Proposed Acquisition
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES IN THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS NOT A PROSPECTUS OR ADMISSION DOCUMENT. COPIES OF THE ADMISSION DOCUMENT PUBLISHED WILL BE AVAILABLE FROM ALLIANCE'S REGISTERED OFFICE AND WEBSITE: WWW. ALLIANCEPHARMACEUTICALS.COM
ALLIANCE PHARMA PLC
Proposed Acquisition of the Healthcare Products Business from Sinclair IS Pharma plc
The Board of Alliance Pharma plc ("Alliance" or the "Company"), the specialty pharmaceutical company, today announces that it has entered into a conditional agreement with Sinclair IS Pharma plc ("Sinclair") to acquire certain assets and businesses principally focused on dermatology (the "Healthcare Products Business") for a consideration of £127.5 million, plus an estimated £4.7 million for inventory, to be satisfied partly in cash, funded by way of the New Loans, and partly by the issue and allotment of the Vendor Consideration Shares pursuant to the terms of the Acquisition Agreement.
The Acquisition constitutes a reverse takeover under the AIM Rules and, therefore, Completion is conditional on, amongst other things, receiving the approval of Shareholders. This approval will be sought at the General Meeting to be held at the offices of Fasken Martineau LLP, 17 Hanover Square, London W1S 1HU at 10.00 a.m. on 14 December 2015. Completion and Re-admission are expected to take place on 17 December 2015.
A combined Admission Document and Circular is being sent to the Company's shareholders today and will be available on the Investor Relations section of the Company's website at www.alliancepharmaceuticals.com.
Transaction highlights:
· Alliance to acquire 27 products including five key growth brands (Kelo-CoteTM, FlammaceriumTM, AloclairTM, Kelo-stretchTM and AtopiclairTM). The acquisition of these complementary assets will materially increase the scale of the business.
· The Acquisition will significantly increase the Company's footprint outside of the UK and will provide an enhanced platform for further corporate development.
· In the 12 months ended 30 June 2015, the Healthcare Products Business generated revenues of £43.3 million and EBITDA before exceptional items of £9.0 million. It is estimated that cost-saving synergies of approximately £5.0 million will be achievable from the 12 months ending 31 December 2016.
· The Directors believe that, taking into account the business and prospects of the Enlarged Group, the Acquisition will be significantly accretive to earnings per share on an adjusted basis for the 12 months ending 31 December 2016.
· The Directors further believe that the return on invested capital associated with the Acquisition will exceed the Group's weighted average cost of capital in the 12 months ending 31 December 2017 (assuming a weighted average cost of capital of eight per cent.).
· The Acquisition and associated expenses will be financed by a fully underwritten vendor placing raising gross proceeds of £78.5 million and by £54.2 million to be drawn down under the New Loans.
· The proposed vendor placing will comprise the issue of 191,463,414 new Ordinary Shares at a price of 41 pence per share, a discount of approximately 19.6 per cent. to the closing mid-market price of 51 pence per ordinary share on 25 November 2015.
· Irrevocable undertakings to vote in favour of the Resolutions have been received from the Directors and certain Shareholders in respect of 123,484,458 Ordinary Shares, in aggregate, representing approximately 46.7 per cent. of the Existing Issued Share Capital.
· The Company has also granted the Option to Numis under the Placing Agreement in order to enable Numis to deal with additional demand under the Placing in the event that requests to participate in the Placing from institutional and certain other investors are received during the period from the date of this announcement to 5.00 p.m. on 2 December 2015. Any Ordinary Shares issued pursuant to the exercise of the option will be issued on the same terms and conditions as the Vendor Consideration Shares. The maximum number of new Ordinary Shares that may be issued pursuant to the exercise of options is 12,195,121.
John Dawson, Chief Executive of Alliance, commented:
"This Acquisition represents a very significant development for Alliance. On completion, Alliance will be a significantly larger business with synergies in existing markets. Having over half of our business outside of the UK, we will have a greater ability to compete for international deals and in-licensing opportunities."
Conference call for analysts
A conference call for analysts will be held this morning at 7.45am GMT. For further details of the conference call, please contact Buchanan on 020 7466 5000.
Expected timetable of principal events
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Announcement of the Placing and Acquisition |
26 November 2015 |
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Publication date of the Admission Document |
26 November 2015 |
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Latest time and date for receipt of Forms of Proxy in respect of the General Meeting |
10.00 a.m. on 12 December 2015 |
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General Meeting |
10.00 a.m. on 14 December 2015 |
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Expected date and time of suspension of trading of the Ordinary Shares on AIM |
4.30 p.m. on 16 December 2015 |
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Expected date of completion of the Acquisition |
8.00 a.m. on 17 December 2015 |
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Expected date and time of Re-admission becoming effective and dealings in the Ordinary Shares commencing on AIM |
8.00 a.m. on 17 December 2015 |
Re-admission and Placing statistics
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Existing Issued Share Capital |
264,520,610 Ordinary Shares |
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Number of Vendor Consideration Shares proposed to be issued |
191,463,414 |
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Maximum number of Option Shares to be issued pursuant to the Option |
12,195,121 |
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Placing Price |
41 pence per Ordinary Share |
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Enlarged Issued Share Capital (assuming no Option Shares are issued) |
455,984,024 Ordinary Shares |
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Enlarged Issued Share Capital (assuming the maximum number of Option Shares are issued) |
468,179,145 Ordinary Shares |
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Gross value of the Vendor Consideration Shares at the Placing Price |
£78.5 million |
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Gross value of the Option Shares at the Placing Price (assuming the maximum number of Option Shares are issued) |
£5.0 million |
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Market capitalisation of the Enlarged Group at the Placing Price immediately following Re-admission (assuming no Option Shares are issued) |
£187.0 million |
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Market capitalisation of the Enlarged Group at the Placing Price immediately following Re-admission (assuming the maximum number of Option Shares are issued) |
£192.0 million |
Further information:
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Alliance Pharma plc |
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John Dawson, Chief Executive |
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+ 44 (0) 1249 466966 |
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Numis Securities Limited |
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Nominated Adviser: Michael Meade / Freddie Barnfield |
+ 44 (0) 20 7260 1000 |
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Corporate Broking: David Poutney / James Black |
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Buchanan |
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Mark Court / Sophie Cowles / Jane Glover |
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+ 44 (0) 20 7466 5000 |
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Proposed acquisition of the Healthcare Products Business from Sinclair IS Pharma plc, proposed Vendor Placing of 191,463,414 new Vendor Consideration Shares at 41 pence per share, proposed placing of up to 12,195,121 Option Shares at 41 pence per share, re-admission of the Ordinary Shares to trading on AIM and Notice of General Meeting
1. Introduction
Alliance today announces that it, together with its wholly owned subsidiary APL, has entered into the conditional Acquisition Agreement with Sinclair to acquire the Healthcare Products Business. The aggregate consideration for the Acquisition, determined on an adjusted debt free/cash free basis, is up to £127.5 million, plus an estimated £4.7 million for inventory, to be satisfied partly in cash, funded by way of the New Loans, and partly by the issue and allotment of the Vendor Consideration Shares pursuant to the terms of the Acquisition Agreement. The Vendor Consideration Shares are proposed to be placed by Numis on behalf of the Company pursuant to the Placing Agreement to raise approximately £78.5 million (before expenses).
Irrevocable undertakings to vote in favour of the Resolutions have been received from the Directors and certain Shareholders in respect of 123,484,458 Ordinary Shares, in aggregate, representing approximately 46.7 per cent. of the Existing Issued Share Capital.
2. Background to and reasons for the Acquisition and Placing
Overview
The Directors believe that the Healthcare Products Business will complement the Group's business and strategy. The principal therapy area of the Healthcare Products Business is dermatology and the Acquisition will therefore give the Enlarged Group, from Re--admission, a broad geographic reach by combining the Healthcare Products Business with the Group's existing core portfolio in dermatology, which Alliance has successfully served for over a decade and which remains an important area of continuing medical need.
The portfolio of Healthcare Products contains a mixture of 'growth' products receiving promotion as well as non--promoted, established products. This corresponds with the Group's strategic approach to balancing risk within its portfolio and also applies to the similar prescription and consumer split of each of the portfolios. The Healthcare Products Business is similar in size to the Group in terms of revenue and the Acquisition is therefore expected to provide a significant increase in the scale of business, leading to economies of scale and increased revenue and EBITDA, improved access to further acquisitions and a higher industry profile. The Healthcare Products Business and the Group have each been pursuing an internationalisation strategy. The Directors expect that the Enlarged Group will be able to take advantage and benefit from this synergy by (i) strengthening the existing footprint of the top five directly served territories in Europe (and in particular the UK, France and Italy) and (ii) providing an extensive combined network of distributors serving the APAC, MEA and LATAM/US regions. The Healthcare Products Business achieved revenue of £43.3 million for the 12 months ended 30 June 2015, with a gross profit of £22.2 million and EBITDA before exceptional items of £9.0 million over the same period.
The Directors therefore believe that the resulting business of the Enlarged Group will have a stronger platform for future development with synergies in existing markets and, with over half of its business outside of the UK, create greater opportunity for international deals including in--licensing opportunities, and candidacy as a truly global Alliance partner.
International diversification and distribution network
The Enlarged Group will have a significantly larger international footprint than the existing Group with around half of the Enlarged Group's sales having been made internationally over the 12 month period ended 30 June 2015 on a pro-forma basis. The Healthcare Products Business currently serves the top five European markets with offices in France, Italy and the UK. For the 12 months ended 30 June 2015, the Healthcare Products Business achieved sales of £24.4 million in its key Western European markets. The top five territories of the Healthcare Products Business for the same period were France (sales of £8.9 million), UK (£6.3 million), Italy (£4.3 million), Germany (£2.6 million) and Spain (£2.4 million). The other top 10 territories included Algeria, China, Brazil, the Philippines and Indonesia which were served by a network of distribution partners. The Healthcare Products Business' top 10 territories accounted for just over two-thirds (68 per cent.) of gross revenues for the 12 months ended 30 June 2015. The Healthcare Products Business also has a small presence in the US and Brazil through distribution partners, which the Directors believe has the potential for growth. The Directors believe that the diverse geographical spread of the Healthcare Products Business helps to reduce risk and creates a better platform for acquisition and in--licencing opportunities.
Currently, distribution of the Healthcare Products is carried out either directly (39.9 per cent. of revenues in the 12 months ended 30 June 2015), which results in higher gross margins for the Healthcare Products Business, or via third party distributors (60.1 per cent. of revenues in the 12 months ended 30 June 2015). The mix of direct and non--direct sales may change over time, as the extent of the Enlarged Group's presence in each territory alters. The distributor base comprises at least 65 active distributors, with the top five (Menarini, Bard, Conbio, Recordati and Magpharm) accounting for over 50 per cent. of the total distributor revenue in the 12 months ended 30 June 2015. The Directors believe that there may be potential for the distribution network to provide a platform for Hydromol and other existing products of the Group to be introduced to new territories.
The Enlarged Group will then expect to be able to, in due course, introduce products from the Group's existing portfolio to these markets via the distribution network it is acquiring pursuant to the Acquisition as well as any new lines of distribution it is able to establish.
Complementary product portfolio of growth and established products
The Healthcare Product portfolio consists of a range of devices, cosmetics and medicines focused on dermatology and wound care. The Healthcare Products Business is therefore similar to the Group's existing range of products, which is also comprised of a mixture of devices, cosmetics and medicines.
The majority of the Healthcare Products are not prescription products, which provides the Enlarged Group's portfolio with a more balanced prescription/OTC mix.
The portfolio of Healthcare Products contains a mixture of 'growth' products receiving promotion as well as non--promoted, established products. The Directors have identified 20 such established products among the Healthcare Products.
The Directors have also identified five key growth brands: Kelo-cote™ (a wound care product with sales of £8.0 million for the 12 months ended 30 June 2015); Flamma Franchise including Flammacerium™ which was granted orphan drug designation in the USA by the FDA in 2014 (wound care; sales of £7.1 million); Aloclair™ (wound care; sales of £4.0 million); Kelo-Stretch™ (skin care; sales of £2.7 million) and Atopiclair™ (skin care; sales of £2.0 million).
Taking these products with the Group's current portfolio, the Directors believe that the portfolio of the Enlarged Group will consist of a well--balanced blend of stable, established products and 'growth' brands, with an improved balance between prescription products and products with OTC status.
Acceleration of the Group's stated 'Buy & Build' strategy to create an Enlarged Group of scale
The Directors believe that the Acquisition will prove transformational in terms of scale, product range and geographical reach resulting in greater efficiency and increased revenue for the Enlarged Group, as well as improved access to further acquisitions and an enhanced industry profile. For the 12 months ended 30 June 2015, the Enlarged Group achieved pro--forma sales of £88.1 million and gross profit of £49.2 million.
The Group has experience of integrating acquisitions through its 'Buy & Build' model having completed at least 18 acquisitions (both corporate entities and assets) since it was admitted to AIM in 2003. Notwithstanding this experience, the Directors recognise that the Acquisition is larger than any of the Group's previous acquisitions and plans have been put in place to integrate and deliver the transition programme by the Group's management team.
3. Information on the Group
The Group is a specialty pharmaceuticals group traded on AIM (LSE: APH). Audited turnover for the 12 months ended 31 December 2014 was £43.5 million and pre--tax profits were £10.8 million before exceptional items. The Group is headquartered in the UK and employed 88 people (in the UK, Republic of Ireland, France, Germany and China) as at 1 November 2015. In the six months ended 30 June 2015, unaudited turnover was £22.8 million and unaudited pre--tax profits were £5.5 million.
The Group's principal activity is the marketing of pharmaceutical and healthcare products. Its brands are sourced via acquisition or inward licensing. The brands and products are selected for their sales stability or growth potential. Capital intensive activities such as manufacturing, warehousing and logistics are controlled by the Group but outsourced to specialist service organisations in these fields. The Group does not engage in R&D, except for minor line extensions on a product by product basis. The Group's personnel have been recruited from a wide range of pharmaceutical companies and backgrounds.
4. Information on the Vendor
Sinclair is a medical and aesthetic dermatology international specialty pharmaceuticals company traded on AIM (LSE: SPH). Sinclair has its corporate headquarters in London, UK and has a sales and marketing footprint in the UK, France, Germany, Italy and Spain, and a presence in emerging markets around the world through strategic partners.
In November 2014, Sinclair commenced a strategic review and consequently decided to divest its non--aesthetics business and focus on its aesthetics activities.
5. Information on the Healthcare Products Business
The Acquisition is being effected as follows: (a) the purchase of the collection of companies forming the SPH Group, and (b) the acquisition of the Healthcare Products not owned by those companies and their related businesses.
SPH Group
The SPH Group is a collection of four companies: Advanced Biotechnologies Inc. (incorporated in Florida, USA), Sinclair Pharma s.r.l. (incorporated in Italy), Sinclair Pharma France SAS (incorporated in France) and Maelor Laboratories Limited (incorporated in England and Wales).
Healthcare Products Business not owned by the SPH Group
Not all of the Healthcare Products Business is owned by companies in the SPH Group. The remainder of the Healthcare Products Business is owned by other companies in the Sinclair Group, and is being acquired by APL. These business assets include a single Healthcare Product and the distributor relationships relevant to the Healthcare Products which are not otherwise being acquired with the SPH Group.
Historical financial information
The Healthcare Products Business Combined HFI has been prepared in respect of the Healthcare Products Business.
The Healthcare Products Business Combined HFI was prepared using the Healthcare Products Business' historical records of its assets and liabilities, and includes all sales, costs, assets and liabilities directly attributable to the Healthcare Products Business. Costs directly associated with the Healthcare Products Business, for example, costs associated with manufacturing, are separately identifiable and have been included directly within the Healthcare Products Business Combined HFI.
In addition, there are a number of other indirect central costs which have been allocated into the Healthcare Products Business Combined HFI to reflect the fact that the Healthcare Products Business operated as part of the wider Sinclair Group. These costs primarily relate to the sales force, general marketing and merchandising, and general corporate expenses related to regulatory, development, finance, legal and information technology. These expenses have been allocated to the Healthcare Products Business on the basis of direct usages when identifiable, or on a basis deemed appropriate by the management of the Healthcare Products Business, for example, scheme members' time spent in relation to share -based payments, headcount and promotional spend, with the remainder allocated on the basis of the Healthcare Products Business' revenue as a proportion of the Sinclair Group's total revenue. These costs were affected by the arrangements that existed in the Sinclair Group and are not necessarily representative of the position that will prevail in the future. As such, the Directors do not consider that the historical cost base reflects the cost base that would be attributed to the Healthcare Product Business once integrated within the Enlarged Group.
Historical Income Statement
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£'m |
12 months ended 30 June 2015 |
12 months ended 30 June 2014 |
12 months ended 30 June 2013 |
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Revenue |
43.3 |
46.1 |
46.5 |
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Cost of sales |
(21.1) |
(23.3) |
(20.1) |
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Gross profit |
22.2 |
22.8 |
26.4 |
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Administration and marketing expenses |
(17.2) |
(18.4) |
(36.1) |
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Operating profit/(loss) |
5.0 |
4.4 |
(9.7) |
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Finance expense[1]
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- |
- |
- |
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Profit/(loss) before taxation |
5.0 |
4.4 |
(9.7) |
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0.4 |
0.4 |
1.3 |
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Profit/(loss) for the year |
5.4 |
4.8 |
(8.4) |
Reconciliation to EBITDA before exceptional items:
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£'m |
12 months ended 30 June 2015 |
12 months ended 30 June 2014 |
12 months ended 30 June 2013 |
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Operating profit/(loss) |
5.0 |
4.4 |
(9.7) |
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Depreciation & amortisation |
3.8 |
3.6 |
3.8 |
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Exceptional items |
0.2 |
- |
12.2 |
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EBITDA before exceptional items |
9.0 |
8.0 |
6.3 |
It is important to note that approximately 55-60 per cent. of sales are booked by the Vendor in Euros. The Healthcare Products Business' sales have been stable on a constant currency basis with sales of £43.5 million for the 12 months ended 30 June 2013 and £44.0 million for the 12 months ended 30 June 2014 based on the actual exchange rate for the 12 months ended 30 June 2015. The Directors understand that comparisons between sales in the years ended 30 June 2014 and 2015 are also distorted by distributors building inventory for launch campaigns between April 2014 and December 2014. The Directors also understand that sales were impacted by margin sharing arrangements. As noted above, the Directors do not believe that the historical costs attributed to the Healthcare Products Business are reflective of likely future costs within the Enlarged Group. EBITDA and EBITDA margins have both increased over the period reviewed in the Healthcare Products Business Combined HFI.
The Healthcare Products Business
The Group will acquire a portfolio of 27 products. Five of these products have been identified by the Directors as 'growth' products with the remainder of the portfolio considered stable established products, some of which the Directors believe have the potential for line extension. Within the 'growth' product category Kelo-cote™, the Flamma Franchise and Aloclair™ are wound care products whereas Kelo--stretch™ and Atopiclair™ are skin care products. Further details of the key products are set out below.
The Directors believe that Kelo--cote™, which is used for the treatment of hypertrophic scars, has good prospects for growth in Asia and in Brazil where a new sun protection factor formulation, Kelo-cote UV, was launched in 2015. Alliance intends to pursue a strategy for continued growth through distributor promotions and development and in--licensing of new line extensions such as silicone sheets. Kelo--cote™ dries to an invisible, breathable sheet in four to five minutes, which the Directors believe is quicker than competing products; it is the only Healthcare Product with clinical trial data. Sales of Kel-o-cote™ increased by 18.9 per cent. between June 2012 and September 2015 on a last 12 month basis. Last 12 month sales from the product remained steady between June 2012 and November 2014, since when they have increased to £8.8 million (for the 12 months ended to 30 September 2015). Kelo--cote™ has performed strongly in China with sales increasing from approximately £0.7 million on a last 12 month basis for the period to 30 June 2012 to £2.3 million for the period ended 30 September 2015, with sales growth having accelerated in recent months.
The Flamma Franchise is used for the treatment of burns and wounds in hospitals. Its key features are that it is a sterile cream, which prevents infection, relieves pain and speeds up the healing process. The Directors believe that there is a specific opportunity to launch Flammacerium™ in the UK in Q1 2017 once regulatory approval has been obtained. Flammacerium™ has been granted orphan drug ("OD") designation in the US by the FDA. Alliance intends to pursue growth through new negotiations and a new OD indication launch in the US.
Aloclair™ is used for the treatment of aphthous mouth ulcers and other minor oral lesions and its sales are growing in the UK, US and Portugal as well as in other regions. It is positioned as a fast acting pain- relieving treatment, which is non-stinging, alcohol free and promotes healing; it is supplied with applicators and there are no age limits on its use. Alliance intends to pursue growth by consolidating the brand into its Consumer Healthcare division and completing the development and launch of Aloclair Ultra, a new long--acting formulation.
Kelo--stretch™ is a clinically proven dermocosmetic cream for the prevention and treatment of stretch marks. It moisturises and heals, is sensitiser -and irritant- free, is quickly absorbed and is non--sticky. Its growth is being driven in Asia through the distribution agreement with Menarini. Alliance will seek to pursue growth through new and existing distribution channels with central brand marketing support.
Atopiclair™ is a steroid free reference treatment for mild to moderate atopic dermatitis, for use in hospitals, primary care and OTC. It restores, protects and calms the affected area. The product is showing sales growth via its distribution partner, Menarini, in APAC. Alliance will pursue the product's growth as an "anti-itch" gap within its existing Hydromol portfolio, as well as supporting growth in APAC via Menarini and through a focus on developing the product's European sales.
The turnover of the Healthcare Products is set out below:
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Sales in the 12 months ended 30 June 2015 |
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Percentage of sales in the 12 months ended 30 June 2015 |
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Brand |
Application |
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Kelo-cote™ |
Hypertrophic scars |
8.0 |
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18.4% |
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Flamma Franchise |
Wound care |
7.1 |
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16.4% |
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Haemopressin™ |
Bleeding oesophageal varices |
4.0 |
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9.2% |
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Aloclair™ |
Mouth ulcers |
4.0 |
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9.2% |
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Optiflo™ |
Catheter flushing |
2.8 |
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6.5% |
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Kelo-stretch™ |
Stretch marks |
2.7 |
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6.2% |
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Oxyplastine™ |
Humid eczema |
2.4 |
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5.5% |
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Atopiclair™ |
Atopic dermatitis |
2.0 |
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4.6% |
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Papulex™ |
Acne |
1.8 |
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4.2% |
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Fazol™ |
Dermal fungal infections |
1.7 |
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3.9% |
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Tridesonit™ |
Contact/Atopic dermatitis |
1.4 |
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3.2% |
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Others |
Various |
5.4 |
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12.7% |
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Totals |
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43.3 |
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100.0% |
Included in the assets to be acquired pursuant to the Acquisition are 27 families of patents and patent applications that are in force or under ongoing examination respectively and which cover each of Aloclair™, Atopiclair™, Decapinol™, Effadiane™, Kelo-cote™, Optiflo™, Papulex™ and Sebclair™. These patents and applications vary in the jurisdictions they cover but most include at least the main European countries (France, Germany and the UK) as well as the US, parts of MEA, LATAM and CEE. The patent families themselves have varying levels of longevity with the earliest date of expiry being November 2016 (relating to Effadiane) and the latest currently being February 2033 (relating to Kelo-cote™). Whilst the acquisition of a portfolio of products which has such a level of patent protection is a significant departure, in terms of size, by the Group from previous acquisitions, the Directors believe that the value of the Healthcare Products Business does not rest simply with the higher level of patent protection but, in line with the Group's strategy, to a greater degree with the brand recognition and repeat use by patients and healthcare practitioners.
Manufacturing
All of the products being acquired are manufactured in the US or EU, with three also being manufactured in India. The Healthcare Products Business does not manufacture any of its own products. As part of the Acquisition, the Group will also take on contract manufacturing agreements pursuant to which all of the Healthcare Products being acquired are manufactured.
Distribution
The products being acquired are currently distributed both directly (39.9 per cent. of gross revenues in the 12 months ended 30 June 2015) and through the Healthcare Products Business's distribution network (60.1 per cent. of revenues in the 12 months ended 30 June 2015). The mix of direct and indirect sales depends on whether the Healthcare Products Business has a physical presence in a given territory. Direct sales are higher in Europe. The Healthcare Products Business has a small presence in the US through distributors, with potential for future growth.
The Group will take on agreements with at least 65 active distributers, which relate to all of the products being acquired and their distribution around the world. The Group intends to continue with and, where applicable, to renew the distribution relationships. Historically these relationships have been maintained by the relevant Regional Directors and following Completion the Enlarged Group intends to maintain those relationships.
The top five distributors in revenue terms are Menarini (Asia), Bard (UK - Optiflo™), Conbio (China - Kelo¬cote™), Recordati and Magpham Sarl (MEA - Oxyplastine™).
Inventory holding arrangements
The Healthcare Products Business does not hold inventory directly and inventory is held and managed by external distributors and warehouse providers including Silvano Chiapparoli Logistica, Next Pharma, Farmavenix and Mawdsley Brooks & Co. The Group intends to continue the SPH Group's stockholding arrangements following Completion.
Healthcare Products Business personnel to be transferred to the Group pursuant to the Acquisition
It is expected that 39 Healthcare Product Business employees will transfer on Completion and be employed by the Enlarged Group. It is likely that further employees will need to be recruited to operate the activities of the Healthcare Products Business following Completion. The statutory consultation processes required in particular by French law have been concluded.
SPH Group key sites
The Healthcare Products Business maintains offices in London (UK), Chester (UK), Paris (France) and Milan (Italy). The Paris office serves as the SPH Group's global operational headquarters.
Transitional Arrangements
The Acquisition Agreement provides that, for a period of 12 months after Completion, Sinclair will provide certain transitional services to Alliance in order to facilitate the integration of the Healthcare Products Business. Those services will focus on the transition of key business functions including regulatory; commercial support; finance, accounting & supply chain and operations. The Acquisition Agreement also provides for the handover of IT systems and communication with key external stakeholders including distributors. In addition, the Group has developed a detailed transition plan building on its extensive experience of integrating acquisitions through its 'Buy & Build' model. A transition director has been appointed and a team prioritising the integration established.
6. Information on Current Product Portfolio of the Group
The Group's sales are derived from sale of prescription products and OTC products, with sales of prescription products being the predominant channel. The Group distributes to hospitals directly, to pharmaceuticals wholesalers which service both retail and hospital pharmacies and to distributors in various territories around the world. Currently the Group does not have any direct¬to-consumer or online sales.
The turnover of the leading products in the Group's current portfolio is set out below:
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Sales in the 12 months ended 31 December 2014 |
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Percentage of sales in the 12 months ended 31 December 2014 |
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Brand |
Application |
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Hydromol™ |
Dermatology |
6.0 |
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13.8% |
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Opus™ |
Stoma Care |
4.3 |
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9.9% |
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Buccastem™ |
Nausea & Vomiting |
2.5 |
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5.7% |
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Nu-Seals™ |
Cardiology |
2.3 |
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5.3% |
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Syntometrine™ |
Obstetrics |
2.1 |
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4.8% |
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Forceval™ |
Nutrition |
1.9 |
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4.4% |
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Timodine™ |
Dermatology |
1.7 |
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3.9% |
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Vitamin E |
Nutrition |
1.6 |
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3.7% |
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Naseptin™ |
Antibacterial |
1.4 |
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3.2% |
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Ashton & Parsons™ |
Teething |
1.4 |
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3.2% |
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Anti-Malarials |
Infectious diseases |
1.3 |
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3.0% |
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Others |
Various |
17.0 |
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39.1% |
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Totals |
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43.5 |
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100.0% |
7. Strategy of the Group
The Group's strategy is to grow through acquisition and in--licensing of cash -generating healthcare products, maintain a balanced portfolio of growth and established products to deliver profits whilst exploiting growth opportunities, scale up the business for improved profitability and deal flow, and internationalise in order to provide a stronger platform for future development.
8. Details of the Acquisition
Under the terms of the Acquisition Agreement, APL has conditionally agreed to acquire, and the Vendor has conditionally agreed to procure the sale by its subsidiaries of, the Healthcare Products Business, by way of the acquisition of the SPH Group and the single Healthcare Product which is outside the SPH Group, for an aggregate consideration of up to £127.5 million (plus an estimated £4.7 million for inventory). In addition, the Vendor will be entitled to receive the Royalty, which is calculated at the rate of 12.0 per cent. on net US sales of Flammacerium™ in the five years following the Launch Date.
The consideration for the Acquisition, which is payable on Re--admission, is to be satisfied partly in cash, funded by way of the New Loans, and partly by the issue and allotment of the Vendor Consideration Shares (pursuant to the terms of the Acquisition Agreement). To this end the Company and Numis have entered into the Placing Agreement to affect the Vendor Placing to raise £78.5 million (before expenses). Under the terms of the Placing Agreement, Numis has agreed to procure that the net proceeds of the Vendor Placing (after deducting all commissions) are paid to the Vendor. In addition, the Company is increasing its debt facility to £100.0 million (including the refinancing of £25.6 million of existing debt) by way of the New Loans.
The Acquisition Agreement is conditional, inter alia, upon the passing of the Resolutions and Re--admission.
The Acquisition Agreement also contains certain warranties from the Vendor relating to, inter alia, the Healthcare Products and the SPH Group which are subject to an aggregate financial cap on the Vendor's liability by reference to a percentage of the value of the consideration payable by APL for the Acquisition.
9. Details of the Placing
Under the Vendor Placing, the Company will issue and allot 191,463,414 Vendor Consideration Shares to Numis, or such persons as Numis may procure on behalf of the Company to subscribe for such shares, at the Placing Price. The aggregate value of the Vendor Consideration Shares at the Placing Price is £78.5 million (of which £2.16 million will be withheld to settle the commissions payable by the Company pursuant to the Placing Agreement and the balance paid to the Vendor). The Placing Price represents a discount of approximately 19.6 per cent. to the closing price of 51 pence per Ordinary Share as at 4.30 p.m. on 25 November 2015 (being the latest practicable time before publication of this announcement).
In connection with the Vendor Placing, the Company and Numis have entered into the Placing Agreement pursuant to which Numis has agreed, in accordance with its terms, to use reasonable endeavours to procure subscribers on behalf of the Company for the Vendor Consideration Shares at the Placing Price. The Vendor Placing has been underwritten by Numis.
The Placing Agreement contains customary warranties given by the Company to Numis as to matters relating to the Group and its business and a customary indemnity given by the Company to Numis in respect of liabilities arising out of or in connection with the Placing. Numis is entitled to terminate the Placing Agreement in certain circumstances prior to Re--admission, including circumstances where any of the warranties are found not to be true or accurate or were misleading and which in any such case is material, or the occurrence of certain force majeure events.
The Placing is conditional, inter alia, on:
· the relevant conditions in the Placing Agreement being satisfied or (if applicable) waived and the Placing Agreement not having been terminated in accordance with its terms prior to Re-admission;
· the Acquisition Agreement having become unconditional in all respects, save for Re-admission;
· the New Loans Agreement having become unconditional in all respects, save for R-admission and the Vendor Placing;
· the passing of the Resolutions; and
· Re-admission becoming effective by no later than 8.00 a.m. on 17 December 2015 (or such later time and/or as Numis and the Company may agree, being not later than 8.30 a.m. on 28 December 2015).
The Company has also granted the Option to Numis under the Placing Agreement in order to enable Numis to deal with additional demand under the Placing in the event that requests to participate in the Placing from institutional and certain other investors are received during the period from the date of the Admission Document to 5.00 p.m. on 2 December 2015.
The Option is exercisable on more than one occasion at any time prior to 5.00 p.m. on 2 December 2015. Any Ordinary Shares issued pursuant to the exercise of the Option will be issued on the same terms and conditions as the Vendor Consideration Shares. The Option may be exercised by Numis, following consultation with the Company, but there is no obligation on Numis to exercise the Option or to seek to procure subscribers for Ordinary Shares pursuant to the Option. The maximum number of new Ordinary Shares that may be issued pursuant to the exercise of the Option is 12,195,121. The maximum number of Ordinary Shares (including Ordinary Shares issued pursuant to exercise of the Option) that may be issued pursuant to the Placing is 203,658,535. The net proceeds received by the Company pursuant to the exercise of the Option (if any) will be used for general corporate purposes.
The Vendor Consideration Shares will represent, in aggregate, approximately 42.0 per cent. of the Enlarged Issued Share Capital (assuming no Option Shares are issued). The Placing Shares will represent, in aggregate, approximately 43.5 per cent. of the Enlarged Issued Share Capital (assuming the maximum number of Option Shares are issued). The Placing Shares will be issued credited as fully paid and will, upon issue, rank pari passu in all respects with the Ordinary Shares then in issue, including all rights to receive all dividends and other distributions declared, made or paid following Re--admission. The Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.
10. Details of current funding and New Loans
Alliance has existing banking facilities of £55.0 million with Bank of Scotland plc and National Westminster Bank Plc of which a £19 million term loan and approximately £6.8 million revolving credit facility has been drawn down as at 30 September 2015. Net bank debt was approximately £25.6 million at 30 September 2015.
Alliance has negotiated new enlarged bank facilities of up to £100.0 million on improved terms with Bank of Scotland plc, National Westminster Bank Plc and Silicon Valley Bank.
The new facilities will immediately replace the existing facilities and will be available until November 2020. The new facilities comprise a £65.0 million term loan ("Term Loan") and a £35.0 million revolving credit facility ("RCF"). There will also be an additional £5.0 million uncommitted working capital facility and a £25 million uncommitted "accordion" facility. The Term Loan will be used to refinance the existing banking facilities and to finance, in part, the Acquisition (including the payment of certain fees, costs and expenses incurred in connection with the Acquisition). The RCF will in part be applied towards financing the Acquisition, and the balance will be available for general corporate and working capital purposes (including the ability to be used to fund further acquisitions).
Interest on the Term Loan will be between 1.7 per cent. and 2.75 per cent. above LIBOR depending on the Enlarged Group's gearing level. The main financial covenants specify maximum leverage (the ratio of net bank debt to EBITDA) of 3.25 times (reducing over time), minimum interest cover (the ratio of EBITDA to finance charges) of 4.0 times and operating cash flows must exceed debt service cash flows. The Directors expect the leverage on Re--admission to be in the range of 2.54 to 2.82 times EBITDA.
The Term Loan is to be repaid as to £39.5 million in quarterly instalments commencing 31 March 2016, at the rate of £6 million per annum, rising to £10 million per annum from 2019. The balance of up to £25.5 million is to be repaid at the end of the five year term.
11. Financial effects of the Acquisition and Placing
The Directors believe that, taking into account the business and prospects of the Enlarged Group, the Acquisition will be significantly accretive to earnings per share on an adjusted basis for the 12 months ending 31 December 2016. The Directors believe that the Acquisition's historic cost base is not reflective of the cost base that it will incur as part of the Enlarged Group and believe that cost--saving synergies of approximately £5.0 million will be achievable from the 12 months ending 31 December 2016. The Directors further believe that the return on invested capital associated with the Acquisition will exceed the Group's weighted average cost of capital in the 12 months ending 31 December 2017 (assuming a weighted average cost of capital of eight per cent.). These statements are not intended to be a profit forecast, have not been reviewed or reported on, and should not be interpreted to mean that the earnings per share of Alliance following Completion will necessarily be above or below the historical published earnings per share.
An unaudited pro-forma statement of net assets is set out in the Admission Document and discloses that, on the assumptions stated, on Completion the Enlarged Group would have pro-forma net assets of £153.9 million after paying the estimated expenses of the Proposals.
14. Working Capital
In the opinion of the Directors, having made due and careful enquiry and taking into account the New Loans and existing cash resources available to the Enlarged Group, the Enlarged Group will have sufficient working capital available to it for its present requirements, that is for at least 12 months from Re-admission.
15. Dividend Policy
The Company has historically had a progressive dividend policy and the Directors intend this to continue to be the case. The Company's interim and final dividend payments are expected to be split approximately one-third to two-thirds respectively.
The amount of future dividend payments proposed to Shareholders, if any, will depend on Alliance's operating profit, future prospects, financial condition, and capital requirements, any financing required to grow operations, overall business conditions and other factors deemed relevant by the Directors.
For the 12 months ended 31 December 2012 and 2013, Alliance paid a dividend of 0.825 pence per share (£2.0 million in total) and 0.908 pence per share (£2.4 million in total) respectively. For the 12 months ended 31 December 2014, Alliance paid an interim dividend of 0.333 pence per share (£0.9 million in total) and a final dividend of 0.667 pence per share (£1.8 million in total). Alliance has declared an interim dividend for 2015 of 0.366 pence per share (£1.7 million in total, based on the Enlarged Issued Share Capital) which is due to be paid on 14 January 2016 to Shareholders on the register as at 18 December 2015. Accordingly it is anticipated that the Placing Shares will participate in this interim dividend.
Dividends paid out by Alliance to date are not necessarily an indication of Alliance's future dividend payments. Payments of dividends are made in accordance with the Act.
16. Current Trading and Outlook
The Group
For the six months ended 30 June 2015, the Group delivered unaudited revenues of £22.8 million (30 June 2014: £21.4 million). This year--on--year increase of 6.5 per cent. was driven in part by an increase in sales of the Hydromol™ Dermatology range to £3.3 million for the period. MacuShield™ contributed £1.4 million following its acquisition in February 2015 and Gelclair also performed strongly, increasing sales by 8 per cent. on only modest promotional support. Sales in the Group's French and German businesses was impacted by the weakening Euro with sales in both countries being approximately flat over the period following translation into Pounds Sterling.
Gross profit for the same period increased by 15.7 per cent. to £13.8 million. For the 12 months ended 31 December 2014, the Group was in the process of handing back a number of fostered products to Novartis and as such generated lower margins on these products. For the six months ended 30 June 2015, these products were fully handed back which helped increase gross margin to 61 per cent. (30 June 2014: 56 per cent.). Operating profit grew by 2.2 per cent. to £6.1 million (30 June 2014: £6.0 million) and pre--tax profits grew by 1.4 per cent. to £5.5 million (30 June 2014: £5.4 million) over the period.
Cash inflows from operating activities were £2.8 million over the first half of the year, after significant increases in inventory to reduce the risks of inventory shortfall. Net debt increased to £26.5 million at 30 June 2015 (£21.1 million at 31 December 2014) primarily due to the £5.5 million drawdown on the Group's revolving credit facility to fund the MacuShield™ acquisition.
On 5 November 2015 the Group announced that it had agreed compensation from Sanofi Pasteur following the suspension of manufacturing since mid--2012 of the bladder cancer treatment ImmuCyst™. Alliance will receive £6.7 million in cash, inclusive of costs, in full and final settlement of its claims. Alliance will continue to distribute ImmuCyst™ in the UK and is seeking to bring the product back into supply before the end of the year. The Group does however expect that future stocks of ImmuCyst™ will be constrained. The Group further announced that the proceeds of the settlement agreement would be used to reduce the Group's net bank debt.
Since the results for the six months ended 30 June 2015, which were announced on 9 September 2015, the Group's overall trading performance has been in line with the Directors' expectations.
Healthcare Products Business
The Healthcare Products Business achieved sales of £43.3 million in the 12 months ended 30 June 2015 with a gross profit for the period of £22.2 million. The Directors believe that sales for the period were impacted by distributors building inventory for launch campaigns between April and December 2014 and that this should normalise in the 12 months ended 31 December 2016. The key growth products performed strongly over the period with Kelo-cote™ achieving sales of £8.0 million; Flamma Franchise (including Flammacerium™) £7.1 million; Aloclair™ £4.0 million; Kelo--stretch™ £2.7 million and Atopiclair™ £2.0 million. Sales of the Healthcare Products have remained stable since 30 June 2015.
17. Re-admission to AIM
Application will be made to the London Stock Exchange for Re-admission. It is expected that dealings in the Existing Issued Share Capital will be suspended from 4.30 p.m. on 16 December 2015 and that Re-admission will become effective and dealings in the Enlarged Issued Share Capital will commence on AIM at 8.00 a.m. on 17 December 2015.
18. General Meeting
The General Meeting has been convened for 10.00 a.m. on 14 December 2015 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 the Admission Document the Notice of General Meeting convening the General Meeting 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 for Companies; and
· Resolution 2 is an ordinary resolution to authorise the Directors under Section 551 of the Act to allot equity securities up to an aggregate nominal value of £2,036,585.35 in connection with the Placing and Acquisition Agreement.
19. Action to be taken
Shareholders will find enclosed with the Admission Document a Form of Proxy, for use in connection with the General Meeting. Whether or not you intend to be present at the General Meeting, 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 12 December 2015, being 48 hours before the time appointed for the holding of the General Meeting. Completion and posting of a Form of Proxy will not prevent you from attending and voting in person at the General Meeting if you so wish.
20. Shareholder Irrevocables
The Directors and their associated interests have each irrevocably undertaken to vote in favour of the Resolutions in respect of their beneficial holdings in the Ordinary Shares, amounting to 62,046,048 Ordinary Shares, in aggregate, representing approximately 23.5 per cent. of the Existing Issued Share Capital.
In addition, the Company has received irrevocable undertakings to vote in favour of the Resolutions from various Shareholders in respect of their beneficial holdings in Ordinary Shares, amounting to 61,438,410 Ordinary Shares, in aggregate, representing approximately 23.2 per cent. of the Existing Issued Share Capital.
As such, as at the date of this Announcement, the Company has received irrevocable undertakings to vote in favour of the Resolutions in respect of 123,484,458 Ordinary Shares, in aggregate, representing approximately 46.7 per cent. of the Existing Issued Share Capital.
21. Recommendation
The Directors believe that the Proposals are in the best interests of the Company and the Shareholders as a whole.
Accordingly the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as they have irrevocably undertaken to do in respect of their own beneficial holdings.
APPENDIX
TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING
THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX (TOGETHER, THE "ANNOUNCEMENT") AND THE INFORMATION IN IT, IS RESTRICTED, AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, NEW ZEALAND, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED, ("QUALIFIED INVESTORS") BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE"); (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER"); (II) FALL WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.
THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT HAS BEEN ISSUED BY AND IS THE SOLE RESPONSIBILITY OF THE COMPANY.
THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, IS NOT AN OFFER FOR SALE OR SUBSCRIPTION IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX, IS NOT AN OFFER OF OR SOLICITATION TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES HAS APPROVED OR DISAPPROVED OF AN INVESTMENT IN THE SECURITIES OR PASSED UPON OR ENDORSED THE MERITS OF THE PLACING OR THE ACCURACY OR ADEQUACY OF THE CONTENTS OF THIS ANNOUNCEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE UNITED STATES. NO PUBLIC OFFERING OF SECURITIES IS BEING MADE IN THE UNITED STATES. NO MONEY, SECURITIES OR OTHER CONSIDERATION FROM ANY PERSON INSIDE THE UNITED STATES IS BEING SOLICITED AND, IF SENT IN RESPONSE TO THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT, WILL NOT BE ACCEPTED.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN PLACING SHARES. THE PRICE OF SHARES IN THE COMPANY AND THE INCOME FROM THEM (IF ANY) MAY GO DOWN AS WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL AMOUNT INVESTED ON DISPOSAL OF SHARES.
Persons who are invited to and who choose to participate in the Placing, by making (or on whose behalf there is made) an oral or written offer to subscribe for Placing Shares (the "Placees"), will be deemed to have read and understood this Announcement, including this Appendix, in its entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, acknowledgements, and undertakings contained in this Appendix. In particular, each such Placee represents, warrants and acknowledges that:
1. it is a Relevant Person (as defined above) and undertakes that it will acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;
2. in the case of any Placing Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the Placing Shares acquired by it have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Member State of the European Economic Area ("EEA") which has implemented the Prospectus Directive other than Qualified Investors or in circumstances in which the prior consent of Numis has been given to the offer or resale; or (ii) where Placing Shares have been acquired by it on behalf of persons in any Member State of the EEA other than Qualified Investors, the offer of those Placing Shares to it is not treated under the Prospectus Directive as having been made to such persons; and/or
3. (a) (i) it is not in the United States and (ii) it is not acting for the account or benefit of a person in the United States, (b) it is a dealer or other professional fiduciary in the United States acting on a discretionary basis for a non-US person (other than an estate or trust) in reliance on Regulation S under the Securities Act; or (c) it is otherwise acquiring the Placing Shares in an "offshore transaction" meeting the requirements of Regulation S under the Securities Act.
The Company and Numis will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.
This Announcement does not constitute an offer, and may not be used in connection with an offer, to sell or issue or the solicitation of an offer to buy or subscribe for Placing Shares in any jurisdiction in which such offer or solicitation is or may be unlawful. This Announcement and the information contained herein is not for publication or distribution, directly or indirectly, to persons in the United States, Canada, Australia, New Zealand, Japan or the Republic of South Africa or in any jurisdiction in which such publication or distribution is unlawful. Persons into whose possession this Announcement may come are required by the Company to inform themselves about and to observe any restrictions of transfer of this Announcement. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere.
In particular, the Placing Shares referred to in this Announcement have not been and will not be registered under the Securities Act or any laws of, or with any securities regulatory authority of, any state or other jurisdiction of the United States, and may not be offered, sold, pledged or otherwise transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any state or other jurisdiction of the United States. The Placing Shares are being offered and sold outside the United States in accordance with Regulation S under the Securities Act.
The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States.
The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with or registered by the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Canada, Australia, New Zealand, Japan or the Republic of South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Canada, Australia, New Zealand, Japan or the Republic of South Africa or any other jurisdiction outside the United Kingdom.
Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Appendix or the Announcement of which it forms part should seek appropriate advice before taking any action.
In this Appendix, unless the context otherwise requires, "Placee" means a Relevant Person (including individuals, funds or otherwise) by whom or on whose behalf a commitment to subscribe for Placing Shares has been given.
Details of the Placing
Numis has entered into the Placing Agreement with the Company under which Numis has, on the terms and subject to the conditions set out therein, undertaken to use its reasonable endeavours to procure, as agent for the Company, subscribers for the Vendor Consideration Shares at the Placing Price. The Vendor Placing is being underwritten by Numis.
The issue of the Vendor Consideration Shares is to be effected by way of a vendor placing in connection with the Acquisition. The Company will allot and issue the Vendor Consideration Shares on a non-pre-emptive basis to Numis or, as directed by Numis, such Placees in consideration for Numis paying the net proceeds of the subscription of the Vendor Consideration Shares to the Vendor in part satisfaction of the payment obligations of APL, being a wholly owned subsidiary of the Company, under the Acquisition Agreement.
In addition, the Company has also granted the Option to Numis in order to enable Numis to deal with additional demand under the Placing in the event that requests to participate in the Placing from institutional investors and certain other investors are received during the period from the date of this Announcement to 5.00 p.m. on 2 December 2015.
The Option is exercisable on more than one occasion at any time prior to 5.00 p.m. on 2 December 2015. Any Ordinary Shares issued pursuant to the exercise of the Option will be issued on the same terms and conditions as the Vendor Consideration Shares. The Option may be exercised by Numis, following consultation with the Company, but there is no obligation on Numis to exercise the Option or to seek to procure subscribers for Ordinary Shares pursuant to the Option. The maximum number of new Ordinary Shares that may be issued pursuant to the exercise of the Option is 12,195,121. The maximum number of Ordinary Shares (including Ordinary Shares issued pursuant to exercise of the Option) that may be issued pursuant to the Placing is 203,658,535.
The Placing Agreement contains customary warranties given by the Company to Numis as to matters relating to the Company and its business and a customary indemnity given by the Company to Numis in respect of liabilities arising out of or in connection with the Placing. The Placing is conditional upon, amongst other things, the Acquisition Agreement becoming unconditional in all respects (save for Re-admission) and the Resolutions being passed by the requisite majorities.
An admission document explaining the background to and reasons for the Placing and the Acquisition, and containing the Notice of General Meeting will be sent to shareholders. A copy of the Admission Document and the Notice of General Meeting will also be available from the Company's website at: www.alliancepharmaceuticals.com.
The Placing is also conditional upon Re-admission becoming effective and the Placing Agreement not being terminated in accordance with its terms.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing issued Ordinary Shares, including the right to receive all dividends and other distributions (if any) declared, made or paid on or in respect of the Ordinary Shares following Re-admission.
The Company, subject to certain exceptions, has agreed not to allot, issue or grant any rights in respect of its Ordinary Shares in the period of 12 months from the date of Re-admission without the prior written consent of Numis (such consent not to be unreasonably withheld or delayed).
Application for admission to trading
Application will be made to the London Stock Exchange for Re-admission. Subject to, amongst other things, the Resolutions being passed by the requisite majorities at the General Meeting, it is expected that settlement of any such shares and Re-admission will become effective on or around 17 December 2015 and that dealings in the Placing Shares will commence at that time.
Participation in, and principal terms of, the Placing
1. Numis (whether through itself or any of its affiliates) is arranging the Placing as placing agent of (a) the Company for the purpose of using reasonable endeavours to procure Placees at the Placing Price for the Vendor Consideration Shares and (b) the Company for the purpose of placing the Option Shares (if any) at the Placing Price.
2. Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by Numis. Numis and its affiliates may participate in the Placing as principal.
3. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing.
4. The Placing Price will be a fixed price of 41 pence per new Ordinary Share.
5. An offer to take up Placing Shares which has been communicated by a prospective Placee to Numis which has not been withdrawn or revoked prior to publication of this Announcement will not be capable of variation or revocation following the publication of this Announcement.
6. Each Placee's allocation will be confirmed to Placees orally by Numis, and evidenced by a trade confirmation or contract note which will be dispatched as soon as practicable thereafter. The terms of this Appendix will be deemed incorporated by reference therein. The oral confirmation to such Placee will constitute an irrevocable legally binding commitment upon such person (who will at that point become a Placee) in favour of Numis and the Company, under which it agrees to acquire the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with the Company's Articles of Association.
7. Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to Numis, to pay in cleared funds immediately on the settlement date, in accordance with the registration and settlement requirements set out below, an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to take up and the Company has agreed to allot.
8. Except as required by law or regulation, no press release or other announcement will be made by Numis or the Company using the name of any Placee (or its agent), in its capacity as Placee (or agent), other than with such Placee's prior written consent.
9. Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and settlement".
10. All obligations under the Placing will be subject to fulfilment or (where applicable) waiver of, amongst other things, the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Right to terminate under the Placing Agreement".
11. By participating in the Placing, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.
12. To the fullest extent permissible by law, none of the Company, Numis or any of their respective affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, none of the Company, Numis or any of their respective affiliates shall have any liability (including to the fullest extent permissible by law, any fiduciary duties) in respect of Numis' conduct of the Placing. Each Placee acknowledges and agrees that the Company is responsible for the allotment of the Placing Shares to the Placees and Numis shall have no liability to the Placees for the failure of the Company to fulfil those obligations.
Conditions of the Placing
Numis' obligations under the Placing Agreement in respect of the Placing Shares are conditional on, inter alia:
(a) the Acquisition Agreement (i) not having lapsed or been terminated and (ii) having become unconditional in all respects (save for (A) Re-admission and (B) any conditions relating to the Placing Agreement having become unconditional or not having terminated prior to Re-admission) and having been completed in accordance with its terms;
(b) the Facility Agreement becoming unconditional in all respects on or prior to Re-admission (save for any condition relating to the Vendor Placing or Admission);
(c) the Company allotting, subject only to Re-admission, the Placing Shares in accordance with the Placing Agreement;
(d) Admission taking place not later than 8.00 a.m. on 17 December 2015; and
(e) the passing (without any amendment, save as agreed by Numis) of the Resolutions at the General Meeting.
If (i) any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by Numis by the respective time or date where specified (or such later time or date as the Company and Numis may agree not being later than 8.30 a.m. on 28 December 2015 (the "Final Date"), or (ii) the Placing Agreement is terminated as described below, the Placing in relation to the Placing Shares will lapse and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.
Numis may, at its absolute discretion and upon such terms as it thinks fit, waive, or extend the period (up to the Final Date) for, compliance by the Company with the whole or any part of any of the Company's obligations in relation to the conditions in the Placing Agreement, save that the conditions relating to the passing of the Resolutions, Re-admission taking place and the Acquisition Agreement and the Facility Agreement becoming unconditional may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this Announcement.
Neither Numis nor the Company shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and/or date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of Numis.
Right to terminate under the Placing Agreement
Numis is entitled, at any time before Admission, to terminate the Placing Agreement by giving notice to the Company in certain circumstances, including, inter alia:
(a) in the opinion of Numis (acting in good faith), the warranties given by the Company to Numis are not true and accurate or have become misleading (or would not be true and accurate or would be misleading if they were repeated at any time before Admission) by reference to the facts subsisting at the time when the notice referred to above is given, in each case in a way that is material in the context of the Proposals; or
(b) in the opinion of Numis (acting in good faith), the Company fails to comply with any of its obligations under the Placing Agreement and that failure is material in the context of the Proposals; or
(c) in the opinion of Numis (acting in good faith), there has been a development or event (or any development or event involving a prospective change which will or is reasonably likely to have a material adverse effect on or affecting the operations, the condition (financial or otherwise), prospects, management, results of operations, financial position, business or general affairs of the Company or the Group or the Healthcare Products Business respectively whether or not foreseeable and whether or not arising in the ordinary course of business, which in each case is material in the context of the Proposals; or
(d) there has been a change in national or international financial, political, economic or stock market conditions (primary or secondary); an incident of terrorism, outbreak or escalation of hostilities, war, declaration of martial law or any other calamity or crisis; a suspension or material limitation in trading of securities generally on any stock exchange; any change in currency exchange rates or exchange controls or a disruption of settlement systems or a material disruption in commercial banking, in each case as would be likely in the opinion of Numis (acting in good faith) to materially prejudice the success of the Proposals.
Following Re-admission, the Placing Agreement is not capable of termination to the extent that it relates to the Placing of the Placing Shares.
The rights and obligations of the Placees shall terminate only in the circumstances described in these terms and conditions and in the Placing Agreement and will not be subject to termination by the Placee or any prospective Placee at any time or in any circumstances. By participating in the Placing, Placees agree that the exercise by Numis of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of Numis, and that it need not make any reference to Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise or decision not to exercise. Placees will have no rights against Numis, the Company or any of their respective directors or employees under the Placing Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 (as amended).
No Prospectus
The Placing Shares are being offered to a limited number of specifically invited persons only and will not be offered in such a way as to require a prospectus in the United Kingdom or in any other jurisdiction. No prospectus has been or will be submitted to be approved by the FCA or submitted to the London Stock Exchange in relation to the Placing, and Placees' commitments will be made solely on the basis of the information contained in this Announcement, the Admission Document and this Appendix. Each Placee, by accepting a participation in the Placing, agrees that the content of this Announcement is exclusively the responsibility of the Company and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of the Company or Numis or any other person and neither Numis nor the Company nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received and, if given or made, such information, representation, warranty or statement must not be relied upon as having been authorised by Numis, the Company, or their respective officers, directors, employees or agents. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Placing. Neither the Company, nor Numis are making any undertaking or warranty to any Placee regarding the legality of an investment in the Placing Shares by such Placee under any legal, investment or similar laws or regulations. Each Placee should not consider any information in this Announcement to be legal, tax or business advice. Each Placee should consult its own solicitor, tax adviser and financial adviser for independent legal, tax and financial advice regarding an investment in the Placing Shares. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.
Registration and settlement
Settlement of transactions in the Placing Shares (ISIN: GB0031030819) following Re-admission will take place within CREST provided that, subject to certain exceptions, Numis reserves the right to require settlement for, and delivery of, the Placing Shares (or a portion thereof) to Placees by such other means that it deems necessary if delivery or settlement is not possible or practicable within CREST within the timetable set out in the Admission Document or would not be consistent with the regulatory requirements in any Placee's jurisdiction.
Each Placee allocated Placing Shares in the Placing will be sent a trade confirmation or contract note stating the number of Placing Shares allocated to it at the Placing Price, the aggregate amount owed by such Placee to Numis (as agent for the Company) and settlement instructions. Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the CREST or certificated settlement instructions that it has in place with Numis.
It is expected that settlement in respect of the Placing Shares will be on 17 December 2015 in accordance with the instructions set out in the trade confirmation.
Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by Numis.
Each Placee is deemed to agree that, if it does not comply with these obligations, Numis may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for Numis' account and benefit (as agent for the Company), an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable and shall indemnify Numis on demand for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax or securities transfer tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf. By communicating a bid for Placing Shares, each Placee confers on Numis all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Numis lawfully takes in pursuance of such sale.
If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation or contract note is copied and delivered immediately to the relevant person within that organisation.
Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax or securities transfer tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.
Representations, warranties and further terms
By participating in the Placing each Placee (and any person acting on such Placee's behalf) makes the following representations, warranties, acknowledgements, agreements and undertakings (as the case may be) to the Company and Numis, namely that, each Placee (and any person acting on such Placee's behalf):
1. represents and warrants that it has read and understood this Announcement, the Admission Document and this Appendix, in its entirety and that its subscription of Placing Shares is subject to and based upon all the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings and other information contained therein and undertakes not to redistribute or duplicate this Announcement and the Admission Document;
2. acknowledges that no prospectus has been prepared in connection with the Placing and represents and warrants that it has not received and will not receive a prospectus in connection therewith;
3. acknowledges that none of Numis, the Company, any of their respective affiliates or any person acting on behalf of any of them has provided it, and will not provide it, with any material regarding the Placing Shares or the Company other than this Announcement and the Admission Document; nor has it requested any of Numis, the Company, their respective affiliates or any person acting on behalf of any of them to provide it with any such information;
4. acknowledges that the contents of this Announcement and the Admission Document are exclusively the responsibility of the Company and the Directors, and that none of Numis, its affiliates or any person acting on its or their behalf has or shall have any liability for any information, representation or statement contained in this Announcement and the Admission Document or any information previously or concurrently published by or on behalf of the Company, and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this Announcement and the Admission Document or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to acquire the Placing Shares is contained in this Announcement and the Admission Document, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by Numis, the Company or any of their respective directors, officers or employees or any person acting on behalf of any of them, or, if received, it has not relied upon any such information, representations, warranties or statements (including any management presentation that may have been received by any prospective Placee or any material prepared by the Research Department of Numis (the views of such Research Department not representing and being independent from those of the Company and the Corporate Finance Department of Numis and not being attributable to the same)), and neither Numis nor the Company will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied solely on its own investigation of the business, financial or other position of the Company in deciding to participate in the Placing and it will not rely on any investigation that Numis, its affiliates or any other person acting on its or their behalf has or may have conducted;
5. represents and warrants that it has neither received nor relied on any confidential price sensitive information concerning the Company in accepting this invitation to participate in the Placing;
6. acknowledges that Numis does not have any duties or responsibilities to it, or its clients, similar or comparable to the duties of "best execution" and "suitability" imposed by the Conduct of Business Sourcebook in the FCA's Handbook of Rules and Guidance and that Numis is not acting for it or its clients and that Numis will not be responsible for providing protections to it or its clients;
7. acknowledges that none of Numis, any of its affiliates or any person acting on behalf of it or them has or shall have any liability for the Admission Document, any publicly available or filed information or any representation relating to the Company, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;
8. that, save in the event of fraud on the part of Numis (and to the extent permitted by the Rules of the FCA), neither Numis, its ultimate holding company nor any direct or indirect subsidiary undertakings of that holding company, nor any of their respective directors and employees shall be liable to Placees for any matter arising out of Numis' role as placing agent or otherwise in connection with the Placing and that where any such liability nevertheless arises as a matter of law Placees will immediately waive any claim against any of such persons which they may have in respect thereof;
9. represents and warrants that (i) it is not in the United States and (ii) it is not acting for the account or benefit of a person in the United States;
10. acknowledges that the Placing Shares are being offered and sold only pursuant to Regulation S under the Securities Act in a transaction not involving a public offering of securities in the United States and the Placing Shares have not been and will not be registered under the Securities Act or with any state or other jurisdiction of the United States, nor approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority, and that the offer and sale of the Placing Shares to it has been made outside of the United States in an 'offshore transaction' (as such term is defined in Regulation S under the Securities Act) and agrees not to reoffer, resell, pledge or otherwise transfer the Placing Shares except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and otherwise in accordance with any applicable securities laws of any state or jurisdiction of the United States;
11. unless otherwise specifically agreed in writing with Numis, represents and warrants that neither it nor the beneficial owner of such Placing Shares will be a resident of Canada, Australia, New Zealand, Japan or the Republic of South Africa;
12. acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of Canada, Australia, New Zealand, Japan or the Republic of South Africa and, subject to certain exceptions, may not be offered, sold, taken up, renounced or delivered or transferred, directly or indirectly, within those jurisdictions;
13. represents and warrants that the issue to it, or the person specified by it for registration as holder, of Placing Shares will not give rise to a liability under any of sections 67, 70, 93 or 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer Placing Shares into a clearance system;
14. represents and warrants that: (i) it has complied with its obligations under the Criminal Justice Act 1993 and Part VIII of FSMA; (ii) in connection with money laundering and terrorist financing, it has complied with its obligations under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000 (as amended), the Terrorism Act 2006 and the Money Laundering Regulations 2007; and (iii) it is not a person: (a) with whom transactions are prohibited under the Foreign Corrupt Practices Act of 1977 or any economic sanction programmes administered by, or regulations promulgated by, the Office of Foreign Assets Control of the U.S. Department of the Treasury; (b) named on the Consolidated List of Financial Sanctions Targets maintained by HM Treasury of the United Kingdom; or (c) subject to financial sanctions imposed pursuant to a regulation of the European Union or a regulation adopted by the United Nations (together, the "Regulations"); and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations and has obtained all governmental and other consents (if any) which may be required for the purpose of, or as a consequence of, such purchase, and it will provide promptly to Numis such evidence, if any, as to the identity or location or legal status of any person which Numis may request from it in connection with the Placing (for the purpose of complying with such Regulations or ascertaining the nationality of any person or the jurisdiction(s) to which any person is subject or otherwise) in the form and manner requested by Numis on the basis that any failure by it to do so may result in the number of Placing Shares that are to be purchased by it or at its direction pursuant to the Placing being reduced to such number, or to nil, as Numis may decide at its sole discretion;
15. if a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, represents and warrants that the Placing Shares purchased by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a Member State of the European Economic Area which has implemented the Prospectus Directive other than Qualified Investors, or in circumstances in which the prior consent of Numis has been given to the offer or resale;
16. represents and warrants that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Re-admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);
17. represents and warrants that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) relating to the Placing Shares in circumstances in which section 21(1) of the FSMA does not require approval of the communication by an authorised person;
18. represents and warrants that it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;
19. if in a Member State of the European Economic Area, unless otherwise specifically agreed with Numis in writing, represents and warrants that it is a Qualified Investor within the meaning of the Prospectus Directive;
20. if in the United Kingdom, represents and warrants that it is a person (i) who has professional experience in matters relating to investments falling within Article 19(1) of the Order; (ii) falling within Article 49(2)(A) to (D) ("High Net Worth Companies, Unincorporated Associations, etc") of the Order; or (iii) to whom this Announcement and the Admission Document may otherwise be lawfully communicated;
21. represents and warrants that it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and that it has all necessary capacity and has obtained all necessary consents and authorities and taken any other necessary actions to enable it to commit to this participation in the Placing and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in this Appendix) and will honour such obligations;
22. where it is acquiring Placing Shares for one or more managed accounts, represents and warrants that it is authorised in writing by each managed account: (a) to acquire the Placing Shares for each managed account; (b) to make on its behalf the representations, warranties, acknowledgements, undertakings and agreements in this Appendix, the Announcement and the Admission Document of which it forms part; and (c) to receive on its behalf any investment letter relating to the Placing in the form provided to it by Numis;
23. undertakes that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as Numis may in its sole discretion determine and without liability to such Placee and it will remain liable and will indemnify Numis on demand for any shortfall below the net proceeds of such sale and the placing proceeds of such Placing Shares and may be required to bear the liability for any stamp duty or stamp duty reserve tax or security transfer tax (together with any interest or penalties due pursuant to or referred to in these terms and conditions) which may arise upon the placing or sale of such Placee's Placing Shares on its behalf;
24. acknowledges that none of Numis, any of its affiliates, or any person acting on behalf of any of them, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be treated for these purposes as a client of Numis and that Numis has no duties or responsibilities to it for providing the protections afforded to its clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;
25. undertakes that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be. Neither Numis nor the Company will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify the Company and Numis in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of Numis who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;
26. acknowledges that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreement shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter (including non-contractual matters) arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by the Company or Numis in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;
27. acknowledges that time shall be of the essence as regards to obligations pursuant to this Appendix;
28. agrees that the Company, Numis and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to Numis on its own behalf and on behalf of the Company and are irrevocable and are irrevocably authorised to produce this Announcement or a copy thereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby;
29. agrees to indemnify on an after-tax basis and hold the Company, Numis and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;
30. acknowledges that no action has been or will be taken by any of the Company, Numis or any person acting on behalf of the Company or Numis that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;
31. acknowledges that it is an institution that has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for the Placing Shares. It further acknowledges that it is experienced in investing in securities of this nature and in this sector and is aware that it may be required to bear, and it, and any accounts for which it may be acting, are able to bear, the economic risk of, and is able to sustain, a complete loss in connection with the Placing. It has relied upon its own examination and due diligence of the Company and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved;
32. acknowledges that its commitment to subscribe for Placing Shares on the terms set out herein and in the trade confirmation or contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's conduct of the Placing;
33. acknowledges that Numis or any of its affiliates acting as an investor for its own account may take up shares in the Company and in that capacity may retain, purchase or sell for its own account such shares and may offer or sell such shares other than in connection with the Placing;
34. represents and warrants that, if it is a pension fund or investment company, its purchase of Placing Shares is in full compliance with all applicable laws and regulation; and
35. to the fullest extent permitted by law, it acknowledges and agrees to the disclaimers contained in the Announcement, the Admission Document and this Appendix.
The representations, warranties, acknowledgments and undertakings contained in this Appendix are given to Numis and the Company and are irrevocable and shall not be capable of termination in any circumstances.
The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to a subscription by it and/or such person direct from the Company for the Placing Shares in question. Such agreement assumes that the Placing Shares are not being subscribed for in connection with arrangements to issue depositary receipts or to transfer the Placing Shares into a clearance service. If there are any such arrangements, or the settlement relates to any other subsequent dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Numis will be responsible, and the Placee to whom (or on behalf of whom, or in respect of the person for whom it is participating in the Placing as an agent or nominee) the allocation, allotment, issue or delivery of Placing Shares has given rise to such UK stamp duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp duty reserve tax forthwith and to indemnify on an after-tax basis and to hold harmless the Company and Numis in the event that any of the Company and/or Numis has incurred any such liability to UK stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify Numis accordingly.
In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.
Each Placee, and any person acting on behalf of the Placee, acknowledges that Numis does not owe any fiduciary or other duties to any Placee in respect of any representations, warranties, undertakings or indemnities in the Placing Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and agrees that Numis or any of its affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with Numis, any money held in an account with Numis on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from Numis' money in accordance with the client money rules and will be used by Numis in the course of its own business and the Placee will rank only as a general creditor of Numis.
All times and dates in this Announcement may be subject to amendment. Numis shall notify the Placees and any person acting on behalf of the Placees of any changes.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
DEFINITIONS
In this Appendix to the Announcement and, as the context shall admit, in the Announcement:
'Acquisition' means the proposed acquisition by the Company, through its wholly-owned subsidiary, APL, of the Healthcare Products Business from the Vendor pursuant to the Acquisition Agreement;
'Acquisition Agreement' means the conditional sale and purchase agreement to be entered into between (i) the Company, (ii) APL and (iii) the Vendor relating to the Acquisition, as more particularly described in the Admission Document;
'Act' means the Companies Act 2006;
'Admission Document' means the admission document to be issued by the Company containing, inter alia, further details of the Proposals and the Notice of General Meeting;
'AIM' means the market of that name operated by the London Stock Exchange;
'AIM Rules for Companies' means the provisions of the London Stock Exchange's AIM Rules for Companies as amended from time to time governing, inter alia, admission to AIM and the continuing obligations of AIM companies;
'Announcement' means this announcement (including the appendix to this announcement);
'APAC' means Asia Pacific;
'APL' means Alliance Pharmaceuticals Limited, a wholly-owned subsidiary of the Company;
'CEE' means Central and Eastern Europe;
'Company' or 'Alliance' means Alliance Pharma plc;
'Completion' means completion of the Acquisition pursuant to and in accordance with terms and conditions of the Acquisition Agreement;
'CREST' means the relevant system (as defined in the CREST Regulations) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the CREST Regulations);
'CREST Regulations' means the Uncertificated Securities Regulations 2001 (SI 2001/3755) as amended from time to time;
'Directors' means the directors of the Company as at the date of this Announcement;
'EBITDA' means earnings before interest, tax, depreciation and amortisation;
'Enlarged Group' means the Group as it will be following Completion, as enlarged by the Acquisition;
'Enlarged Issued Share Capital' means the issued share capital of the Company immediately following Re-admission, comprising the Existing Issued Share Capital and the Placing Shares (assuming all of the Option Shares are issued and no other Ordinary Shares are issued between the date of this announcement and Re-admission);
'EU' means the European Union;
'Existing Issued Share Capital' means the 264,520,610 Ordinary Shares in issue at the date of this Announcement;
'Facility Agreement' means the credit agreement dated 26 November 2015 and entered into between (i) the Company and certain of its subsidiaries, (ii) National Westminster Bank plc and (iii) Bank of Scotland plc and (iv) Silicon Valley Bank, comprising a £65 million term loan and a £35 million revolving credit facility, as more particularly described in the Admission Document;
'FCA' means the Financial Conduct Authority of the United Kingdom;
'FDA' means the US Food and Drug Administration;
'Flamma Franchise' comprises FlammaceriumTM, FlammazineTM and Flamma SprayTM;
'Form of Proxy' means the form of proxy to be enclosed with the Admission Document for use by Shareholders at the General Meeting;
'FSMA' means the Financial Services and Markets Act 2000 (as amended);
'General Meeting' means the general meeting of the Company to be convened at 10.00 a.m. on 14 December 2015 (or any adjournment thereof);
'Group' means the Company and its subsidiaries as at the date of this Announcement;
'Healthcare Products' means the healthcare medicines and devices to be acquired by the Group either directly, or indirectly through the acquisition of the SPH Group, pursuant to the Acquisition;
'Healthcare Products Business' means the entire business carried out at the date of this Announcement relating to all of the Healthcare Products to be acquired pursuant to the Acquisition;
'Healthcare Products Business Combined HFI' means the historical financial information relating to the Healthcare Products Business set out in Part 6 of the Admission Document;
'LATAM/US' means Latin America and the United States;
'Launch Date' means the date on which the Enlarged Group first operates, revenues from the commercial sale of Flammacerium™ in the US following approval of Flammacerium™ by the FDA;
'London Stock Exchange' means London Stock Exchange plc;
'MEA' means the Middle East and Africa;
'New Loans' means the new debt financing to be provided to the Group, details of which are set out in paragraph 10 of Part 1 of the Admission Document;
'New Loans Agreement' means the agreement recording the terms of the New Loans as referred to in paragraph 10 of Part 1 of the Admission Document;
'Notice of General Meeting' means the notice of the General Meeting which is set out at the end of the Admission Document;
'Numis' means Numis Securities Limited, registered in England and Wales with number 2285918, whose registered office is at 10 Paternoster Square, London EC4M 7LT;
'Option' means the option granted to Numis pursuant to the Placing Agreement to allow Numis to require the Company to issue and allot the Option Shares to Placees following the date of this Announcement under the Placing;
'Option Shares' means up to 12,195,121 new Ordinary Shares (if any) to be allotted and issued by the Company to Placees following the exercise of the Option by Numis;
'Ordinary Shares' means the ordinary shares of one penny each in the capital of the Company;
'OTC' means over-the-counter (that is to say, capable of being purchased without a prescription);
'Placee' means any person (including individuals, funds or otherwise) by whom or on whose behalf a commitment to acquire Placing Shares has been given;
'Placing' means the conditional placing of the Vendor Consideration Shares by Numis, on behalf of the Company, with Placees, and the allotment of the Option Shares (if any) to Placees;
'Placing Agreement' means the placing agreement dated 26 November 2015 between the Company and Numis in respect of the Placing;
'Placing Price' means 41 pence per Placing Share;
'Placing Shares' means, together, the Vendor Consideration Shares and the Option Shares (if any);
'Proposals' means the Acquisition, the Placing and Re-admission;
'Re-admission' means the admission of the entire issued and to be issued ordinary share capital of the Company (including the Placing Shares) to trading on AIM becoming effective in accordance with the AIM Rules for Companies;
'Resolutions' means the resolutions to be proposed at the General Meeting as set out in the Notice of General Meeting;
'Royalty' means the royalty to be paid on certain sales in the five year period commencing on the Launch Date, as more particularly described in this announcement;
'Prospectus Directive' means the Directive of the European Parliament and of the Council of the European Union 2003/71/EC;
'Securities Act' means the US Securities Act of 1933, as amended;
'Shareholder' means a holder of Ordinary Shares;
'Sinclair Group' means the Vendor and its subsidiaries (including, as at the date of this announcement, the SPH Group);
'SPH Group' means each of Advanced Bio-Technologies Inc., Sinclair Pharma s.r.l., Sinclair Pharma France SAS and Maelor Laboratories Limited;
'United Kingdom' or 'UK' means the United Kingdom of Great Britain and Northern Ireland; and
'United States' or 'US' or 'USA' means the United States of America, its territories and possessions, any state of the United States and the District of Columbia.
'Vendor' or 'Sinclair' means Sinclair IS Pharma plc;
'Vendor Consideration Shares' means 191,463,414 new Ordinary Shares to be allotted and issued by the Company, credited as fully paid, under the Acquisition Agreement to Numis or to such Placees as it may direct, in part consideration for the Acquisition;
'Vendor Placing' means the conditional vendor placing (to be effected by Numis on behalf of the Company) of the Vendor Consideration Shares at the Placing Price pursuant to the Placing Agreement;
[1] Finance expense of £67,000 in the year ended 30 June 2013 has been rounded to £nil to eliminate rounding differences on the operating profit and profit / (loss) for the year line items.
This information is provided by RNS
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