Publication of Circular

RNS Number : 4463N

Proteome Sciences PLC

11 June 2010

 



Proteome Sciences plc

("Proteome Sciences" or "the Company")

POSTING OF CIRCULAR

Cobham, 11 June 2010 - Proteome Sciences is pleased to announce that further to the announcement made on 7 June regarding the conditional placing to raise £4.81 million and the Open Offer to raise up to a further £2.06 million a circular is today being sent to shareholders with details of the proposed Placing and Open Offer and the Chief Executive Loan Conversion.

Details of the Open Offer

Proteome Sciences is proposing to raise up to £2.06 million (before expenses) pursuant to the Open Offer. The proposed Issue Price of 20pence per Open Offer Share is the same price as the price at which the Placing Shares are being issued.

The Open Offer is being made on a pre-emptive basis, allowing all Qualifying Shareholders the opportunity to participate. The Open Offer is not underwritten. The Open Offer is not conditional upon the level of applications made to subscribe under the Open Offer. However, if no applications to subscribe under the Open Offer are received the total amount that the Company would raise would be £4,810,000 (before expenses) via the Fundraising.

The Open Offer provides Qualifying Holders with the opportunity to apply to acquire Open Offer Shares at the Issue Price pro rata to their holdings of Existing Ordinary Shares as at the Record Date on the following basis of approximately:

0.0777 Open Offer Shares for every Existing Ordinary Share

and so on in proportion for any other number of Existing Ordinary Shares then held. The ratio above equates to approximately 1 Open Offer Share for every 12.87 Existing Ordinary Shares. Entitlements to apply to acquire Open Offer Shares will be rounded down to the nearest whole number and any fractional entitlement to Open Offer Shares will be disregarded in calculating the Qualifying Holder's Entitlement.

The Open Offer is subject to Admission of the Open Offer Shares becoming effective by 8.00 a.m. on 29 June 2010, (or such later time or date not being later than 8.00 a.m. on 12 July 2010 as the Company may decide).

The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.

Defined terms in this announcement have the same meaning as in the circular that has been posted to shareholders.

- ENDS -

For further information please contact:

Proteome Sciences plc

www.proteomics.com                                               Tel:    [phone]

Christopher Pearce, Chief Executive                          [e-mail] 

James Malthouse, Finance Director                           [e-mail] 

Dr. Ian Pike, Chief Operating Officer                           [e-mail] 

Nominated Adviser

Singer Capital Markets Limited

Shaun Dobson/Claes Spång

Tel: [phone]

Public Relations

IKON Associates                                                        Redleaf Communications Limited

Adrian Shaw                                                               Anna Dunkin/Lucy Salaman

Tel:          [phone]                                     Tel:        [phone]

Mobile:     [phone]                                     Email:    [e-mail] 

Email:      [e-mail]                                          

Forward Looking Statement

This document contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates", "intends", "plans", "seeks", "believes", "estimates", "expects" and similar references to future periods, or by the inclusion of forecasts or projections.

Forward-looking statements are based on the Company's current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The Company's actual results may differ materially from those contemplated by the forward-looking statements. The Company cautions you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements and regional, national, global political, economic, business, competitive, market and regulatory conditions.

Background to and Reasons for the Fundraising

On 7 June 2010, the Company announced a share issue to raise up to £4,810,000 (before expenses) through the issue of 24,050,000 New Ordinary Shares by way of a Placing at 20 pence per Ordinary Share to certain institutional investors and up to a further 10,318,837 New Ordinary Shares to be issued to existing shareholders through an Open Offer at 20pence per New Ordinary Share. The Issue Price represents a discount of approximately 12 per cent. to the price of 22.75 pence per share, being the mid-market price of the Company's Ordinary Shares on 4 June 2010. The Open Offer is not underwritten, and accordingly, as set out below the minimum proceeds under the Fundraising are £4,810,000 (before expenses).

In connection with the Placing and Open Offer Christopher Pearce, the Chief Executive of Proteome Sciences, has agreed to convert £5,000,000 of the Chief Executive Loan into 25,000,000 New Ordinary Shares at the Placing Price. The allotment of shares to Mr Pearce is conditional upon shareholder approval which will be sought at the Company's AGM on 30 June 2010.

This letter sets out in more detail the background to the Company's position, the terms of the Placing, the Open Offer, the Chief Executive Loan Conversion and the Chief Executive Loan Novation.

Use of proceeds and future activities

The proceeds of the Placing will be used partly to fund the Company through to breakeven. However, it is anticipated that the funds will also enable Proteome Sciences to make investments in additional equipment to be used by PS Biomarker Services.

It is also envisaged that some of the funds will be applied to the development of MS assays for the Company's proprietary biomarkers with primary focus on Alzheimer's Disease, cancer and brain damage.

On completion of the Fundraising the Company is also intending to reinstate the full payment of salaries to the Directors (who have previously agreed to waive payment part or all of their salaries and fees with effect from 1 July 2006).

The Directors consider that the Placing Proceeds and the Chief Executive Loan are sufficient for the Proteome Sciences' financial needs and that the Company has sufficient working capital for at least the next 12 months.

Terms of the Placing

It was announced on 7 June that the Company had conditionally placed 24,050,000 New Ordinary Shares at 20 pence per Share with existing and new investors to raise £4,810,000 before expenses.

Chief Executive Loan Conversion and Chief Executive Loan Novation

On 29 June 2006 Christopher Pearce, the Chief Executive, and Proteome Sciences entered into a loan agreement whereby Mr Pearce provided the Company with a £2 million working capital loan facility. The loan facility was increased by £2 million on 21 February 2007 at which point the loan was changed to a convertible loan facility. The conversion price was agreed to be the lower of: (a) the closing middle market price on the conversion date; and (b) the lowest 10 day average closing share price since the introduction of the loan on 29 June 2006.

The loan pays interest at 2.5% above the Barclays Bank plc base rate from time to time and is repayable on demand.

Since 29 June 2006 the Chief Executive Loan has been increased on three occasions, 29 June 2007, 24 June 2008 and 18 June 2009. As disclosed in the Annual Report and Accounts for the year to 31 December 2009 the balance of the Chief Executive Loan at that date was £11.787 million including accrued interest.

The Company announced on 3 July 2008 that it would use its best endeavours to ensure that shareholders would be able to participate on similar terms to the terms of the Chief Executive Loan Conversion and the Open Offer is being made to eligible shareholder to subscribe for New Ordinary Shares at the same price as the Chief Executive Loan Conversion price and at which the Placing Shares will be issued.

In conjunction with the Fundraising Mr Pearce has agreed to convert £5,000,000 of the Chief Executive Loan at the Placing Price into 25,000,000 New Ordinary Shares. The Chief Executive Loan Conversion, will result in Christopher Pearce having an interest in 31,538,075 Ordinary Shares being 16.4 per cent. of the Enlarged Share Capital (following the Placing and assuming full take up of the Open Offer).

Christopher Pearce has also agreed to novate the Chief Executive Loan to Proteome Sciences' main trading subsidiary, Electrophoretics Limited, which has agreed to assume all the obligations of its parent company, Proteome Sciences. The Company will guarantee the subsidiary's payment obligations and the existing security granted by the Company in favour of Christopher Pearce in respect of the Chief Executive Loan will remain in place. The Chief Executive Loan will continue to be convertible into New Ordinary Shares in the capital of the Company in accordance with the terms of the original Chief Executive Loan agreements.

The independent directors of Proteome Sciences, having consulted with Singer Capital Markets, consider that the terms of the Chief Executive Loan Novation and the Chief Executive Loan Conversion are fair and reasonable insofar as the shareholders of Proteome Sciences are concerned.

Intentions of the Directors in relation to the Open Offer

Stephen Harris, James Malthouse and William Dawson who are Directors and Qualifying Shareholders but not Placees, have indicated that they intend to acquire Open Offer Shares pursuant to their respective Open Offer Entitlements as set out in column (2) below and will further subscribe for additional Open Offer Shares under the Excess Application Facility as specified in column (3) below (provided that such excess applications will be rejected or scaled back accordingly to the extent that there are insufficient Open Offer Shares to satisfy those applications):

(1) Director	(2) No. of shares under Open Offer Entitlements	(3) No. of shares to be applied for under Excess Application Facility
Stephen Harris	11,888	15,112
James Malthouse	48,562	100,000
William Dawson	1,175	5,000

Christopher Pearce, who is a Director and Qualifying Shareholder but not a Placee, does not intend to acquire Open Offer Shares pursuant to his Open Offer Entitlement but will be free to acquire New Ordinary Shares in the future by converting the balance of the Chief Executive Loan into equity should the Board be authorised to do so by shareholder approval of the resolutions proposed at the AGM.

Recommendation

The Chief Executive Loan Conversion and the Chief Executive Loan Novation constitute related party transactions for the purposes of the AIM Rules. The Independent Directors, having consulted with Singer Capital Markets, consider that the terms of the Chief Executive Loan Conversion and the Chief Executive Loan Novation are fair and reasonable so far as Shareholders are concerned.

The Independent Directors unanimously recommend Shareholders to vote in favour of the Resolutions as the Independent Directors intend to do in respect of their beneficial shareholdings which amount to 793,124 Ordinary Shares representing 0.6 per cent. of the Company's existing issued share capital.

Expected timetable of principal events

                                                                                                                                                  2010

Record Date and time for the Open Offer                                                                 5.00 p.m. on 10 June 

Announcement of the Open Offer and Posting of Circular                                                             11 June

Existing Ordinary Shares marked 'ex' by the London Stock Exchange                                         11 June

Open Offer Entitlements credited to stock accounts in CREST

of Qualifying CREST Holders                                                                                                    14 June

Recommended latest time for requesting withdrawal of Open

Offer Entitlements from CREST                                                                              4.30 p.m. on 22 June 

Latest time for depositing Open Offer Entitlements into CREST                                3.00 p.m. on 23 June 

Latest time and date for splitting of Application Forms

(to satisfy bona fide market claims only)                                                                3.00 p.m. on 24 June 

Latest time and date for receipt of completed Application

Forms and payment in full under the Open Offer or settlement

of relevant CREST instruction (as appropriate)                                                       11.00 a.m. on 28 June 

Admission and commencement of dealings of the Open Offer Shares                                           29 June

Open Offer Shares credited to CREST stock accounts                                                                29 June

Annual General Meeting                                                                                      10.00 a.m. on 30 June 

Admission and commencement of dealings of the Chief Executive Loan Shares                               1 July

Despatch of definitive share certificates for Open Offer Shares                                                  by 12 July

Notes:

(1)    References to times in this Document are to London time (unless otherwise stated).

(2)    If any of the above times or dates should change, the revised times and/or dates will be notified by an announcement to an RIS.

Open Offer Statistics

Market price per Existing Ordinary Share ⁽¹⁾                                                                         22.75 pence

Number of Existing Ordinary Shares in issue ⁽²⁾                                                                    132,803,571

Price of each Open Offer Share                                                                                               20 pence

Number of Open Offer Shares to be offered for subscription by the Company                            10,318,837

Maximum proceeds of the Open Offer (before expenses)                                                    £2,063,767.40

Maximum Enlarged Share Capital following Admission ⁽³⁾                                                      192,172,408

Maximum percentage of Enlarged Share Capital represented by the Open Offer Shares ⁽⁴⁾       5.4 per cent.

Notes:

(1)    Mid-market price on AIM on 10 June 2010, being the last Business Day prior to the announcement of the Open Offer.

(2)    As at 10 June 2010, being the last Business Day prior to the announcement of the Open Offer.

(3)    Assuming full take up of the Open Offer and following the Placing and the Chief Executive Loan Conversion.

(4)    Assuming full take up of the Open Offer and following the Placing and the Chief Executive Loan Conversion.

 

END

 

 

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