BELLEVILLE, Ontario, Oct.28 /PRNewswire-FirstCall/ -- Bioniche Life Sciences Inc. , a research-based, technology-driven Canadian biopharmaceutical company, today announced that it has clarified the terms of two previously announced transactions: its proposed private placement of debt and convertible debt with a U.S.-based institutional investor and, separately, its proposed sale of Bioniche Pharma Group, its subsidiary that manufactures and markets sterile injectible pharmaceutical products in County Galway, Ireland.
Sale of Bioniche Pharma Group
Further to the transaction first announced on October 5, 2005, Bioniche is pleased to outline the terms of the proposed sale of its majority stake in Bioniche Pharma Group. This sale achieves several corporate objectives of Bioniche: Eliminating a significant portion of the Company's debt; providing future liquidity that will be directed to core operations; and helping to maximize the success of Bioniche Pharma Group while allowing Bioniche an ongoing minority participation.
Upon closing, the transaction will immediately benefit Bioniche's financial position, through a substantial infusion of cash and by relieving it of all indebtedness associated with Bioniche Pharma Group. Bioniche also expects to receive substantial post-closing payments for a five-year period based on performance targets. The ability to achieve such performance targets will depend on business and financial factors beyond the control of Bioniche. In particular, Bioniche will be dependent on the new ownership of Bioniche Pharma Group for achieving these targets over the five-year period and will have limited ability to influence operations. As a part of the transaction, Bioniche will also retain a minority ownership position in this Irish business. This transaction is scheduled to close at the end of November, 2005 and is subject to definitive purchase and ancillary agreements.
RoundTable Healthcare Partners ("RoundTable") will become the majority owner of Bioniche Pharma Group, which is expected to derive great benefit from RoundTable's expertise in sterile injectables. Graeme McRae, President & CEO of Bioniche Life Sciences, elaborates: "Bioniche Pharma Group has achieved a great deal under our stewardship, but it must now become a global success story. RoundTable's remarkable track record in building companies in this field is the best indicator of what we expect for Bioniche Pharma Group in the future."
$10 Million U.S. Private Placement
The clarified terms of the proposed $10 million U.S. debt financing are as follows:
1. (i) The $5 million U.S. secured revolving facility is subject to a borrowing base of 90% of eligible accounts receivable and 35% of North American inventory capped at $2,500,000 U.S. (ii) This facility is not convertible, but the principal may be paid in cash and/or in Bioniche common shares (subject to value limits to be agreed) at 85% of the 10-day volume weighted average trading price ("VWAP") of Bioniche common shares on the TSX at the time of payment, and amounts so paid may be re-borrowed subject to the borrowing base limitations. (iii) Interest at the Wall Street Journal prime rate is payable monthly in cash. 2. (i) The $5 million U.S. convertible term facility is convertible at the option of the investor at an average conversion price based on the following: * 65% is convertible at the greater of 108% of the VWAP on the closing date and 110% of the trading price on the business day prior to the closing date; and * 35% is convertible at the greater of 125% of the VWAP on the closing date and 130% of the trading price on the business day prior to the closing date; but not less than $0.88 Cdn. per common share. (ii) The principal is repayable as to 20% in the first year, 20% in the second year and 60% in the third year of the facility, in equal monthly instalments during each such year, in cash or, at the Corporation's option, in common shares at 85% of the VWAP on the principal payment date. In addition, each monthly instalment must be converted at the average conversion price described below if the market price at the time is 115% or more of such average conversion price. Any amount converted will be credited against the next monthly instalment of principal to be made. (iii) Interest at the Wall Street Journal prime + 2% (subject to reduction based on increases in the price of Bioniche common shares) is payable monthly in cash. $7.5 Million U.S. Bridge Facility 3. In addition, Bioniche has negotiated a $7.5 million U.S. 120-day bridge facility which may be drawn to the extent needed pending the completion of the previously announced sale by Bioniche of Bioniche Pharma Group, which is scheduled to close by the end of November. If that sale transaction closes first, this bridge will not be required. If that sale is not completed within the 120-day period, the portion drawn on this facility will automatically convert into the convertible term loan described above as part of the $10 million U.S. facility. Fees 4. The fees in connection with the debt and bridge facilities are as follows: (i) 3.5% of the total facility (including only the portion of the bridge drawn) payable in cash at the time of funding. (ii) $750,000 U.S. payable in common shares priced at the VWAP at the time of closing (but not less than $0.88 Cdn. per share). This represents 2.5% of the $10 million U.S. facilities, for each year of the term. (iii) 3% of the bridge facility actually drawn, and 6% of the bridge facility actually converted, payable in common shares and priced at the VWAP at the time of payment. 5. The terms of the 800,000 five year warrants exercisable at 125% of the VWAP at closing (but not less than $1.10 Cdn.) are unchanged.
In order to afford Bioniche Life Sciences the greatest flexibility, at the Annual and Special Meeting of Bioniche shareholders to be held on November 3, 2005, shareholders are being asked to approve this financing, to the extent it permits the issuance of more than 9 million, and up to 15 million, common shares. If not approved by shareholders, the maximum number of shares issuable under these facilities will be 9 million.
The financing is subject to shareholder approval, definitive documentation, finalization of due diligence, and final TSX approval.
About Bioniche Life Sciences Inc.
Bioniche Life Sciences Inc. is a research-based, technology-driven Canadian biopharmaceutical company focused on the discovery, development, manufacturing, and marketing of proprietary products for human and animal health markets worldwide. The fully-integrated company employs more than 175 skilled personnel and has three principal operating divisions: Animal Health, Food Safety, and Human Health. The Company's primary goal is to develop proprietary cancer therapies supported by revenues from marketed products in human and animal health. For more information, please visit http://www.Bioniche.com.
Except for historical information, this news release may contain forward-looking statements that reflect the Company's current expectation regarding future events. These forward-looking statements involve risk and uncertainties, which may cause but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process, and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting.
For further information, please contact: Jennifer Shea, Corporate Communications Manager, Bioniche Life Sciences Inc. Tel: 613-966-8058 ext. 1250 / Cell: 613- 391-2097 Jennifer.Shea@Bioniche.com Rachel Levine, Investor Relations, The Global Consulting Group Tel: 646-284-9439 Rlevine@hfgcg.com
Bioniche Life Sciences Inc.CONTACT: Jennifer Shea, Corporate Communications Manager, Bioniche LifeSciences Inc., +1-613-966-8058 ext. 1250, Cell: +1-613-391-2097,Jennifer.Shea@Bioniche.com; Rachel Levine, Investor Relations, The GlobalConsulting Group, +1-646-284-9439, Rlevine@hfgcg.com
Web site: http://www.bioniche.com//