A company behind businessman Michael Boyd will acquire a controlling stake in Balcatta-based pharmaceutical wholesaler Advance Healthcare Group, after Nedlands-based pharmaceutical company PharmAust Ltd withdrew its bid today.
Mr Boyd's company Fulcrum Equity Ltd, formerly Quadrant Iridium Ltd, will acquire 80 million shares and all convertible notes in the company from Sydney-based Hawkesbridge Private Equity, in a deal AHG says will convert $12 million of its debt obligations to equity, and mean there would be no further interest payable on the notes.
He has played a significant role in Sonic Healthcare Ltd and Foundation Healthcare Ltd, and was recently appointed chairman of Melbourne-based UltraPay Ltd, where he now lives.
Pharmaust's original takeover offer, made on January 5, relied on its acceptance by shareholders holding 90 per cent of the company, no alterations in AHG's capital structure, full disclosure and no material adverse change to the company.
The companies were due to face court today over the validity of share transactions which took place before an AHG annual general meeting in which Sydney-based Hawkesbridge Private Equity was due to acquire 80 per cent of the company, but sold an 11 per cent stake to AHG chief executive Ken Atkinson the night before.
With the trial now not going ahead on that date, Pharmaust told shareholders the matter was unlikely to be resolved prior to the completion of the bid. Furthermore, ratification of the resolutions would reduce the prospects at trial of unwinding the shares issued - this, the company argued, amounted to a material adverse change in the company.
AHG had also previously advised that 40 per cent of its shareholders, including Hawkesbridge, HET No1 Pty Ltd and the Atkinson Family Superannuation Fund would not accept Pharmaust's 1.5 cents-per-share offer based on the information available.
Hawkesbridge had previously attempted to sell its interest to a former Boyd vehicle, Covenant Nominees Ltd.
The issue by AHG of 20 million shares, and the provision of a loan facility of $2 million to assist with the company's ongoing funding were also identified as issues disturbing the Pharmaust bid.
Meanwhile, Pharmaust today completed the sale of its Mimotopes subsidiary to US-based Commonwealth Biotechnologies Inc for a 39.5 per cent stake in that company.
Pharmaust managing director Dr Paul D'Sylva will become an executive director of CBI as a result.
The full text of both Pharmaust announcements is pasted below
PharmAust Ltd announced today that it has made the decision that it will not be proceeding with an offer in respect of the ordinary fully paid shares in AHG.
The announcement of PharmAust on 5 January 2007 advised that any intended bid would be conditional on:
(a) 90% minimum acceptance;
(b) PharmAust receiving all approvals as required by law or by any regulatory authority with such approvals remaining in force until in effect until completion;
(c) the capital structure (including number and type of all outstanding equity, debt and hybrid securities on issue and any loans or other financial accommodation provided in) of AHG remaining unaltered until completion;
(d) AHG providing full details including relevant legal documentation in respect of the loans and other financial accommodation (including equity or hybrid security investments) provided to it by Hawkesbridge Limited and its associates; and
(e) No material adverse change to AHG.
On 8 January 2007 AHG announced amongst other things that Hawkesbridge had provided an additional loan facility of $2,000,000.00 to assist with AHG's ongoing funding. Such loan proposal is contrary to the bid condition related to the capital structure of AHG.
On 22 January 2007 AHG announced it had resolved to make a placement of 20,000,000 fully paid ordinary shares at the issue price of $0.02 per share to raise $400,000.00 and undertake an entitlements issue at the same price. Such action by AHG would be in breach of the bid condition in relation to the capital structure.
On 24 January 2007 AHG advised that shareholders that represented over 40% of the issued share capital of the company will not accept any offer of PharmAust on the terms proposed. The non acceptance of any bid by the majority shareholders would result in the 90% minimum acceptance condition failing to be satisfied.
Finally, PharmAust has been involved in Supreme Court proceedings in relation to conduct of the AGM of AHG in August 2006 and the resulting issue of certain securities from the resolutions put to shareholders. Such matter was set down for trial on 14 February 2007. This trial has been vacated. The vacation of the trial date to a time after the completion of any bid by PharmAust means that this issue is unlikely to be resolved prior to the completion of a bid by PharmAust and in a time satisfactory to PharmAust. Further, ratification of the tainted resolutions will reduce the prospects at trial of unwinding the convertible securities and shares issued. These factors amount to a material adverse change in AHG.
Due to all, or a combination of the above, PharmAust does not intend to make a bid for the shares of AHG.
The second announcement is pasted below
PharmAust Ltd has completed the sale of subsidiary Mimotopes Pty Ltd to Commonwealth Biotechnologies Inc for a consideration of 2.15 million CBI shares being 39.5% of the issued share capital of CBI.
The completion follows CBI shareholder approval of the Sale Agreement executed in between the two companies in November 2006.
PharmAust Managing Director Dr Paul D'Sylva has been appointed an Executive Director of CBI.
Dr D'Sylva said: "CBI's expertise in proteomics, immunology and genomics coupled with Mimotopes' expertise and proprietary technologies in peptide and synthetic chemistry provide an excellent foundation for growing an integrated research services company targeting the US$4.1 billion market for drug discovery outsourcing.
"PharmAust's strategy is to build its drug discovery and contract research business through the CBI franchise, which is ideally positioned to exploit this large and growing market.
"This partnership will provide cost synergies that will accelerate cash flow and create a strong sales force across the USA, UK and Australia; allowing products and services to keep up with industry demand.
CBI Chairman and Chief Operating Officer Dr Dick Freer said: "CBI is very excited about the potential this new combined entity has to grow its top line revenue and bottom line result. The synergies between the companies, the addition of new management skills, partnerships with major life science companies and a global sales presence are all reasons to be optimistic for the future. "
