcine meniscus which possesses the biomechanics and structure of human
meniscus which the Continuing Board believes will assist in restoring normal
function. Key benefits of the dCELL Meniscus include that it is acellular and
biocompatible and the dCELL process results in a cell friendly scaffold which
regenerates with the patient's own cells and remaining tissue. The complex
organisation of collagen in meniscal tissue means the structure is virtually
impossible to replicate with synthetic materials, a problem that is overcome by
using meniscus as the starting material to manufacture the implantable scaffold.
The dCELL Meniscus product has already been the subject of more than 3 years of
background research at the IMBE. The Continuing Board intends to apply a
significant proportion of the aggregate cash resources of the Enlarged Group
following completion of the Placing towards the further development of the
dCELL Meniscus and the securing of regulatory approval for marketing.
Other possible products in the Enlarged Group's pipeline include the following:
· Cardiology - dCELL Aortic Valve;
· Vascular - dCELL Graft;
· Orthopaedic- dCELL Ligament; and
· Urology - dCELL Bladder and dCELL Patch.
As mentioned above, the Enlarged Group's commercial strategy relies on
discovering and developing products from its novel process and improvements to
that process. In addition, the commercial strategy will involve (i) seeking and
obtaining regulatory and pricing and reimbursement approval for the products
developed; and (ii) convincing surgeons that they should be using the Enlarged
Group's products. All of these steps involve degrees and elements of
uncertainty. The market segments addressed by the Enlarged Group's products
differ in a number of factors including size and complexity of the target
application/mechanism. The Enlarged Group's products may not be appropriate for
certain potential applications. The route to market for a particular product is
also a critical factor in determining how widely adopted that product might be
and obtaining pricing and reimbursement for that product can also be crucial to
its success and use. The Enlarged Group may not be able to obtain regulatory
approval and/or pricing and reimbursement approval for its products. Even after
regulatory approval is obtained, medical devices rely on clinical evidence for
their success and also the use of surgeon recommendation, neither of which the
Proposed Directors are able to predict with any certainty. To some extent the
commercial success of the Enlarged Group may depend on its ability to protect
and enforce its Intellectual Property Rights (and in particular, at this point
in time, Patent Family 1) so as to preserve its exclusive rights in respect of
the dCELL Technology and to preserve the confidentiality of its Know-How. The
Enlarged Group may not be able to protect and preserve its Intellectual Property
Rights or to exclude competitors with competing technologies or competing
products made through different processes. Patent Families 1 and 2 claim
processes for the production of products and do not contain any product claims.
Enforcement of process related claims can be difficult.
With the dCELL Vascular Patch, the dCELL Meniscus and subsequent products
which may be developed by the Enlarged Group, it is the Continuing Board's
intention, once the requisite regulatory approvals are obtained, to pursue a
combined commercialisation strategy of both licensing the dCELL Technology to
third parties and entering into co-marketing and/or distribution agreements with
third parties relating to the underlying products.
Alongside the activities described above, it is the Continuing Board's intention
for the Enlarged Group to continue to work with and strengthen the existing
links which Tissue Regenix already has with major academic centres in Europe,
North and South America in order to leverage their resource and expertise to
enhance the value of the dCELL Technology and to facilitate the development and
introduction of additional products/processes using it.
Additionally, the Continuing Board believes that the dCELL Technology may be
enhanced by the strategic acquisition of complimentary technologies to
strengthen its technology base and Intellectual Property Rights in the
Regenerative Medicine sector.
Following Admission, the Enlarged Group will have net funds of approximately
GBP6.8 million. These funds will be applied towards the execution of the
Enlarged Group's strategy.
8. MARKETS
The market for human therapeutic products employing tissue engineering and
Regenerative Medicine technologies is one of the most rapidly growing sectors
within the medical products market, offering a permanent cure rather than an
ongoing therapeutic treatment. The range and complexity of Regenerative Medicine
products is significant, but the market can be broadly categorised into two main
segments:
- Scaffolds - including gels, foams, membranes and fibres; and
- Cells - including cultivated adult and embryonic stem cells,
autogenous and differentiated cells.
The dCELL Technology currently falls just within the scaffolds segment but
there is potential in the future for it to also form the base scaffold for
further cell-based therapeutics.
The general global healthcare medical devices market further sub-divides along
surgical specialty lines.
As the Regenerative Medicine market is a relatively new and emerging market,
current estimates of its total value are variable with many of the sub-segments
of the market being in their infancy and a number still in development. There
is, however, general agreement amongst market researchers and governmental
bodies in the UK and the US that the potential markets are significant and,
according to a report produced in early 2009, the global market potential for
Regenerative Medicine will exceed $118bn by 2013 with an estimated compound
annual growth rate of 4.8 per cent. Substantial growth is generally expected in
multiple product segments. The Enlarged Group's target procedure areas with high
volume and/or high growth potential and in which the dCELL Technology has
applicability (which will only be a proportion of the Regenerative Medicine
market) include neurologic, orthopaedic, cardiovascular, urologic and wound
care.
9. COMPETITION
Decellularisation is an emerging concept and the published scientific literature
shows that there are different techniques used to achieve it. The Proposed
Directors are aware of several research groups who are using decellularisation
technology and the Continuing Board will continue to monitor new publications to
ascertain the development status of these and any new decellularisation
technologies which are developed.
The main commercial competitors of which the Proposed Directors are aware, are:
· CryoLife - CryoLife develops human derived grafts and tissue engineered
heart valves, as well as a proprietary process for preserving non-human tissue
for human implantation. Most relevant to the dCELL Technology is Cryolife's
SynerGraft technology, a decellularising method for denuding a human valve of
its living cells to create an acellular valvular construct that may function as
a scaffold for repopulation by the patient's own cells. Cryolife is currently
applying Synergraft to human tissues only.
· LifeCell - LifeCell develops and markets tissue repair products for use
in orthopedic, reconstructive and urogynecologic surgical procedures. In June
2007, LifeCell received marketing clearance from the FDA for its StratticeTM
product, a sterile porcine-derived tissue matrix processed using Lifecell's
proprietary technology which was launched in 2008. The Continuing Board believes
that the process underpinning the dCELL Technology is more efficient at
removing immunogenic components that Lifecell's StratticeTM.
· Synovis Life Technologies Inc. (NASDAQ: SYNO) - Synovis' Veritas product
range of patches is one of the newest product ranges in the current market and
represents a benchmark for the Enlarged Group's products since they are gaining
acceptance and sales amongst users of patches. Unlike porcine based devices
being developed by Tissue Regenix, these are bovine derived implants.
· Cook Biotech - Cook Biotech's SISTM technology is an existing product on
the market. As with Lifecell's StratticeTM product, the Proposed Directors
believe that the dCELL process is more efficient at removing immunogenic
components than Cook Biotech's SISTM technology.
· Covidien Inc. - Covidien acquired Tissue Science Laboratories plc
("TSL") in 2008. TSL has a porcine based product called Permacol, but, unlike
the dCELL Technology, its process uses fixation chemicals.
10. DETAILS OF THE ACQUISITION
Under the terms of the Acquisition Agreement, the Company has conditionally
agreed to acquire the Tissue Regenix Share Capital for GBP12 million. The
consideration for the Acquisition, which is payable on Admission, is to be
satisfied by the allotment and issue by the Company to the Vendors of the
Consideration Shares, credited as fully paid up at the Placing Price. The
Consideration Shares will, when issued, represent 51.42 per cent. of the
Enlarged Issued Share Capital and will rank pari passu in all respects with the
New Ordinary Shares then in issue, including all rights to receive all dividends
and other distributions declared, made or paid following Admission. Application
will be made for the admission of the Consideration Shares to trading on AIM and
dealings are expected to commence following completion of the Acquisition.
As part of the Acquisition, the Tissue Regenix Options will be replaced by the
Company granting the Replacement Options. The Replacement Options will be
granted on the similar terms as the Tissue Regenix Options. Further details of
the number and terms of exercise of the Replacement Options to be granted under
the EMI Scheme and the Unapproved Option Scheme are set out in paragraph 11 of
Part VII of this document.
The Acquisition Agreement is conditional, inter alia, upon the passing of the
Resolutions and Admission. The Company has the right to rescind the Acquisition
Agreement if a material adverse change occurs in relation to the assets or
financial position of Tissue Regenix prior to Admission. The Vendors also have a
similar right should there be a material adverse change in Oxeco prior to
Admission.
The Acquisition Agreement contains a variety of restrictive covenants from the
Covenantors (which includes the Founders). The Acquisition Agreement also
contains certain warranties from the Warrantors on the business of Tissue
Regenix. The other Vendors are only giving warranties as to their respective
ownership of their Tissue Regenix Shares. All warranties are given on a several
basis and are subject to an aggregate financial cap on each Vendors' liability
by reference to the value of his/its Consideration Shares as at the date of a
claim being made for breach of warranty.
Further details of the Acquisition Agreement are set out in paragraph 12 of Part
VII of this document.
11. RELATED PARTY TRANSACTIONS
The Acquisition will constitute a related party transaction under the AIM Rules
by reason of ORA Guernsey holding 45.25 per cent. of the issued share capital of
the Company and 18.85 per cent. of the Tissue Regenix Share Capital.
Furthermore, Michael Bretherton (a director of the Company) is a director of ORA
Guernsey and a director and shareholder of ORA, the holding company of ORA
Guernsey. Gordon Hall and Graham Richards, as independent directors for this
purpose, having consulted with ZAICF, consider the Acquisition to be fair and
reasonable insofar as Shareholders of the Company are concerned.
The placing of 29,892,989 Placing Shares at the Placing Price to ORA Guernsey
and 200,000 Placing Shares at the Placing Price to Michael Bretherton, a
Director, will also constitute a related party transaction under the AIM Rules.
Gordon Hall and Graham Richards, as independent directors for this purpose,
having consulted with ZAICF, consider the participation of ORA Guernsey and
Michael Bretherton in the Placing to be fair and reasonable insofar as
Shareholders of the Company are concerned.
12. GRANT OF REPLACEMENT OPTIONS AND NEW OPTIONS AND RIGHTS UNDER THE JOINT
OWNED SHARE SCHEME
The Continuing Board recognises the importance of ensuring that employees of the
Enlarged Group are well motivated and identify closely with its future success.
They therefore regard employee share ownership as a key incentive and it is
proposed that the Company adopt the Share Schemes at Admission.
The EMI Scheme will allow the grant of options over New Ordinary Shares to
eligible employees of the Enlarged Group, which include executive directors and
employees. It is proposed that Replacement Options under the EMI Scheme will be
granted, at Admission, to replace the Tissue Regenix Options currently held by
Antony Odell and other employees. In addition, it is proposed that additional
New Options under the EMI Scheme will be granted, at Admission, to Antony Odell
and John Samuel which will only vest subject to meeting agreed performance
criteria. Further details of the number of Replacement Options and New Options
to be granted under the EMI Scheme, the exercise price, and final exercise date
are set out in paragraph 11 of Part VII of this document.
In respect of the Replacement Options to be granted under the EMI Scheme to
replace the Tissue Regenix Options, confirmation is being sought from the Shares
and Assets Division of HM Revenue and Customs that such replacement options will
be of equivalent value and as such will continue to be treated as qualifying for
EMI.
The Unapproved Scheme will allow the grant of options over New Ordinary Shares
to all directors and employees of the Enlarged Group. It is proposed that
Replacement Options under the Unapproved Scheme will be granted, at Admission,
to replace the Tissue Regenix Options currently held by directors, employees and
consultants over shares in Tissue Regenix. Further details of the number of
Replacement Options to be granted under the Unapproved Scheme, the exercise
price, and final exercise date are set out in paragraph 11 of Part VII of this
document.
A summary of the Tissue Regenix Options that have been granted and of the
Replacement Options to be granted in substitution for the Tissue Regenix
Options, together with the additional New Options to be granted to Antony Odell
and John Samuel, is set out below:
Total
Number of Replacement
Number of Tissue Replacement Number of
Options and
Regenix Options at Options to be New Options
New Options
the date of this granted in to be granted to
be granted
report substitution on Admission
on Admission
+---------------------+------------+------------+------------+------------+
| EMI options | | | | |
+---------------------+------------+------------+------------+------------+
| Antony Odell | 379 | 8,307,608 | 1,187,200 | 9,494,808 |
+---------------------+------------+------------+------------+------------+
| John Samuel | 0 | 0 | 2,400,000 | 2,400,000 |
+---------------------+------------+------------+------------+------------+
| Other employees | 145 | 3,178,370 | 0 | 3,178,370 |
+---------------------+------------+------------+------------+------------+
| Total EMI Options | 524 | 11,485,978 | 3,587,200 | 15,073,178 |
+---------------------+------------+------------+------------+------------+
| Unapproved options | | | | |
+---------------------+------------+------------+------------+------------+
| Other employees and | 129 | 3,105,241 | 0 | 3,105,241 |
| consultants | | | | |
+---------------------+------------+------------+------------+------------+
| Total options | 653 | 14,591,219 | 3,587,200 | 18,178,419 |
+---------------------+------------+------------+------------+------------+
The Joint Owned Share Scheme will offer executives and selected senior employees
of the Company the opportunity to purchase an interest in New Ordinary Shares
jointly with the Oxeco Plc Employee Benefit Trust. The executive's or employee's
interest will entitle him or her to participate in the future growth in share
value above the market value, at the date of award, of a New Ordinary Share
subject to meeting agreed performance criteria. The balance of any benefit will
accrue to the EBT which may use its shares for future employee incentivisation
as well as, if appropriate, to repay loans to the Company covering the
subscription monies owed by the EBT for purchase of its initial interest in the
New Ordinary Shares. It is proposed that, at Admission, John Samuel will acquire
an interest in 10,740,000 New Ordinary Shares through the EBT, that Antony Odell
will acquire an interest in 5,372,800 New Ordinary Shares through the EBT and
that Michael Bretherton will acquire an interest in 600,000 New Ordinary Shares
through the EBT. Further details of the terms of the Joint Owned Share Scheme
and the interests to be acquired by John Samuel, Antony Odell and Michael
Bretherton are set out in paragraph 11 of Part VII of this document.
13. CURRENT TRADING
Historical audited financial information of the Oxeco Group for the 12 months to
31 January 2008, 12 months to 31 January 2009 and 12 months to 31 January 2010
is set out in the Company's latest published statutory accounts which are
available from the Company's website www.oxecoplc.com. The consolidated trading
loss for the year ended 31 January 2010 from continuing operations was GBP0.12
million, increasing to a loss of GBP0.23 million after incorporating the
discontinued activities of the Oxray business, compared to a loss in the
previous year of GBP0.03 million before impairment of goodwill which increased
to a loss of GBP2.15 million after the impairment, and GBP2.35 million after
incorporating discontinued activities. Consolidated net assets at 31 January
2010 amounted to GBP2.30 million, including cash balances of GBP2.32 million
compared with net assets of GBP2.52 million and cash balances of GBP2.53 million
a year earlier at 31 January 2009. The Oxeco Group has, subsequent to 31 January
2010, traded in line with expectations.
Historical audited financial information of Tissue Regenix for the 15 months
from 5 May 2006 to 31 July 2007, 12 months to 31 July 2008, 12 months to 31 July
2009 and 6 months to 31 January 2010 is set out in Section B of Part V of this
document. Tissue Regenix made a loss before tax of GBP0.15 million in the 15
months to 31 July 2007, a loss before tax of GBP0.58 million in the 12 months to
31 July 2008, a loss before tax of GBP1.42 million in the 12 months to 31 July
2009 and a loss before tax of GBP0.74 million in the 6 months to 31 January
2010. The net equity attributable to shareholders was GBP0.54 million as at 31
July 2007, GBP3.17 million as at 31 July 2008, GBP1.95 million as at 31 July
2009 and GBP1.29 million as at 31 January 2010. Tissue Regenix has, subsequent
to 31 January 2010, traded in line with expectations.
14. FINANCIAL EFFECTS OF THE ACQUISITION AND PLACING
The Acquisition and the Placing are expected to strengthen the Company's balance
sheet and provide the Enlarged Group with funding to pursue its proposed
strategy as outlined in paragraph 7 above.
A Pro Forma Statement of Net Assets is set out in Section B of Part VI of this
document and discloses that the Enlarged Group will have pro-forma net assets of
GBP7.6 million inclusive of cash and cash equivalent balances of GBP7.4 million
and after paying the estimated expenses of the Proposals.
15. CITY CODE ON TAKEOVERS AND MERGERS
The terms of the Proposals give rise to certain considerations under the City
Code. Brief details of the Panel, the City Code and the protection they afford
are given below.
The City Code does not currently have the full force of law. It has, however,
been acknowledged by both government and other regulatory authorities that those
who seek to take advantage of the facilities of the securities markets in the
United Kingdom should conduct themselves in matters relating to takeovers (and
related transactions) in accordance with high business standards and according
to the City Code.
The City Code is issued and administered by the Panel. The City Code applies to
all listed or unlisted public companies registered in the United Kingdom (and to
private companies in certain circumstances) and, where not listed on a regulated
market, are considered by the Panel to have their place of central management
and control in the United Kingdom. The Company is a public company registered in
the United Kingdom and managed and controlled in the United Kingdom and as such
its Shareholders are therefore entitled to the protections afforded by the City
Code.
Under Rule 9 of the City Code, where any person acquires, whether by a single
transaction or a series of transactions over a period of time, 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, that person is normally required by the Panel to make a general offer,
in cash, to the shareholders of that company to acquire the balance of the
equity share capital and any other class of transferable security carrying
voting rights of the company at the highest price paid by that person or any
person acting in concert with him in the previous 12 months.
Rule 9 of the City Code further provides that, inter alia, where any person who,
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 shares carrying not more than 50 per cent. of such voting
rights and such person, or any such person acting in concert with him, acquires
an interest in additional shares which increase his percentage of shares
carrying voting rights, such person is normally required by the Panel to make a
general offer to the shareholders of that company to acquire the balance of the
equity share capital and every other class of transferable security carrying
voting rights of the company at the highest price paid by that person or any
person acting in concert with him in the previous 12 months.
Under the City 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 City Code, control means an
interest, or aggregate interests, in shares carrying 30 per cent. or more of the
voting rights of a company, irrespective of whether the interest or interests
gives de facto control.
Before Admission, the Concert Party will, in aggregate, be interested in
352,500,000 Existing Ordinary Shares, representing approximately 58.75 per cent.
of the then issued ordinary share capital of the Company. Following completion
of the Acquisition and the Placing, the Concert Party will, in aggregate, be
interested in 169,708,809 New Ordinary Shares, representing approximately 36.36
per cent. of the voting rights attaching to the Enlarged Issued Share Capital.
The table below shows the interests of each member of the Concert Party in the
Existing Ordinary Shares and in the New Ordinary Shares following completion of
the Acquisition, Placing and Admission.
+---------------+---------+----+-----+----------+------+----------+----------+--+-------+----------+------+----------+-----------+---+-------+
| ORA Concert Party | | | No. of New | | | | |
| | | | Ordinary | | | | |
+-------------------------+----------+-----------------+---------------------+---------------------+-----------------+-----------+-----------+
| | | | Shares post | %. of New Ordinary | | No. | |
| | | | issue of the | | | of | |
| | | | | | | New | |
+-------------------------+----------+-----------------+---------------------+---------------------+-----------------+-----------+-----------+
| Number of | %. of | | Consideration | Shares post | | Ordinary | % of |
+-------------------------+----------+-----------------+---------------------+---------------------+-----------------+-----------+-----------+
| Existing | Existing | Number of | Shares and | issue of the | Number of | Shares | Enlarged |
+-------------------------+----------+-----------------+---------------------+---------------------+-----------------+-----------+-----------+
| Ordinary | Ordinary | Consideration | the Share | Consideration | Placing | following | Issued |
+-------------------------+----------+-----------------+---------------------+---------------------+-----------------+-----------+-----------+
| Shares | Shares | Shares | Consolidation | Shares | Shares | Admission | Share |
| | | | | | | | Capital |
+-------------------------+----------+-----------------+---------------------+---------------------+-----------------+-----------+-----------+
| ORA | 271,500,000 | 45.25 | 226,212,439 | 99,542,487 | 27.65 | 29,892,989 | 129,435,476 | 27.73 |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| Robert | 55,000,000 | 9.17 | - | 11,000,000 | 3.06 | 1,833,333 | 12,833,333 | 2.75 |
| Quested | | | | | | | | |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| Richard | 22,000,000 | 3.67 | - | 4,400,000 | 1.22 | 20,000,000 | 24,400,000 | 5.23 |
| Griffiths(1) | | | | | | | | |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| Michael | 2,000,000 | 0.33 | - | 400,000 | 0.11 | 800,000 | 1,200,000 | 0.26 |
| Bretherton(2) | | | | | | | | |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| Beatrice | 500,000 | 0.08 | - | 100,000 | 0.03 | 200,000 | 300,000 | 0.06 |
| Hollond | | | | | | | | |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| Annnabel | 1,500,000 | 0.25 | - | 300,000 | 0.08 | - | 300,000 | 0.06 |
| Ede-Golightly | | | | | | | | |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| James | - | 0.00 | - | - | 0.00 | 200,000 | 200,000 | 0.04 |
| Ede-Golightly | | | | | | | | |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| William | - | 0.00 | - | - | 0.00 | 1,000,000 | 1,000,000 | 0.21 |
| Orgee | | | | | | | | |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| Nikki Cooper | - | 0.00 | - | - | 0.00 | 40,000 | 40,000 | 0.01 |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| | ----- | | ----- | ----- | | ----- | ----- ----- | |
| | ----- | | | ----- | | | | |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| | 352,500,000 | 58.75 | 226,212,439 | 115,742,487 | 32.15 | 53,966,322 | 169,708,809 | 36.36 |
+---------------+--------------+----------------+-----------------+-------------+-------+-----------------+--------------------------+-------+
| | | | | | | | | | | | | | | | |
+---------------+---------+----+-----+----------+------+----------+----------+--+-------+----------+------+----------+-----------+---+-------+
1. Includes 20,000,000 New Ordinary Shares to be held through a derivative
financial instrument with Cantor Index Limited.
2. Includes 600,000 New Ordinary Shares to be held jointly by Michael
Bretherton and the EBT.
The Panel has been consulted and has agreed that it will not require the Concert
Party, individually or collectively, to make a general offer for shares in the
Company as a result of the issue of the Placing Shares or the Consideration
Shares on the basis that on 25 June 2007 the independent Shareholders at that
time approved a waiver of such obligation on the Concert Party in accordance
with the provisions of the City Code as part of the acquisition of Oxray by the
Company and because the aggregate percentage holding of the Concert Party will,
following the completion of the Proposals, fall from 58.75 per cent. to 36.36
per cent.
Following completion of the Acquisition, the Placing and Admission, the Concert
Party will continue to be considered to be acting in concert by the Panel and
so, as outlined above, if any member of the Concert Party acquires an interest
in additional New Ordinary Shares which increases that person's percentage of
shares carrying voting rights, the Concert Party will normally be required by
the Panel to make a general offer to the shareholders of the Company to acquire
the balance of the equity share capital in the Company and every other class of
transferable security carrying voting rights of the Company at the highest price
paid by any member of the Concert Party in the previous 12 months.
Further details on the individual members of the Concert Party and their
holdings is set out in Part IV of this document.
16. INFORMATION ON THE DIRECTORS AND PROPOSED DIRECTORS
The Directors of the Company as at the date of this document are Michael
Bretherton, Gordon Hall and Professor Graham Richards. It is proposed that, with
effect from Admission, Gordon Hall and Professor Graham Richards will resign
from the Board, Michael Bretherton will assume the role as Finance Director and
John Samuel, Antony Odell, Alan Miller, Alex Stevenson and Alan Aubrey will join
the Board as Executive Chairman, Managing Director and Non-Executive Directors
respectively.
Details of the Continuing Board are set out below:
John Andrew Walter Samuel, Executive Chairman, aged 58
John Samuel joined Tissue Regenix as Chairman in March 2008. John qualified as a
Chartered Accountant with Price Waterhouse and has held a number of senior
finance positions in industry, including as Financial Director of Whessoe plc
and Ellis & Everard plc. He was formerly the CEO of the Molnlycke Health Care
Group, a global provider of single use surgical and wound care products to the
healthcare sector. Until January 2010 he was a partner with Apax Partners LLP.
Antony Ruben Odell, Managing Director, aged 48
Antony Odell joined Tissue Regenix as a consultant from January 2008. Antony was
made chief executive officer of Tissue Regenix in October 2008. Antony has
extensive commercial experience in the medical technology sector. As well as
working as co-director of Xeno Medical, a medical technology consultancy, he was
CEO for a UK NHS cardiovascular device spin-out, Tayside Flow Technologies Ltd.
Antony has a strong corporate sector background having worked for J&J Medical
for almost 10 years in European business development roles for Drug Delivery &
Vascular Access and General Manager (UK) for Fresenius (Critical Care &
Diagnostics).
Michael Anthony Bretherton, Finance Director, aged 54
Michael Bretherton graduated in Economics from the University of Leeds and then
worked as an accountant and manager with Pricewaterhouse for 7 years in both
London and the Middle East. Michael subsequently worked for the Plessey Company
Plc before being appointed finance director of the fully listed Bridgend Group
Plc in 1988 where he held the position for 12 years. More recently, he has
worked at the property and services company, Mapeley Limited, and at the
entertainment software games developer, Lionhead Studios Limited. Michael has a
depth of business experience and has been involved in the strategic evaluation
and commercial implementation of a broad range of business initiatives,
including acquisitions, disposals, restructurings, company start-ups, venture
capital fundings and IPO flotations. He is currently also a director of ORA,
which he joined at its inception in early 2006, as well as of Nanoco Group Plc,
Obtala Resources Plc, Oxford Advanced Surfaces Group Plc and Oxford Nutrascience
Group Plc, all of which are AIM listed. Michael's services to the Company are
provided pursuant to a consultancy agreement with the ORA Group, details of
which are described in paragraph 12 of Part VII of this document.
Alan Jonathan Richard Miller, Non-Executive Director, aged 46
Alan Miller is a founding partner of SCM Private, the wealth management company,
which was set up in early 2009 and which recently was awarded "New Firm of the
Year" by Spears magazine. He was formerly the chief investment officer and
founding shareholder of New Star Asset Management from early 2001 until early
2007. Prior to that, he was a director at Jupiter Asset Management in charge of
their specialist high performance division between 1994 and 2000. Earlier he was
a senior fund manager at Gartmore Investment Management between 1988 and 1994.
Alan is also a non-executive director of several private companies including
Pharminox Ltd, a pharmaceutical company specialising in cancer research, and
Leigh Cottage Childcare, a children's nursery near Bradford-upon-Avon providing
home from home childcare. Alan's qualifications include a degree in Commerce
(Accounting) from Birmingham University, the London Business School Investment
Management Programme, the Society of Investment Analysts exams, and the
Chartered Institute of Management Accountants exams.
Alexander James Stevenson, Non-Executive Director, aged 39
Alex Stevenson joined Tissue Regenix as a non-executive director in December
2007. Alex is a director of Aquarius Equity Partners, one of the investors in
Tissue Regenix. He began his career as a scientist, before focusing on
identification, establishment and growth of high value technology businesses.
Alex worked for Techtran from formation through to its sale to main market
listed IP Group in 2005. Following the acquisition, Alex worked in a variety of
roles within IP Group and managed investments in portfolio companies including
Avacta and Syntopix (where he was also CEO), both of which listed on AIM in
2006. Most recently, Alex was a founder and chief operating officer of Modern
Biosciences plc, the drug development subsidiary of IP Group.
Alan John Aubrey, Non-Executive Director, aged 48
Alan is the chief executive officer of IP Group plc, a company that specialises
in commercialising intellectual property originating from research intensive
institutions. He is a non-executive director of PROACTIS Holdings PLC and
Energetix Group PLC, and is a non-executive director of Avacta Group plc.
Previously, Alan was the founder and CEO of Techtran that was sold to IP Group
in 2005. He was also a partner at KPMG where he specialised in providing
corporate finance advice to fast growing technology businesses. He is a fellow
of the Institute of Chartered Accountants.
17. LOCK-IN AGREEMENT
The Warrantors who, following Admission, will be interested, in aggregate, in
356,309,631 New Ordinary Shares (including those New Ordinary Shares which may
be issued on the exercise of New Options to be granted conditional on Admission
or New Ordinary Shares held under the JOSS), representing approximately 74.45
per cent. of the Enlarged Issued Share Capital (as diluted by the exercise in
full of the Replacement Options and New Options held by Antony Odell and John
Samuel) have each undertaken to the Company and ZAICF that they will not, save
in certain limited circumstances, (namely (a) as permitted by the AIM Rules and
(b) in order to meet warranty claims under the Acquisition Agreement), sell or
dispose of any interest in New Ordinary Shares held by them on Admission for a
period of eighteen months following Admission, and that, for a further period of
six months, they will only dispose of any interest in such New Ordinary Shares
through ZAICF (or the Company's broker from time to time) in accordance with
ZAICF's (or the relevant broker's) requirements for the maintenance of an
orderly market in the New Ordinary Shares.
In addition, each of the Michael Bretherton and Antony Odell (as those members
of the Continuing Board who are not also Warrantors), who will, on Admission, be
interested, in aggregate, in 16,267,608 New Ordinary Shares (including those
shares which may be issued on the exercise of New Options and Replacement
Options to be granted conditional on Admission or New Ordinary Shares held under
the JOSS), representing approximately 3.4 per cent. of the Enlarged Issued Share
Capital (as diluted by the exercise in full of the Replacement Options and New
Options held by Antony Odell and John Samuel) of the Company, have each
undertaken to the Company and ZAICF not to dispose of the same for a period of
(a) eighteen months following Admission save as permitted by the AIM Rules and
(b) then for a further six months thereafter only in accordance with ZAICF's (or
the relevant broker's) requirements for the maintenance of an orderly market in
the New Ordinary Shares.
Further details of the Lock-In Agreement are set out in paragraph 12 of Part VII
of this document.
18. RELATIONSHIP AGREEMENT
On 12 December 2006, the Company entered into a relationship agreement with ORA
Capital in connection with the Company's admission to AIM. The purpose of the
relationship agreement was to ensure that it would exercise its rights as a
Shareholder to ensure that all transactions, relationships and agreements
between the Company and the ORA Group would be on arm's length terms. The
Company and ORA have, conditional on Admission, entered into the Restated
Relationship Agreement. Further details of the Restated Relationship Agreement
are set out in paragraph 12 of Part VII of this document.
19. DETAILS OF THE PLACING
The Company is proposing to raise GBP4.5 million (before expenses of
approximately GBP0.47 million) by the issue of 106,712,800 Placing Shares at the
Placing Price. Certain of the Directors and Proposed Directors are participating
in the Placing as follows: Michael Bretherton, John Samuel, Antony Odell and
Alan Miller will be subscribing for 200,000, 1,731,665, 200,000 and 4,192,258
Placing Shares respectively at the Placing Price. In addition, 16,712,800
Placing Shares are to be issued to the EBT, in respect of which the GBP835,640
of subscription monies will be loaned to the EBT by the Company (and which
monies are therefore excluded from the proceeds of the Placing). The Placing
Shares will represent, in aggregate, approximately 22.9 per cent. of the
Enlarged Issued Share Capital. The Placing Shares will be issued credited as
fully paid and will, upon issue, rank pari passu in all respects with the New
Ordinary Shares then in issue, including all rights to receive all dividends and
other distributions declared, made or paid following Admission. The Placing has
not been underwritten or guaranteed. The Placing Shares have not been marketed
in whole or in part to the public in connection with the application for
Admission.
The Placing is conditional, inter alia, on the Placing Agreement becoming
unconditional (save for any condition as to Admission) on or before 16 July 2010
(or such later time as ZAICF and the Company may agree). Further details of the
Placing Agreement are set out in paragraph 12 of Part VII of this document.
20. SHARE CONSOLIDATION
The Company proposes to consolidate its existing share capital on the basis of 1
(one) New Ordinary Share for every 5 (five) Existing Ordinary Shares held by
Shareholders on the register of members of the Company at the close of business
on the Record Date. The Share Consolidation is to become effective on the Record
Date.
The Directors and Proposed Directors believe that the Share Consolidation will
be beneficial to the Company as it may facilitate trading in, increase liquidity
and potentially reduce the volatility of the price of the New Ordinary Shares on
AIM. Other than the change in nominal value, the New Ordinary Shares arising on
implementation of the Share Consolidation will have the same rights as the
Existing Ordinary Shares, including voting, dividend and other rights.
No Shareholder shall be entitled to receive a fraction of a New Ordinary Share
and so where, as a result of the Share Consolidation, any Shareholder would be
entitled to a fraction of a New Ordinary Share in respect of their holding of
Existing Ordinary Shares at the Record Date (a "Fractional Shareholder"), such
fractions shall be aggregated with the fractions of New Ordinary Shares to which
other Fractional Shareholders of the Company may be entitled so as to form full
New Ordinary Shares and shall be sold for the benefit of the Fractional
Shareholder for the best price then reasonably available for such shares.
The proceeds of such sale (net of all costs and expenses) will then be
distributed to the Fractional Shareholders in proportion to the fractions of New
Ordinary Shares held by each of them.
However, any cash proceeds of less than GBP5 will not be distributed to
Fractional Shareholders but will be retained for the benefit of the Company. In
view of the current share price, the Directors and Proposed Directors do not
believe that the due proportion of the proceeds of the sale of any fractional
entitlements will amount to GBP5 and consider it unlikely that any sums will be
paid to the Fractional Shareholders concerned.
If a Shareholder holds a share certificate in respect of an Existing Ordinary
Share, the certificate will no longer be valid from the time the proposed Share
Consolidation becomes effective. If a Shareholder holds 5 or more Existing
Ordinary Shares at the Record Date, such Shareholder shall be sent a new share
certificate evidencing the New Ordinary Shares to which such Shareholder is
entitled to under the Share Consolidation. Such certificates are expected to be
despatched no later than 7 days after Admission. Upon receipt of the new
certificate, Shareholders should destroy any old certificates. Pending the
despatch of new certificates, transfers of certificated New Ordinary Shares will
be certified against the Company's share register.
21. CHANGE OF NAME
It is proposed that the name of the Company be changed to Tissue Regenix Group
Plc. A special resolution, being Resolution 7, will be proposed at the GM to
this effect.
22. DIVIDEND POLICY
It is the intention of the Continuing Board to achieve Shareholder capital
growth. In the short term, the Continuing Board intends to reinvest any future
profits in the Company and, accordingly, are unlikely to declare dividends in
the foreseeable future. However, the Continuing Board will consider the payment
of dividends out of the distributable profits of the Company when they consider
it is appropriate to do so.
23. CORPORATE GOVERNANCE
The Directors and the Proposed Directors recognise the importance of sound
corporate governance and intend that the Enlarged Group will observe the
provisions of the Combined Code and the main provisions of the QCA Guidelines,
insofar as they are appropriate given the Enlarged Group's size, stage of
development and financial resources.
The Company established properly constituted audit and remuneration committees
with formally delegated duties and responsibilities on its first admission to
trading on AIM on 21 December 2006.
The members of both the audit committee and the remuneration committee as at the
date of this document are Gordon Hall and Graham Richards, with Gordon Hall as
the chairperson of each committee.
It is intended that, conditional upon Admission, each of Gordon Hall and Graham
Richards will resign from both the audit and remuneration committees. In their
place, Alex Stevenson, Alan Miller and Alan Aubrey will be appointed to each
committee, with Alex Stevenson chairing the remuneration committee and Alan
Miller the audit committee.
At the present time, given its stage of development, the Board does not feel it
is appropriate to have a nomination committee. However, the Continuing Board
will review this decision in the future as appropriate.
Share Dealing
The Company has adopted a code for directors' dealings in securities of the
Company which is appropriate for an AIM quoted company. The Directors comply and
the Continuing Board will continue to comply with Rule 21 of the AIM Rules
relating to directors' dealings and will, in addition, take all reasonable steps
to ensure compliance by the Enlarged Group's "applicable employees" (as defined
in the AIM Rules).
24. NEW ARTICLES OF ASSOCIATION
The final provisions of CA 2006 came into force on 1 October 2009. It is now
proposed that the New Articles be adopted to reflect the provisions of CA 2006
and to ensure consistency with CA 2006. Some of the principal provisions of CA
2006 that are reflected in the New Articles are as follows:
· CA 2006 abolishes the requirement for a company to have an authorised
share capital and the New Articles reflect this. Directors will still be limited
as to the number of shares they can at any time allot because allotment
authority continues to be required under CA 2006, save in respect of employee
share schemes;
· the New Articles are in line with the provisions of CA 2006 regarding
the convening of and notice periods for general meetings. The effect of this is
that at least 14 days notice is required for all general meetings, save for
Annual General Meetings where at least 21 days notice will be required;
· CA 2006 provides that when a company has given an electronic address in
a notice of meeting or form of proxy, it is treated as having accepted that a
communication in relation to that notice of meeting or form of proxy can be sent
to that electronic address. The New Articles will enable the Company to receive
appointments of proxies in electronic form subject to the conditions or
limitations which are specified in the notice of meeting;
· provisions have been included in the New Articles to provide the Company
with a general power to send or give any notice, document or information to any
shareholder in electronic form (such as by email), or by making it available on
the Company's website, in accordance with the provisions of CA 2006. If the
Company gives any notice or sends any document or information to its
shareholders by making it available on the Company's website, it must comply
with the requirements of CA 2006 and the notice provisions in the New Articles.
The Company will be able to ask each individual shareholder for his or her
consent to receive communications from the Company via its website. Shareholders
can also revoke their consent to receive electronic communications at any time;
· provisions have been included in the New Articles in order to clarify
the methods by which shareholders can communicate with the Company. Apart from
hard copy documents or information sent or supplied by hand or by post, this
can, pursuant to the new electronic communication provisions in CA 2006, also be
by electronic communication to an address specified for the purpose by the
Company for the purposes of receiving such communication; and
· CA 2006 significantly reduces the constitutional significance of a
company's memorandum of association. Under CA 2006 the objects clause and all
other provisions which are contained in a company's memorandum, for existing
companies at 1 October 2009, are deemed to be contained in the company's
articles of association but the company can remove these provisions by special
resolution. Further, CA 2006 states that unless a company's articles provide
otherwise, a company's objects are unrestricted. This abolishes the need for
companies to have objects clauses. The adoption of the New Articles confirms the
removal of these provisions for the Company.
A summary of the principal provisions of the New Articles is set out in
paragraph 5 of Part VII of this document.
25. ADMISSION TO AIM
Application will be made to the London Stock Exchange for the Enlarged Issued
Share Capital to be admitted to trading on AIM. It is expected that Admission
will become effective and dealings in the Enlarged Issued Share Capital will
commence on AIM on 29 June 2010.
If the Resolutions are not passed or the Acquisition is not completed, the
Existing Ordinary Shares will continue to be traded on AIM.
26. CREST
CREST is a computerised paperless share transfer and settlement system which
allows shares and other securities to be held in electronic rather than paper
form and transferred otherwise than by written instrument. The New Articles
permit the New Ordinary Shares to be issued and transferred in uncertified form
in accordance with the CREST Regulations. The Existing Ordinary Shares are
currently enabled for settlement through CREST. Accordingly, settlement or
transactions in the New Ordinary Shares following Admission may take place
within CREST if relevant Shareholders so wish. CREST is a voluntary system and
Shareholders who wish to hold their shares in certificated form will be able to
do so.
27. TAXATION
Information regarding taxation in the UK with regard to holdings of Ordinary
Shares is set out in paragraph 18 of Part VII of this document. These details
are, however, intended only as a general guide to the current tax position under
UK taxation law. Shareholders who are in any doubt as to their tax position or
who are subject to tax in jurisdictions other than the UK are strongly advised
to consult their own independent financial adviser immediately.
28. RISK FACTORS
Shareholders should consider carefully the risk factors set out in Part III of
this document in addition to the other information presented.
29. ADDITIONAL INFORMATION
Your attention is drawn to the further information set out in Parts II to VII of
this document.
30. GENERAL MEETING
The General Meeting has been convened for 10.00 a.m. on 28 June 2010 to be held
at the offices of Fasken Martineau LLP, 17 Hanover Square, London W1S 1HU. You
will find set out at the end of this document the Notice of GM convening the GM
for the purposes of considering and, if thought fit, approving the following
resolutions:
· Resolution 1 is an ordinary resolution to approve the Acquisition for
the purposes of the AIM Rules;
· Resolution 2 is an ordinary resolution to approve the Share
Consolidation;
· Resolution 3 is an ordinary resolution to authorise the Directors under
section 551 of the CA 2006 to allot relevant securities up to an aggregate
nominal value of GBP2,506,589.30;
· Resolution 4 is an ordinary resolution to approve the Share Schemes;
· Resolution 5 is a special resolution to dis-apply statutory pre-emption
rights;
· Resolution 6 is a special resolution to approve the adoption of the New
Articles; and
· Resolution 7 is a special resolution to approve the change of name of
the Company to Tissue Regenix Group Plc.
The attention of Shareholders is also drawn to the voting intentions of the
Directors as set out in paragraph 32 below.
31. ACTION TO BE TAKEN
Shareholders will find enclosed with this document a Form of Proxy, for use in
connection with the GM. Whether or not you intend to be present at the GM, you
are asked to complete and return the Form of Proxy in accordance with the
instructions printed thereon as soon as possible but in any event so as to
arrive no later than 10.00 a.m. on 26 June 2010, being 48 hours before the time
appointed for the holding of the GM. Completion and posting of a Form of Proxy
will not prevent you from attending and voting in person at the GM if you so
wish.
32. RECOMMENDATION
As I am a member of the Concert Party and a director and shareholder of ORA, the
holding company of ORA Guernsey, which is, in turn, a significant shareholder of
the Company and of Tissue Regenix, I have not, in my capacity as a Director,
taken any part in the consideration by the Board of the Acquisition. As Graham
Richards is a director and a shareholder of IP Group (the holding company of
Techtran and IP2IPO Nominees Limited, both Vendors), he has also not, in his
capacity as a Director, taken part in the consideration by the Board of the
Acquisition.
The Directors, who have been so advised by ZAICF, believe that the Proposals are
fair and reasonable and in the best interests of the Company and the
Shareholders as a whole. In providing advice to the Directors, ZAICF has taken
account of the information supplied by the Directors and their commercial
assessments. Accordingly, the Directors recommend the Shareholders to vote in
favour of the Resolutions to be proposed at the GM (save that, to the extent
that the Resolutions are necessary to implement the Placing, I make no
recommendation as the Placing constitutes a related party transaction with me
for the purposes of the AIM Rules). The Directors intend to vote in favour of
the Resolutions in respect of their own beneficial holdings of, in aggregate,
3,000,000 Ordinary Shares representing 0.5 per cent. of the issued share capital
of the Company at the date of this document.
Yours faithfully
MICHAEL BRETHERTON
Executive Chairman
This information is provided by RNS
The company news service from the London Stock Exchange
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