RNS Number:2978J
NAV Bidco Limited
06 December 2007
Not for release, publication or distribution, in whole or in part, in or into or
from any jurisdiction (including the United States) where to do so would
constitute a violation of the laws of such jurisdiction. No Securities
Commission or similar authority in the United States of America has in any way
passed upon the merits of the proposals contained herein.
6 December 2007
Recommended cash offer
by
NAV Bidco Limited
for
Bionostics Plc
to be implemented by means of a Scheme of Arrangement
under section 425 of the Companies Act 1985
Summary
* The board of directors of NAV Bidco and the board of directors of Bionostics
are pleased to announce that they have today reached agreement on
the terms of a recommended cash offer by NAV Bidco for the entire issued and
to be issued share capital of Bionostics to be effected by means of a scheme
of arrangement under section 425 of the Companies Act 1985.
* NAV Bidco has been established by NAV LLP (on behalf of the NAV Funds)
for the purposes of making the Offer. Following implementation of the
Proposals, NAV Bidco will be owned by the NAV Funds and, assuming sufficient
valid elections are made, those Scheme Shareholders who have validly elected
for the Unlisted Securities Alternative (as described below).
* Under the terms of the Offer, Scheme Shareholders on the register of
members at the Scheme Record Time will receive 30 pence in cash for each
Scheme Share held by them, valuing the existing issued share capital of
Bionostics at approximately #15.1 million.
* The Cash Consideration of 30 pence per Bionostics Share represents a premium
of approximately:
(a) 106.9 per cent. to the Closing Price of 14.5 pence per Bionostics Share
on 5 December 2007 (being the last dealing day prior to the making of
this announcement);
(b) 27.7 per cent. to the Closing Price of 23.5 pence per Bionostics Share
on 7 June 2007, the last Business Day prior to the announcement of a
possible offer for Bionostics; and
(c) 28.6 per cent. to the average Closing Price of 23.3 pence per Bionostics
Share over the 3 months up to and including 7 June 2007, the date of the
announcement of a possible offer for Bionostics.
* The Scheme also includes an Unlisted Securities Alternative, under which
Scheme Shareholders will be entitled to elect, in respect of all or some of
their Scheme Shares, to receive NAV Bidco Share Units in lieu of the Cash
Consideration to which they are entitled in respect of such Scheme Shares
under the terms of the Offer. NAV Bidco Shares will be unlisted securities
and there are no plans to seek a public quotation on any recognised
investment exchange or other market for the NAV Bidco Shares which may be
issued to Scheme Shareholders under the Unlisted Securities Alternative.
* The Unlisted Securities Alternative will only be made available and
implemented as part of the Proposals if valid elections for the Unlisted
Securities Alternative are made in respect of at least 5,041,119 Scheme
Shares, representing approximately 10 per cent. of the current issued share
capital of Bionostics, and the Scheme becomes effective. The number of NAV
Bidco Share Units available under the Unlisted Securities Alternative shall
also be limited to a maximum aggregate of 12,552,387 which will represent
approximately 24.9 per cent. of each class of the issued share capital of
NAV Bidco after the Scheme becomes effective. If aggregate valid elections
for the Unlisted Securities Alternative would result in the issue of more
than 12,552,387 NAV Bidco Share Units and the Scheme becomes effective, the
number of NAV Bidco Units to which each electing Scheme Shareholder is
entitled shall be scaled down pro rata (or as near thereto as NAV Bidco in
its absolute discretion considers practicable) amongst the electors and the
balance of the consideration due to Scheme Shareholders who have made such
elections will be satisfied by Cash Consideration in accordance with the
terms of the Offer. The Unlisted Securities Alternative will also be subject
to certain other restrictions as regards Overseas Shareholders.
* Implementation of the Scheme will be subject, amongst other things, to
the sanction of the Court and the approval of Bionostics Shareholders. The
Scheme Document, setting out full details of the Scheme and the procedures
to be followed by Bionostics Shareholders to approve the Scheme, together
with the Form of Election and Forms of Proxy, will be posted to Bionostics
Shareholders and, for information only, to participants in the Bionostics
Share Schemes, as soon as practicable and in any event within 28 days from
the date of this announcement unless otherwise agreed with the Panel.
* If the Scheme does not become effective by 29 February 2008, the
Proposals will lapse except where the approval of Bionostics Shareholders at
the Court Meeting and the EGM is obtained before this date, in which
case the longstop date for the Proposals may be extended to such later date
as NAV Bidco and Bionostics may agree and, if appropriate, the Court may
approve.
* The Bionostics Directors, who have been so advised by Rothschild,
consider the terms of the Offer to be fair and reasonable. In providing its
advice to the Bionostics Directors, Rothschild has taken into account the
commercial assessments of the Bionostics Directors. Accordingly, the
Bionostics Directors unanimously recommend all Bionostics Shareholders to
vote in favour of the Proposals.
* The Unlisted Securities Alternative is not the subject of a
recommendation by the Bionostics Directors and Bionostics Shareholders are
strongly advised to seek their own independent financial advice before
electing to participate in the Unlisted Securities Alternative.
* Each of the Bionostics Directors who owns Bionostics Shares has
irrevocably undertaken to vote (or procure to the extent they are able that
votes are cast) in favour of the resolutions to be proposed at the Court
Meeting and the EGM in respect of his own beneficial holding of Bionostics
Shares which, in aggregate, total 182,500 Bionostics Shares. On the
Reference Date, these irrevocable undertakings together relate to
approximately 0.4 per cent., of the existing issued share capital of
Bionostics and will only lapse if a competing offer is made for the entire
issued share capital of Bionostics which (i) exceeds the value of the Offer
by ten per cent. or more and (ii) the Bionostics Directors wish to
recommend.
* In addition, a further Bionostics Shareholder has irrevocably undertaken
to vote in favour of the resolutions to be proposed at the Court Meeting and
the EGM. As at the Reference Date, this investor held, in aggregate,
5,208,333 Bionostics Shares, representing approximately 10.3 per cent. of
the existing issued share capital of Bionostics. This irrevocable
undertaking will only lapse if a competing offer is made for the entire
issued share capital of Bionostics which exceeds the value of the Offer by
ten per cent. or more.
* At the date of this announcement the NAV Funds beneficially own in
aggregate 13,489,076 Bionostics Shares representing approximately 26.76 per
cent. of the existing issued share capital of Bionostics.
Commenting on behalf of the Bionostics Directors, Dr Paul Haycock, Non-executive
Chairman of Bionostics, said:
"We are pleased to have received this proposal totalling 30 pence per Bionostics
Share from NAV Bidco. We believe that NAV Bidco's cash offer represents a good
opportunity for Bionostics Shareholders to realise the value of their Bionostics
Shares. Accordingly, the Bionostics Board strongly recommends that the
Bionostics Shareholders vote in favour of the recommended cash offer.
Whilst no recommendation is being given in respect of it, the Unlisted
Securities Alternative also provides Bionostics Shareholders with the option to
retain an interest in the business should they wish to do so."
Commenting on behalf of the directors of NAV Bidco, Christopher Mills, Chief
Investment Officer of J O Hambro Capital Management Limited and a director of
J O Hambro Capital Management Limited, said:
"We believe that Bionostics is a great company with strong operational
management, but that, given its size, operating environment and US focus, it
would fare better as a private company. Our offer gives Bionostics Shareholders
a significant premium over both the current value of the shares and the value of
the shares prior to our approach, as well as potentially allowing them the
option to remain invested in the company."
This summary should be read in conjunction with the full text of this
announcement and the Appendices. Implementation of the Scheme will be subject to
the conditions set out in Appendix I to this announcement and further conditions
to be set out in the Scheme Document and the Form of Election.
Enquiries:
NAV Bidco Limited Tel: 020 7747 5678
Christopher Mills, Director
Maarten Hemsley, Director
Strand Partners Limited Tel: 020 7409 3494
(Financial Adviser to NAV Bidco)
Simon Raggett
Stuart Faulkner
Matthew Chandler
Bionostics Plc
Dr Paul Haycock, Non-Executive Chairman Tel: 020 7067 0700
Michael Thomas, Group Chief Executive Tel: 020 7067 0700
N M Rothschild & Sons Limited
(Financial Adviser to Bionostics)
Paul Simpson Tel: 0121 600 5252
John Byrne Tel: 0121 600 5252
Strand Partners Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively as sole financial
adviser to NAV Bidco and no-one else in connection with the matters described in
this announcement and will not be responsible to anyone other than NAV Bidco
Limited for providing the protections afforded to clients of Strand Partners
Limited or for providing advice in relation to matters set out in this
announcement or any other matter referred to herein.
Rothschild, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively as financial adviser to
Bionostics and no-one else in connection with the matters described in this
announcement and will not be responsible to anyone other than Bionostics for
providing the protections afforded to clients of Rothschild or for providing
advice in relation to the matters set out in this announcement or any other
matter referred to herein.
The full terms and conditions of the Scheme will be set out in the Scheme
Document. Bionostics Shareholders are advised to read carefully the formal
documentation in relation to the Proposals once it has been despatched.
THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR AN INVITATION TO
SUBSCRIBE FOR OR PURCHASE, ANY SECURITIES OR THE SOLICITATION OF ANY VOTE OR
APPROVAL IN ANY JURISDICTION, NOR SHALL THERE BE ANY SALE, ISSUANCE OR TRANSFER
OF THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT IN ANY JURISDICTION IN
CONTRAVENTION OF APPLICABLE LAW.
The availability of the Offer, the Unlisted Securities Alternative and the
release, publication or distribution of this announcement to persons who are not
resident in the United Kingdom may be affected by the laws of the relevant
jurisdictions in which they are located. Persons who are not resident in the
United Kingdom should inform themselves of, and observe, any applicable
requirements. Any failure to comply with such applicable requirements may
constitute a violation of the securities laws of any such jurisdictions. This
announcement has been prepared for the purpose of complying with English law and
the City Code and the information disclosed may not be the same as that which
would have been disclosed if this announcement had been prepared in accordance
with the laws of jurisdictions outside England.
NAV Bidco Shares have not been and will not be registered under the US
Securities Act or under the securities laws of any state in the United States
and may not be offered or sold directly or indirectly in or into the United
States unless registered under the Securities Act or issued pursuant to an
exemption therefrom. Accordingly, notwithstanding the Unlisted Securities
Alternative, all Scheme Shareholders who are US Persons shall receive cash, and
there shall be no issuance of NAV Bidco Shares to such Scheme Shareholders,
unless NAV Bidco considers that they may be so issued pursuant to an exemption
from the registration requirements of the US Securities Act provided by Section
3(a)(10) of that Act and the registration requirements of the securities laws of
any state in the United States provided that NAV Bidco has the right to deem a
Scheme Shareholder not to have made an election under the Unlisted Securities
Alternative where such election is by a Scheme Shareholder to whom the issue of
NAV Bidco Shares would be subject to the securities laws of the state of New
York or the securities law of any other state in the United States which imposes
regulatory obligations in connection with the sale of such securities which NAV
Bidco considers unduly onerous or with which they are unable to comply. Any such
issue, and the availability of the Unlisted Securities Alternative, will be
subject to the additional restrictions noted in paragraph 3 below.
No steps have been taken, nor will any be taken, to enable NAV Bidco Share Units
to be offered in compliance with the applicable securities laws of Canada or
Japan and no prospectus in relation to NAV Bidco Share Units has been, or will
be, lodged with or registered by the Australian Securities and Investments
Commission. Accordingly, NAV Bidco Share Units may not be offered, sold, resold,
taken up, delivered or transferred, directly or indirectly, in or into Canada,
Japan or Australia (except in transactions exempt from or not subject to the
registration requirements of the relevant securities laws of Canada, Japan or
Australia).
In accordance with normal United Kingdom market practice and subject to
applicable regulatory requirements, NAV Bidco or its nominees or its brokers
(acting as agents) may from time to time make certain purchases of, or
arrangements to purchase, Bionostics Shares outside the United States, other
than pursuant to the Offer. These purchases may occur either in the open market
at prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the United
Kingdom and under applicable regulatory requirements (including applicable US
securities laws).
Appendix I sets out the Conditions to the implementation of the Scheme.
Appendix II sets out the bases and sources of information from which the
financial calculations used in this announcement have been derived.
Appendix III contains a summary of the key rights attaching to NAV Bidco Shares.
Appendix IV contains the definitions of terms used in this announcement
(including this summary).
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of Bionostics and
certain plans and objectives of the boards of Bionostics and NAV Bidco with
respect thereto. These forward-looking statements can be identified by the fact
that they do not relate only to historical or current facts. Forward-looking
statements often use words such as "anticipate", "target", "expect", "estimate",
"intend", "plan", "goal", "believe", "will", "may", "should", "would", "could"
or other words of similar meaning. These statements are based on assumptions and
assessments made by the boards of Bionostics and NAV Bidco in light of their
experience and their perception of historical trends, current conditions,
expected future developments and other factors they believe appropriate. By
their nature, forward-looking statements involve risk and uncertainty, because
they relate to events and depend on circumstances that will occur in the future
and the factors described in the context of such forward-looking statements in
this announcement could cause actual results and developments to differ
materially from those expressed in or implied by such forward-looking
statements. Although Bionostics and NAV Bidco believe that the expectations
reflected in such forward-looking statements are reasonable, Bionostics and NAV
Bidco can give no assurance that such expectations will prove to have been
correct and Bionostics and NAV Bidco therefore caution you not to place undue
reliance on these forward-looking statements which speak only as at the date of
this announcement.
DEALING DISCLOSURE REQUIREMENTS
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,
"interested" (directly or indirectly) in one per cent. or more of any class of
"relevant securities" of Bionostics, all "dealings" in any "relevant securities"
of Bionostics (including by means of an option in respect of, or a derivative
referenced to, any such "relevant securities") must be publicly disclosed by no
later than 3.30 p.m. (London time) on the Business Day following the date of the
relevant transaction. This requirement will continue until the Proposals lapse,
are withdrawn, or upon the "offer period" otherwise ending. If two or more
persons act together pursuant to an agreement or understanding, whether formal
or informal, to acquire an "interest" in "relevant securities" of Bionostics,
they will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant
securities" of Bionostics, by NAV Bidco or Bionostics, or any of their
respective "associates", must also be disclosed by no later than 12.00 noon
(London time) on the Business Day following the date of the relevant
transaction.
A disclosure table, giving details of the companies whose "relevant securities"
and "dealings" should be disclosed, and the number of securities in issue, can
be found on the Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a dealing under Rule 8, you should consult the Panel.
Not for release, publication or distribution, in whole or in part, in or into or
from any jurisdiction (including the United States) where to do so would
constitute a violation of the laws of such jurisdiction. No Securities
Commission or similar authority in the United States of America has in any way
passed upon the merits of the proposals contained herein.
6 December 2007
Recommended cash offer
by
NAV Bidco Limited
for
Bionostics Plc
to be implemented by means of a Scheme of Arrangement
under section 425 of the Companies Act 1985
1. Introduction
The board of directors of NAV Bidco and the board of directors of Bionostics are
pleased to announce that they have today reached agreement on the terms of a
recommended cash offer by NAV Bidco for the entire issued and to be issued
ordinary share capital of Bionostics. The Offer of 30 pence per Bionostics Share
values the existing issued ordinary share capital of Bionostics at approximately
#15.1 million. The Offer is to be implemented by means of a scheme of
arrangement pursuant to section 425 of the Companies Act 1985 (involving a
reduction of capital under section 135 of the Companies Act 1985). The Scheme
requires the approval of the Scheme Shareholders at a meeting convened by the
Court and the subsequent sanction of the Court. The Reduction of Capital
requires the approval of members at an Extraordinary General Meeting and the
subsequent confirmation of the Court.
The Scheme also includes an Unlisted Securities Alternative, under which Scheme
Shareholders will be entitled to elect, in respect of all or some of their
Scheme Shares, for NAV Bidco Share Units in lieu of the Cash Consideration to
which they are entitled in respect of such Scheme Shares under the terms of the
Offer, should they choose to do so. NAV Bidco Shares will be unlisted securities
and there are no plans to seek a public quotation on any recognised investment
exchange or other market for the NAV Bidco Shares which may be issued to Scheme
Shareholders under the Unlisted Securities Alternative. The Unlisted Securities
Alternative is not the subject of a recommendation by the Bionostics Directors
and Bionostics Shareholders are strongly advised to seek their own independent
financial advice before electing to participate in the Unlisted Securities
Alternative.
NAV Bidco has been established by NAV LLP (on behalf of the NAV Funds) for the
purposes of making the Offer. Following implementation of the Proposals, NAV
Bidco will be owned by the NAV Funds and, assuming sufficient valid elections
are made, those Scheme Shareholders who have validly elected for the Unlisted
Securities Alternative (as described below).
2. The Offer
It is intended that the Offer will be implemented by means of a scheme of
arrangement between Bionostics and the Scheme Shareholders under section 425 of
the Companies Act 1985 (involving a reduction of capital under section 135 of
the Companies Act 1985). The Scheme will be subject to the conditions set out in
Appendix I to this announcement and on the further conditions to be set out in
the Scheme Document and the Form of Election.
If the Scheme (including the Reduction of Capital) becomes effective, the Scheme
Shares will be cancelled and, under the terms of the Offer, Scheme Shareholders
on the register of members at the Scheme Record Time will receive:
for each Scheme Share 30 pence in cash
The Offer values the existing issued share capital of Bionostics at
approximately #15.1 million and represents a premium of approximately:
* 106.9 per cent. to the Closing Price of 14.5 pence per Bionostics Share
on 5 December 2007 (being the last dealing day prior to the making of this
announcement);
* 27.7 per cent. to the Closing Price of 23.5 pence per Bionostics Share
on 7 June 2007, the last Business Day prior to the announcement of a
possible offer for Bionostics; and
* 28.6 per cent. to the average Closing Price of 23.3 pence per Bionostics
Share over the 3 months up to and including 7 June 2007, the date of the
announcement of a possible offer for Bionostics.
3. The Unlisted Securities Alternative
3.1 Terms
Under the Unlisted Securities Alternative, Scheme Shareholders may elect, in
respect of all or some of their Scheme Shares, to receive NAV Bidco Share Units
in lieu of the Cash Consideration to which they are entitled in respect of such
Scheme Shares under the terms of the Offer on the following basis:
for each Scheme Share 1 NAV Bidco Share Unit
but subject to availability and scaling down as described below.
The key rights and restrictions attaching to NAV Bidco Shares are summarised in
Appendix III to this announcement.
3.2 Availability
The Unlisted Securities Alternative will only be made available and implemented
as part of the Proposals if valid elections for the Unlisted Securities
Alternative are made in respect of at least 5,041,119 Scheme Shares,
representing approximately 10 per cent. of the current issued share capital of
Bionostics, and if the Scheme becomes effective. If valid elections below this
amount are received, all such elections shall be deemed to be invalid and,
provided that the Scheme becomes effective, Scheme Shareholders who elected for
the Unlisted Securities Alternative will instead receive Cash Consideration in
respect of the Scheme Shares which were subject to such an election in
accordance with the terms of the Offer.
The number of NAV Bidco Share Units available under the Unlisted Securities
Alternative will also be limited to a maximum aggregate of 12,552,387,
representing approximately 24.9 per cent. of each class of the issued share
capital of NAV Bidco after the Scheme becomes effective. If in aggregate valid
elections for the Unlisted Securities Alternative would result in the issue of
more than 12,552,387 NAV Bidco Share Units, the number of NAV Bidco Share Units
to which each electing Scheme Shareholder is entitled shall be scaled down pro
rata (or as near thereto as NAV Bidco in its absolute discretion considers
practicable) amongst the electors and the balance of the consideration due to
Scheme Shareholders who have made such elections will be satisfied by Cash
Consideration in accordance with the terms of the Offer. The Unlisted Securities
Alternative will also be subject to certain other restrictions as regards
Overseas Shareholders noted in paragraphs 3.4 and 16 below.
If the Unlisted Securities Alternative is fully subscribed and the Scheme
becomes effective, NAV Bidco Shares held by Scheme Shareholders who elect for
the Unlisted Securities Alternative will represent approximately 24.9 per cent.
of each class of the issued share capital of NAV Bidco.
If elections have to be scaled down, those Scheme Shareholders who validly elect
for the Unlisted Securities Alternative will instead receive additional Cash
Consideration in lieu of the NAV Bidco Share Units they would have received had
such elections not been scaled down.
3.3 Risk factors
The Unlisted Securities Alternative is not the subject of a recommendation by
the Bionostics Directors. It is recommended that Bionostics Shareholders
carefully consider, in light of their own investment objectives and having taken
independent advice appropriate to their own financial circumstances, whether
they wish to elect for the Unlisted Securities Alternative. The attention of
Bionostics Shareholders who may be considering electing for the Unlisted
Securities Alternative is drawn to certain risk factors and other investment
considerations relevant to such an election. These will be set out in full in
the Scheme Document and include, inter alia, the following:
* NAV Bidco is an unlisted company and there currently is, and there is
expected to continue to be, no market in NAV Bidco Shares;
* NAV Bidco has no plans to seek a listing or public quotation of the NAV
Bidco Shares on any recognised investment exchange or other market following
the Offer. Consequently, NAV Bidco Shares may be difficult to sell;
* NAV Bidco will not be subject to the disclosure, corporate governance
and shareholder protection requirements of any recognised investment
exchange;
* the NAV Bidco Shares held by Scheme Shareholders will represent a
minority interest in NAV Bidco. The NAV Funds, which will hold over 75 per
cent. of the NAV Bidco Shares, will have control of NAV Bidco;
* the Articles of NAV Bidco will contain provisions which restrict the
transfer of the NAV Bidco Shares (these restrictions are summarised in
Appendix III of this announcement); and
* NAV Bidco currently has no intention to pay dividends.
3.4 Securities law restrictions
The NAV Bidco Shares have not been and will not be registered under the US
Securities Act or under the securities laws of any state in the United States
and may not be offered or sold directly or indirectly in or into the United
States unless registered under the US Securities Act or issued pursuant to an
exemption therefrom. Accordingly, they will not be issued to US Persons unless
NAV Bidco considers that they may be so issued pursuant to an exemption from the
registration requirements of the US Securities Act provided by Section 3(a)(10)
of that Act and the registration requirements of the securities laws of any
state in the United States provided that NAV Bidco has the right to deem a
Scheme Shareholder not to have made an election under the Unlisted Securities
Alternative where such election is by a Scheme Shareholder to whom the issue of
NAV Bidco Shares would be subject to the securities laws of the state of New
York or the securities laws of any other state in the United States which
imposes regulatory obligations in connection with the sale of such securities
which NAV Bidco considers unduly onerous or with which they are unable to
comply. In addition, if, at any time when NAV Bidco has 500 or more shareholders
of record world wide, 300 or more US Holders elect for the Unlisted Securities
Alternative, NAV Bidco may, at its discretion, determine that the Unlisted
Securities Alternative will not be made available and all Scheme Shareholders
who are US Holders will instead receive Cash Consideration in respect of the
Bionostics Shares which were subject to such an election in accordance with the
terms of the Offer.
In order for the exchange of NAV Bidco Share Units for Scheme Shares, pursuant
to the Unlisted Securities Alternative, to qualify for exemption from the
registration requirements of the US Securities Act provided by Section 3(a)(10)
of that Act, the court, in a hearing open to and of which adequate information
and notice must be given to everyone to whom NAV Bidco Share Units will be
issued and at which all such persons will be entitled to attend in person or
through counsel to support or oppose the sanctioning of the Scheme, must, based
upon sufficient information necessary to determine the value of the Scheme
Shares and the NAV Bidco Share Units, affirmatively conclude when approving the
Scheme that the terms and conditions of the Scheme (including those of the
Unlisted Securities Alternative) are fair both procedurally and substantively to
those to whom the NAV Bidco Share Units will be issued. The Court must also be
advised by Bionostics and NAV Bidco before the hearing, that they will rely on
the Section 3(a)(10) exemption based on the Court's approval of the exchange of
NAV Bidco Share Units for Scheme Shares pursuant to the Unlisted Securities
Alternative.
Securities issued pursuant to Section 3(a)(10) of the US Securities Act may be
resold without restriction under the US Securities Act by any former Scheme
Shareholder in the US who was not an "affiliate" of Bionostics, NAV Bidco or NAV
LLP immediately prior to the Scheme and who is not an "affiliate" of NAV Bidco
or NAV LLP after the Scheme. An affiliate of an issuer is a person that
directly, or indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such issuer, whether through
ownership of securities, by contract or otherwise. Former Scheme Shareholders in
the US who were affiliates of Bionostics, NAV Bidco or NAV LLP immediately
before the Scheme or who are affiliates of NAV Bidco or NAV LLP after the Scheme
are subject to resale restrictions under the US Securities Act and may not
resell NAV Bidco Shares in the United States in the absence of an exemption from
registration under the US Securities Act and may resell NAV Bidco Shares outside
the United States only pursuant to such an exemption or pursuant to the
provisions of Regulation S. Scheme Shareholders are urged to consult their legal
advisers to ascertain any restrictions on the resale of NAV Bidco Shares
applicable to them. Regardless of any restrictions on or exemptions for resale,
following the Scheme becoming effective and except with the approval of NAV
Bidco, NAV Bidco Shares may not be offered, sold, resold, taken up, delivered or
transferred, directly or indirectly, in or into the United States or to or for
the account or benefit of any person believed to be a US Person, or in any other
manner whatsoever, as a result of which a registration under the US Securities
Act or the US Exchange Act would be required, including any transfer at any time
when NAV Bidco has 500 or more shareholders of record worldwide that would
result in there being 300 or more US Holders of either class of NAV Bidco
Shares. Any transfer to a US Person shall require the approval of the board of
NAV Bidco (which approval the board of NAV Bidco intends to grant unless, as a
result of the transfer, registration under the US Securities Act or the US
Exchange Act would be required or there would be 300 or more US Holders).
Where NAV Bidco believes that an election for the Unlisted Securities
Alternative by any Scheme Shareholder may infringe applicable legal or
regulatory requirements, or may result in a requirement for a registration under
the US Securities Act, US Exchange Act or any other securities laws in the
United States, NAV Bidco will have the right to deem that such Scheme
Shareholder has not validly elected for the Unlisted Securities Alternative and
such Scheme Shareholder will instead receive Cash Consideration in respect of
the Scheme Shares which were subject to such an election in accordance with the
terms of the Offer.
3.5 NAV Bidco Share Units
Each NAV Bidco Share Unit will comprise 1 NAV Bidco Ordinary Share and 1 NAV
Bidco Preference Share.
Any NAV Bidco Shares issued pursuant to the Unlisted Securities Alternative will
rank pari passu in all respects with NAV Bidco Shares of the same class which
are to be subscribed for by the NAV Funds on or prior to implementation of the
Proposals. NAV Bidco Shares are subject to certain transfer restrictions and
obligations, including drag-along and tag-along rights. A more detailed summary
of the rights and restrictions attaching to NAV Bidco Shares is provided in
Appendix III to this announcement.
4. Reasons for the Proposals and future plans for Bionostics
NAV Bidco is confident in the overall prospects for Bionostics' operating
businesses, but believes that Bionostics will be better suited to a private
company environment where it will be able to concentrate on the more efficient
delivery of its medium term business plan, free from the requirement to meet the
equity market's expectations. In addition, NAV Bidco believes that, as a small
UK listed company, with predominantly overseas (US) operations, Bionostics will
struggle to attract the research coverage, liquidity and level of market rating
that would make retaining its UK listing worthwhile.
NAV Bidco intends to continue to grow Bionostics' revenues, while keeping a
tight control of costs within a simplified corporate structure without the many
expenses associated with maintaining a public listing.
5. Background to and reasons for the recommendation of the Proposals
Following the difficult and challenging restructuring of the Bionostics Group
through the 2006 financial year, the renamed Bionostics Plc has concentrated on
the development of its two remaining businesses, In Vitro Diagnostics and Oxford
Cryosystems. The Bionostics Group has sought to manage cash resources carefully
and to pursue a cautious growth strategy giving these businesses the capability
to continue their organic growth and cash generation while using only limited
investment.
Over the last year, the Bionostics Group has seen an improvement in operating
performance under the leadership of Chief Executive, Michael Thomas, generating
a significantly enhanced trend in profitability. The high historic debt levels
in the Bionostics Group have been substantially reduced through disposal of both
the Cardiac and Respiratory businesses. However, debt levels have remained,
above the Bionostics Group's long term target, since the level of proceeds from
the disposals were not as high as had been hoped.
Furthermore, the Bionostics Group's existing banking facilities with Barclays
are due to expire on 30 June 2008 and new facilities agreed with Fortress Credit
Corporation are contingent upon implementation of the Scheme. Should the Scheme
not be implemented, the Bionostics Directors expect that the current banking
negotiations will conclude such that replacement banking facilities will be in
place prior to the expiry of the existing facilities. However, the Bionostics
Directors recognise that these uncertainties may cast doubts on the Bionostics
Group's ability to continue as a going concern.
Upon the Scheme becoming effective, all amounts owing to Barclays pursuant to
the facilities provided by it to Bionostics will become immediately due and
repayable. Fortress has agreed to make available to Bionostics loan facilities
of up to $29 million to permit the repayment of the Barclays' facilities, such
facilities being available to Bionostics subject to the Scheme becoming
effective and no event of default having arisen prior to such event.
Although the Bionostics Group has benefited from improved focus and increased
profitability, the Bionostics Directors believe that it has not been possible to
achieve the requisite growth in size and scale quickly enough, through either
organic or acquisition driven means, to achieve sufficient scale to be able to
continue to justify the Bionostics Group's status as a listed company with the
regulation and cost burden that this entails. In addition, the Bionostics
Directors believe that any future shock to the business, while not anticipated,
would be more difficult for the Bionostics Group to withstand as a listed
company.
Lastly, following the disposals referred to above, with the exception of the
small Oxford Cryosystems business, the majority of the Bionostics Group's
business is now located in the United States. Consequently, the Bionostics
Directors feel that the aforementioned burden of managing a listed company
structure in the UK, with operations and an executive team based in the United
States, is inappropriate.
As a result of these factors, the Bionostics Directors have concluded that
Bionostics would be better placed to achieve the opportunities available to it
in an off-market context and hence consider that the Offer represents a good
opportunity for Bionostics Shareholders to realise the value for their
Bionostics Shares. An Unlisted Securities Alternative is also being offered
should Bionostics Shareholders wish to retain an ongoing interest in the
Bionostics Group.
The Cash Consideration represents a 106.9 per cent. premium to Bionostics'
closing share price on 5 December 2007, the day prior to announcement by the
boards of Bionostics and NAV Bidco that they had agreed terms for a recommended
cash offer for Bionostics, a 27.7 per cent. premium to the Closing Price of a
Bionostics Share on 7 June 2007 (the last day immediately prior to the date on
which Bionostics announced that it was in discussions which may or may not lead
to an offer being made for it) and a 28.6 per cent. premium to the average
Closing Price of a Bionostics Share over the three months ending 7 June 2007.
The Bionostics Directors consider that this premium reflects reasonable
prospects for Bionostics Shareholders, given the background and circumstances
referred to above.
Taking all of the above factors into account, the Bionostics Directors believe
that the Offer is in the best interests of Bionostics Shareholders and therefore
unanimously recommend that Bionostics Shareholders vote in favour of the
Proposals.
6. Recommendation
The Bionostics Directors, who have been so advised by Rothschild, consider the
terms of the Offer to be fair and reasonable. In providing its advice to the
Bionostics Directors, Rothschild has taken into account the commercial
assessments of the Bionostics Directors. Accordingly, the Bionostics Directors
unanimously recommend you to vote in favour of the Proposals, as they have
irrevocably undertaken to do (or to procure to the extent that they are able) in
respect of their own beneficial holdings which, in aggregate, total 182,500
Bionostics Shares, representing approximately 0.4 per cent., of Bionostics'
existing issued ordinary share capital.
The Scheme Document will be posted to Bionostics Shareholders and others
containing, inter alia, details of the Scheme and the notices of the Meetings.
The Unlisted Securities Alternative is not the subject of a recommendation by
the Bionostics Directors and Bionostics Shareholders are strongly advised to
seek their own independent financial advice before electing to participate in
it. Of the Bionostics Directors only Michael Thomas has indicated that he
intends to elect for NAV Bidco Units in respect of some or all of his holding of
150,000 Scheme Shares.
7. Irrevocable undertakings
Each of the Bionostics Directors who owns Bionostics Shares has irrevocably
undertaken to vote (or procure to the extent they are able that votes are cast)
in favour of the resolutions to be proposed at the Court Meeting and the EGM in
respect of his own beneficial holding of Bionostics Shares which, in aggregate,
total 182,500 Bionostics Shares. These irrevocable undertakings together relate
to approximately 0.4 per cent., of the existing issued share capital of
Bionostics and will only lapse if a competing offer is made for the entire
issued share capital of Bionostics which (i) exceeds the value of the Offer by
ten per cent. or more and (ii) the Bionostics Directors wish to recommend.
In addition, a further Bionostics Shareholder has irrevocably undertaken to vote
in favour of the resolutions to be proposed at the Court Meeting and the EGM. As
at the Reference Date, this investor held, in aggregate, 5,208,333 Bionostics
Shares, representing approximately 10.3 per cent. of the existing issued share
capital of Bionostics. This irrevocable undertaking will only lapse if a
competing offer is made for the entire issued share capital of Bionostics which
exceeds the value of the Offer by ten per cent. or more.
The following table sets out the investors who have provided irrevocable
undertakings to vote in favour of the resolutions, and the number of Bionostics
Shares that these investors held as at the Reference Date:
Beneficial shareholder's No. of Bionostics Shares Per cent. of the
name held and subject to the total share capital
irrevocable undertakings of Bionostics
Mannheim Holdings LLC 5,208,333 10.3
8. Information relating to the Bionostics Group
Bionostics is a global medical diagnostic business which provides a broad range
of products and services in the liquid control and cryosystem sectors. Following
the divestment of the non-core Cardiac and Respiratory divisions during 2006,
Bionostics now comprises two divisions:
* In Vitro Diagnostics, a leading provider of liquid control solutions
used to confirm the accurate performance of medical diagnostic blood testing
devices. Based in Massachusetts, USA it has established a prominent position
in the supply of blood gas critical care quality controls, and more recently
has successfully applied its technology to the blood glucose sector used to
monitor diabetes.
* Oxford Cryosystems, a developer of low temperature devices for X-ray
crystallography, a pivotal technique in markets including drug discovery,
biotechnology and materials science. Based in Oxford, UK, with an office in
Massachusetts, USA, Oxford Cryosystems also works with a network of
international partners, distributors and local agents.
The Bionostics Group has finished its latest financial year strongly. Trading
during the six months ended 31 August 2007 shows an improved trend as a result
of new contracts won by In Vitro Diagnostics. Record trading months were
recorded in both the third and fourth quarters. Correspondingly, profitability
has improved sufficiently to enable payment of exceptional items associated with
closing the head office in the UK, while at the same time making some progress
to reduce debt levels. In local currencies, revenue from organic growth in some
continuing operations increased by 6 per cent. compared to last year, before the
impact of the weaker dollar. After accounting for the decline in the dollar,
revenue is down a little over 1 per cent. to #13.9m from #14.1m last year.
Initial savings in central costs have more than offset the slight reduction in
margins, improving operating profit from continuing operations before goodwill
impairment and exceptional costs to #2.4m from #2.2m last year.
Bionostics has demonstrated improved performance during the final three quarters
of the year ended 31 August 2007. The improved positioning of In Vitro
Diagnostics, initiated during the first quarter of the fiscal year, has
generated growth from new contracts in the diabetes sector and has led to
increased turnover, resulting in record sales months. Additionally, sales of
blood gas products have been stronger during the year ended 31 August 2007,
despite the anticipated decline of these products. In Vitro Diagnostics finished
the year ended 31 August 2007 exceptionally strongly, realising nearly 60 per
cent. of revenues and 70 per cent. of profits in the second half of the year
ended 31 August 2007. Oxford Cryosystems has seen an encouraging trend in order
book levels during the second half of the year ended 31 August 2007. Renewed
interest in helium based cooling systems has further led to increased revenues
and improved levels of profitability.
Bionostics has started the year ending 31 August 2008 strongly and above last
year's revenue run-rates. In Vitro Diagnostics has renewed contracts with major
customers and new business is anticipated with major pharmaceutical players.
Oxford Cryosystems is developing new products that will be important to the
continued growth of that business.
The Bionostics Directors believe that prospects for the Bionostics Group are
increasingly positive. However, any volatility in performance levels when
combined with the relatively high indebtedness of Bionostics has the potential
to place the Bionostics Group in a precarious financial position. The Bionostics
Directors also believe that Bionostics does not have the resources required to
build a larger group capable of withstanding the shocks to which its business is
potentially susceptible and, as a result, an independent future is viewed with
caution by the Bionostics Directors.
Furthermore, the Bionostics Group's existing banking facilities with Barclays
are due to expire on 30 June 2008 and new facilities agreed with Fortress are
contingent upon implementation of the Scheme. Should the Scheme not be
implemented, the Bionostics Directors expect that replacement banking facilities
will be in place prior to the expiry of the existing facilities. However, the
Bionostics Directors recognise that these uncertainties may cast doubts on the
Bionostics Group's ability to continue as a going concern.
Upon the Scheme becoming effective, all amounts owing to Barclays pursuant to
the facilities provided by it to Bionostics will become immediately due and
repayable. Fortress has agreed to make available to Bionostics loan facilities
of up to $29 million to permit the repayment of the Barclays' facilities, such
facilities being available to Bionostics subject to the Scheme becoming
effective and no event of default having arisen prior to such event.
9. Information relating to NAV Bidco
NAV Bidco was incorporated on 11 September 2007 and was established by NAV LLP
(on behalf of the NAV Funds) specifically for the purpose of acquiring
Bionostics. NAV Bidco is to be funded for the purposes of the Offer by the NAV
Funds pursuant to the Subscription/Cancellation Agreement details of which are
given in paragraph 13 below. The directors of NAV Bidco are Christopher Harwood
Bernard Mills, Chief Investment Officer of J O Hambro Capital Management Limited
and Maarten Duncan Hemsley a senior fund manager of J O Hambro Capital
Management Limited.
Following implementation of the Proposals, NAV Bidco will be owned by the NAV
Funds and, assuming sufficient valid elections are made, those Scheme
Shareholders who have validly elected for the Unlisted Securities Alternative.
10. Directors, management and employees and the effect of the Scheme on their
interests
NAV Bidco has confirmed to the Bionostics Directors that, following the Scheme
becoming effective, it has no intention of changing the existing employment
rights, terms and conditions of the employees of the Bionostics Group and that
Bionostics' pension obligations will be complied with. NAV Bidco's plans do not
involve any material change in the conditions of employment of the employees of
the Bionostics Group, nor are there any plans to change the principal locations
of the Bionostics Group's business and, accordingly, the Bionostics Directors
believe that the prospects of the employees of Bionostics will not be adversely
affected by the implementation of the Scheme.
Paul Haycock and Anthony Fay have agreed to resign on the Effective Date. They
will each receive three months' remuneration by way of compensation. Michael
Thomas and Gerald Moller will remain on the board and will be joined by
Christopher Mills and Maarten Hemsley as representatives of NAV LLP.
If the Scheme becomes effective, it is intended that NAV Bidco will enter into
an agreement with Bionostics for the provision of the services of Christopher
Mills and Maarten Hemsley as directors of Bionostics and to provide additional
consultancy and strategic advisory services to Bionostics at a fee of #50,000
per annum which will be subject to annual review.
Save as disclosed in this announcement, the effect of the Proposals on the
interests of the Bionostics Directors will not differ from their effect on the
interests of any other Bionostics Shareholder.
11. Bionostics Share Schemes
The effects of the Scheme on subsisting options under the Bionostics Share
Schemes are summarised below. All Bionostics Shares issued on the exercise of
options on or prior to the Reorganisation Record Time will be subject to the
terms of the Scheme.
The Scheme will not extend to Bionostics Shares issued, including on the
exercise of options, after the Reorganisation Record Time.
11.1 The Approved Scheme and the Unapproved Scheme
All options granted under the Approved Scheme and the Unapproved Scheme have
exercise prices higher than the Cash Consideration of 30 pence per Bionostics
Share payable under the Scheme. No proposals will therefore be made to holders
of options under these schemes. The options granted under both schemes will
lapse six months after the Effective Date.
11.2 The Sharesave Scheme
There are no subsisting options granted under the Sharesave Scheme.
11.3 The US Plan
The board of Bionostics has resolved that options granted under the US Plan will
become exercisable on the date on which the Scheme is approved by the Court.
Participants in the US Plan will be permitted to exercise their options,
conditional on the Scheme being approved by the Court, so that once approval has
been given Bionostics Shares will be issued to those participants who choose to
exercise their Options. These Bionostics Shares will be included in the Scheme
and participants will be given the opportunity to elect for the Unlisted
Securities Alternative if they wish to do so. The US Plan will then be
terminated immediately after the Effective Date.
12. Financing of the Offer
Strand Partners is satisfied that all necessary financial resources are
available to NAV Bidco for it to implement the Offer in full. Assuming that the
Cash Consideration is payable to all Scheme Shareholders and that all holders of
Options with an exercise price of less than 30 pence per Bionostics Share
exercise those options prior to the Reorganisation Record Time and that none of
them elect for the Unlisted Securities Alternative, full implementation of the
Offer would require a maximum cash payment of approximately #11.1 million by NAV
Bidco which will be funded out of NAV Bidco's cash resources made available by
subscriptions for NAV Bidco Share Units by the NAV Funds pursuant to the
Subscription/Cancellation Agreement details of which are given in paragraph 13
below. This reflects the fact that the 13,489,076 Bionostics Shares held by the
NAV Funds are to be cancelled under the Scheme in consideration for the issue to
those NAV Funds of 13,489,076 NAV Bidco Share Units.
13. Subscription/Cancellation Agreement
Pursuant to the Subscription/Cancellation Agreement, NAV LLP has agreed, inter
alia, on behalf of the NAV Funds, that they will subscribe for up to 36,984,750
NAV Bidco Share Units at a price of 30 pence per unit so as to provide NAV Bidco
with the amount required to satisfy the aggregate Cash Consideration payable in
accordance with the Scheme. The obligation to subscribe for NAV Bidco Share
Units is conditional upon the Scheme becoming effective. The subscription monies
shall be made available no later than seven days after the date on which the
Scheme becomes effective.
In the Subscription/Cancellation Agreement NAV LLP has also confirmed on behalf
of the NAV Funds their agreement to the cancellation of the Bionostics Shares
held by them in consideration for the issue by NAV Bidco of NAV Bidco Share
Units in accordance with the terms of the Scheme.
14. Inducement Fee
As part of the negotiations between Bionostics and NAV Bidco, on 5 December
2007, Bionostics and NAV Bidco entered into the Inducement Fee Agreement,
pursuant to which an inducement fee, which amounts to one per cent. of the
aggregate value of the Offer calculated by reference to the entire issued share
capital of Bionostics at the relevant time and the cash price per Bionostics
Share payable under the Offer (plus VAT to the extent that it is fully
recoverable by Bionostics), is payable by Bionostics to NAV Bidco or (if so
requested by NAV Bidco) to NAV LLP if, in summary: (i) the Offer lapses or is
withdrawn in accordance with its terms and a competing proposal, which is
announced under Rule 2.5 of the City Code prior to the date which is 18 weeks
after the expiry of Bionostics' current offer period, is completed during, or
within the 12 month period following the end of, that offer period; or (ii) the
Bionostics Directors withdraw or adversely modify or fail to reconfirm their
unanimous unqualified recommendation of the cash element of the Offer and/or
their unanimous unqualified recommendation to vote in favour of the Scheme and
the Offer subsequently lapses or is withdrawn.
In the Inducement Fee Agreement, Bionostics has also agreed with NAV Bidco that
it will not solicit or initiate competing proposals and that it will inform NAV
Bidco as soon as reasonably practicable if Bionostics becomes aware of a
competing proposal.
Bionostics has also agreed with NAV Bidco that if it receives an approach
relating to a competing proposal which the Bionostics Directors intend to
recommend instead of the Offer it will notify NAV Bidco as soon as practicable,
of the terms of that competing proposal and shall not withdraw or adversely
modify its recommendation of the Offer unless: (i) NAV Bidco does not, within 48
hours of being notified of the competing proposal, confirm that it is willing to
revise the Offer such that the Bionostics Directors determine to continue to
recommend the Offer as revised; or (ii) NAV Bidco, having confirmed within 48
hours of being notified of the competing proposal that it is willing to revise
its Offer such that the Bionostics Directors determine to continue to recommend
the Offer as revised, fails within 96 hours of receipt of such notice to
announce the revised Offer. Bionostics reserves the right to cancel the grant of
this right to revise the terms of the Offer if NAV Bidco commits a material
breach of the Inducement Fee Agreement or the confidentiality letter signed by
the parties.
15. Structure and implementation of the Proposals
15.1 Process
It is intended that the Offer and, if it becomes available the Unlisted
Securities Alternative will be effected by means of the Scheme, the provisions
of which will be set out in full in the Scheme Document. The purpose of the
Scheme, together with the proposed changes to Bionostics' Articles, is to
provide for NAV Bidco (and/or its nominee(s)) to become the owner(s) of the
entire issued and to be issued share capital of Bionostics. The Scheme will
provide for the cancellation of the Scheme Shares, and the application of the
reserve arising from such cancellation in paying up in full the number of new
Bionostics Shares which have an aggregate nominal value equal to the aggregate
nominal value of the Bionostics Shares cancelled and issuing the same to NAV
Bidco. Scheme Shareholders will then be entitled to receive the Cash
Consideration on the basis set out in paragraph 2 above and to elect for the
Unlisted Securities Alternative on the basis set out in paragraph 3 above.
The implementation of the Scheme is subject to the satisfaction or waiver of all
the Conditions and the further terms to be set out in the Scheme Document and
the Form of Election. In particular, the Scheme requires the approval of
Bionostics Shareholders by the passing of a resolution at the Court Meeting. The
resolution must be approved by a majority in number of those Scheme Shareholders
present and voting either in person or by proxy at the Court Meeting
representing 75 per cent. or more in value of all Scheme Shares voted.
Implementation of the Proposals will also require the passing of a special
resolution, requiring the approval of Bionostics Shareholders representing at
least 75 per cent. of the votes cast at the EGM.
Following the Meetings, the Scheme (and the Reduction of Capital) will only
become effective following sanction (and confirmation) by the Court and delivery
of an office copy of the Scheme Court Order and the registration of such order
by the Registrar of Companies. The Reduction will take effect upon the delivery
of an office copy of the Reduction Court Order to the Registrar of Companies and
the registration of such order by the Registrar of Companies.
Upon the Scheme becoming effective, it will be binding on all Scheme
Shareholders, irrespective of whether or not, being entitled to do so, they
attended or voted at the Court Meeting or the EGM.
As part of the implementation of the Proposals, Bionostics will be re-registered
as a private limited company. It is anticipated that applications will be made
to the UK Listing Authority for the listing of Bionostics Shares to be cancelled
and to the London Stock Exchange for such shares to cease to be admitted to
trading on its market for listed securities immediately following the Scheme
becoming effective.
15.2 Anticipated Timetable
Bionostics anticipates that it will despatch the Scheme Document to Bionostics
Shareholders and, for information only, to holders of options granted under the
Bionostics Share Schemes on or about 15 December 2007, but in any event within
the next 28 days (or such later date as may be agreed with the Panel); that the
Court Meeting and EGM will take place during January 2008; and subject to the
Scheme becoming unconditional and effective in accordance with its terms, the
Effective Date will occur at the end of January 2008. The timing of events which
relate to the implementation of the Scheme is, however, subject to the approval
of the Court and is therefore subject to change. A full anticipated timetable
will be set out in the Scheme Document.
If the Proposals do not become effective by 29 February 2008, the Proposals will
lapse except where the approval of Bionostics Shareholders at the Court Meeting
and the EGM is obtained before this date, in which case the longstop date for
the Proposals may be extended to such later date as NAV Bidco and Bionostics may
agree and, if appropriate, the Court may approve.
16. Overseas Shareholders
16.1 General
Bionostics Shareholders who have registered addresses in or who are resident in,
or who are citizens of, countries other than the United Kingdom should consult
their independent professional advisers as to whether they require any
governmental or other consents or need to observe any other formalities to
enable them to participate in the Unlisted Securities Alternative. If a
Bionostics Shareholder is in any doubt as to his eligibility to participate in
the Unlisted Securities Alternative, he should contact his independent
professional adviser immediately.
The availability of the Offer and/or the Unlisted Securities Alternative to
persons resident in, or citizens of, jurisdictions outside the United Kingdom
may be affected by the laws of the relevant jurisdictions. Persons who are not
resident in the United Kingdom should inform themselves about and observe any
applicable requirements. It is the responsibility of each of the Bionostics
Shareholders who are not resident in the United Kingdom to satisfy themselves as
to the full observance of the laws of the relevant jurisdiction in connection
therewith, including the obtaining of any governmental exchange control or other
consents which may be required or compliance with other necessary formalities
which are required to be observed and the payment of any issue, transfer or
other taxes due in such jurisdiction. Any failure to comply with such applicable
requirements may constitute a violation of the securities laws of any such
jurisdictions.
Under the terms of the Scheme, where NAV Bidco believes that the exercise of the
Unlisted Securities Alternative by any Scheme Shareholder may infringe
applicable legal or regulatory requirements, or may result in a requirement for
a registration under the US Securities Act, the US Exchange Act or any other
securities laws of any state in the United States, NAV Bidco will have the right
to deem that such Scheme Shareholder has not validly elected for the Unlisted
Securities Alternative.
This announcement has been prepared for the purposes of complying with English
law and the City Code and the information disclosed may be different from that
which would have been disclosed if this announcement had been prepared in
accordance with the laws of jurisdictions outside England including Section 14
(a) of the US Exchange Act.
No steps have been taken, nor will any be taken, to enable the NAV Bidco Share
Units to be offered in compliance with the applicable securities laws of Canada
or Japan and no prospectus in relation to the NAV Bidco Share Units has been, or
will be, lodged with or registered by the Australian Securities and Investments
Commission. Accordingly, the NAV Bidco Share Units may not be offered, sold,
resold, taken up, delivered or transferred, directly or indirectly, in or into
Canada, Japan or Australia (except in transactions exempt from or not subject to
the registration requirements of the relevant securities laws of Canada, Japan
or Australia).
16.2 US Persons
NAV Bidco Shares have not been and will not be registered under the US
Securities Act or under the securities laws of any state in the United States
and may not be offered or sold directly or indirectly in or into the United
States unless registered under the US Securities Act or issued pursuant to an
exemption therefrom. Where NAV Bidco believes that an election for the Unlisted
Securities Alternative by any Bionostics Shareholder may infringe applicable
legal or regulatory requirements, or may result in a requirement for a
registration under the US Securities Act or the US Exchange Act or may require
Bionostics or NAV Bidco to comply with any regulatory or other obligations,
including, without limitation, the securities laws of the state of New York
which they consider to be unduly onerous or with which they are unable to
comply, the election shall be deemed to be invalid and the Bionostics
Shareholder shall instead receive Cash Consideration in respect of the Scheme
Shares which were subject to the election in accordance with the terms of the
Offer.
Further, pursuant to securities laws in the United States, certain restrictions
imposed by NAV Bidco, outlined in paragraph 3.4 of this announcement, will be
applicable to NAV Bidco Share Units and the availability of the Unlisted
Securities Alternative.
Neither the US Securities and Exchange Commission nor any US state securities
commission has passed or will be passing upon the accuracy or adequacy of the
Scheme Document. The NAV Bidco Share Units have not been and will not be
approved or disapproved by the US Securities and Exchange Commission or any US
state securities commission. Any representation to the contrary is a criminal
offence in the United States.
17. UK Taxation
The following statements are intended as a general guide only and are not a
substitute for detailed tax advice on current United Kingdom tax legislation and
to what is understood to be the current practice of HM Revenue and Customs. They
summarise the position of Scheme Shareholders who (unless the position of
overseas Scheme Shareholders is expressly described below) are resident and (in
the case of individuals) ordinarily resident in the United Kingdom for tax
purposes and who hold their Bionostics Shares as an investment.
Any person who is in any doubt as to his tax position or who is subject to tax
in a jurisdiction other than the United Kingdom is strongly recommended to
consult his own independent professional adviser immediately.
17.1 Share capital reorganisation
For the purposes of the United Kingdom taxation of chargeable gains:
(i) the reclassification and subdivision of the Scheme Shares into X Shares, Y
Shares and Z Shares should be treated as a reorganisation of the share
capital of Bionostics. Accordingly, Scheme Shareholders should not be
treated as having disposed of their Scheme Shares and no liability to
United Kingdom taxation of chargeable gains should arise in respect of the
reclassification and subdivision;
(ii) Accordingly, for the purposes of United Kingdom taxation of chargeable
gains, the X Shares, the Y Shares and the Z Shares should be treated as the
same asset and as having been acquired at the same time as the Scheme
Shares that they replace; and
(iii)for the purposes of computing any gain or loss on a subsequent disposal of
X Shares, Y Shares or Z Shares, the base cost of the relevant Scheme
Shareholder in his existing Scheme Shares should be apportioned between his
X Shares, Y Shares and Z Shares by reference to their respective market
values immediately after the reorganisation. It is expected that the market
value of each X Share will be equal to the relevant cash consideration per
X Share, the market value of each Y Share and Z Share will be equal to the
market value of one NAV Bidco Share Unit at that time.
17.2 Scheme
(i) Cash Consideration
Scheme Shareholders will generally be treated as having made a disposal of their
X Shares for the purposes of United Kingdom taxation of chargeable gains when
they receive cash from NAV Bidco under the Scheme in consideration for the
cancellation of their X Shares. This may, depending on the individual
circumstances of each Scheme Shareholder (including the availability of any
exemption, allowance or relief), give rise to a liability to United Kingdom
taxation of chargeable gains.
For individual Scheme Shareholders, indexation allowance and taper relief may be
available to reduce any gain arising (but not create or increase an allowable
loss) on the disposal of his or her Scheme Shares. In respect of Scheme Shares
acquired before April 1998, indexation allowance will be given for the period of
ownership up to and including the month of April 1998, but not in respect of any
period thereafter. Taper relief reduces the proportion of the gain brought into
charge to capital gains tax depending in part on the number of complete years
for which the Scheme Shares have been held from 6 April 1998. The percentage
rate for taper relief for an individual will depend on whether the individual's
Scheme Shares are business or non business assets. The capital gains annual
exemption (which is #9,200 for 2007/08) will also be available to offset any
chargeable gain arising (to the extent it has not already been utilised).
Following the proposed changes to UK tax law in the pre-budget report dated 9
October 2007, where the Scheme Shares are disposed on or after 6 April 2008, it
is anticipated that indexation allowance and taper relief will not be available
to reduce any gain arising. This may be subject to change as the proposed
changes are currently draft.
For Scheme Shareholders within the charge to United Kingdom corporation tax (but
who do not qualify for the substantial shareholding exemption in respect of
their Scheme Shares), indexation allowance will be available in respect of the
full period of ownership of the Scheme Shares to reduce any chargeable gain
arising (but not to create or increase an allowable loss) on the disposal of
their Scheme Shares.
(ii) Unlisted Securities Alternative Consideration
Scheme Shareholders will generally be treated as having made a disposal of their
Y Shares for the purposes of United Kingdom taxation of chargeable gains when
they receive NAV Bidco Share Units, in lieu of the cash that they would
otherwise receive under the Scheme, in consideration for the cancellation of
their Y Shares. This may, depending on the individual circumstances of each
Scheme Shareholder (including the availability of any exemption, allowance or
relief), give rise to a liability to United Kingdom taxation of chargeable
gains.
United Kingdom "rollover" relief should be available to Scheme Shareholders who,
alone or together with persons connected with them, do not after the
Reorganisation Record Time hold more than five per cent. of or any class of
shares in or debentures of, Bionostics in respect of the cancellation of their
Scheme Shares upon the terms described in this announcement in consideration for
new NAV Bidco Shares issued by NAV Bidco.
Accordingly, for the purposes of United Kingdom taxation of chargeable gains,
such Scheme Shareholders should not be treated as making a disposal of such
Scheme Shares. The new NAV Bidco Shares issued by NAV Bidco should be treated as
the same asset and as having been acquired at the same time and for the same
consideration as the Scheme Shares from which they are derived.
17.3 Stamp duty / SDRT
Except in relation to depository receipt arrangements and clearance services,
where special rules apply:
(i) no stamp duty or SDRT will generally be payable by Scheme Shareholders in
connection with the share capital reorganisation or the cancellation of
the X Shares, Y Shares and Z Shares; and
(ii) in practice, it is expected that no stamp duty or SDRT will be required to
be paid by Scheme Shareholders in connection with the issue of NAV Bidco
Shares pursuant to the Scheme or their subsequent transfer. Such stamp
duty or SDRT will normally be payable by the purchaser of the relevant NAV
Bidco Shares.
17.4 Other matters
Special tax positions may apply to Scheme Shareholders who have acquired or
agreed to acquire their Scheme Shares by exercising options or awards under the
Bionostics Share Schemes. Where shareholders are in any doubt as to their
taxation position they are advised to seek independent advice.
17.5 Dividends on NAV Bidco Units
NAV Bidco is not required to withhold at source any amount in respect of United
Kingdom tax when paying a dividend.
A shareholder who is an individual will be entitled to a tax credit equal to
one-ninth of the dividend paid by NAV Bidco. The individual will be taxable on
the total of the dividend and the related tax credit (the "gross dividend"),
which will be regarded as the top portion of the individual's income. The tax
credit will, however, be treated as discharging the individual's liability to
income tax in respect of the gross dividend, unless and except to the extent
that the gross dividend falls above the threshold for the higher rate on income
tax, in which case the individual will, to that extent, pay tax on the gross
dividend calculated as 32.5 per cent of the gross dividend less the related tax
credit. So, for example, a dividend of #90 will carry a credit of #10 and the
income tax payable on the dividend by an individual liable to income tax at the
higher rate would be 32.5 per cent of #100, namely #32.50, less the tax credit
of #10 leaving a net charge of #22.50.
A shareholder that is a company resident for tax purposes in the UK will not
generally be taxable on any dividend it receives from NAV Bidco.
A shareholder who is not liable to tax on dividends received from NAV Bidco will
not be entitled to claim payment of the tax credit in respect of those
dividends.
The right of a shareholders who is not resident (for tax purposes) in the United
Kingdom to a tax credit in respect of a dividend received from NAV Bidco to
claim payment of any part of that tax credit will depend on the existence and
terms of any double taxation convention between the United Kingdom and the
country in which the shareholder is resident.
18. United States Taxation
18.1 United States federal income tax consequences
(a) The following is a discussion of the material United States federal income
tax consequences relating to the Scheme of Arrangement applicable to a
Bionostics Shareholder who or that is, for US federal income tax purposes:
* a citizen or resident alien individual, as defined in Section 7701(b) of
the Internal Revenue Code of 1986, as amended, of the United States (the
"Code");
* a corporation (or any other entity treated as a corporation for U.S.
federal income tax purposes) created or organized in or under the laws of
the U.S. or any state or the District of Columbia;
* an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
* in general, a trust subject to the primary supervision of a U.S. Court
and the control of one or more U.S. persons or a trust that was in
existence on 20 August 1996, and has made a valid election to be treated
as a U.S. person.
Such Bionostics Shareholders are hereinafter referred to as "US Holders".
(b) This discussion does not deal with all income tax considerations that might
be relevant to US Holders in light of their particular circumstances, for
example, holders who are banks, insurance companies, regulated investment
companies, tax-exempt entities or dealers in securities, holders who hold
their shares as part of a hedging, straddle, conversion or other risk
reduction transaction or holders who acquired their shares in connection
with stock options or certain types of stock purchase plans or other
compensatory transactions. In addition, the following discussion does not
address the income tax consequences of transactions effected prior to or
after the Scheme (whether or not these transactions are in connection with
the Scheme), including transactions in which Bionostics Shares were or are
acquired or in which Bionostics Shares were or are disposed of. No
statutory, judicial or administrative authority exists that directly
addresses certain of the U.S. federal income tax consequences of the receipt
and ownership of instruments comparable to the NAV Bidco Share Units.
Consequently, the conclusions contained in the discussion below are subject
to significant uncertainty. Furthermore, no state or local tax
considerations are addressed in this announcement. The following discussion
is not binding on the Internal Revenue Service (the "IRS") or any court.
(c) The information in this section is based on the Code, current, temporary and
proposed U.S. Treasury regulations, the legislative history of the Code,
current administrative interpretations and practices of the IRS, and court
decisions. Any reference to IRS interpretations and practices includes IRS
practices and policies as endorsed in private letter rulings, which are not
binding on the IRS except with respect to the taxpayer that receives the
ruling. In each case, these sources are relied upon as they exist on the
date of this announcement. Future legislation, regulations, administrative
interpretations and court decisions could change current law or adversely
affect existing interpretations of current law. Any change could apply
retroactively. Accordingly, even if there is no change in the applicable
law, no assurance can be provided that the statements made in the following
discussion will not be challenged by the IRS or will be sustained by a court
if so challenged.
(d) THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH HEREIN IS INCLUDED FOR
GENERAL INFORMATION ONLY. BIONOSTICS SHAREHOLDERS ARE URGED TO CONSULT THEIR
OWN TAX ADVISERS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE SCHEME
IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABILITY OF
U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
(e) IRS CIRCULAR 230 DISCLOSURE. TO ENSURE COMPLIANCE WITH INTERNAL REVENUE
SERVICE CIRCULAR 230, YOU ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF
U.S. FEDERAL TAX ISSUES IN THIS ANNOUNCEMENT IS NOT INTENDED OR WRITTEN BY
US TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY YOU FOR THE PURPOSE OF
AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER THE INTERNAL REVENUE CODE; (B)
SUCH DISCUSSION IS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING (WITHIN THE
MEANING OF CIRCULAR 230) OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN;
AND (C) YOU SHOULD SEEK ADVICE BASED ON YOUR PARTICULAR CIRCUMSTANCES FROM
AN INDEPENDENT TAX ADVISER.
18.2 Tax consequences of the Scheme
(a) General
The parties are not requesting a ruling from the IRS in connection with the
Scheme. As a result, the Company cannot assure you that the conclusions
expressed herein will not be challenged by the IRS or sustained by a court if
challenged or prevent the IRS from adopting a contrary position.
(b) Tax treatment of Bionostics Shareholders receiving only Cash Consideration
A US Holder receiving only cash consideration under the Scheme will recognize
gain or loss equal to the difference between the amount of cash received and
such US Holder's tax basis in the Bionostics Shares surrendered.
(c) Tax Treatment of Bionostics Shareholders electing for the Unlisted
Securities Alternative and receiving only NAV Bidco Share Units or a combination
of Cash Consideration and NAV Bidco Share Units
The tax treatment of a US Holder selecting the Unlisted Securities Alternative
and receiving under the Scheme only NAV Bidco Share Units or a combination of
cash and NAV Bidco Share Units will depend on whether the NAV Bidco Ordinary
Shares and the NAV Bidco Preference Shares representing the two components of
the NAV Bidco Share Unit are treated for U.S. federal income tax purposes as
separate securities and, if so, whether the NAV Bidco Preference Shares will
constitute "nonqualified preferred stock" ("NQPS") under Section 351(g) of the
Code. The discussion below assumes that, because the NAV Bidco Ordinary Shares
and NAV Bidco Preference Shares may only be transferred in "stapled units"
(consisting of 1 NAV Bidco Ordinary Share and 1 NAV Bidco Preference Share),
they will be regarded for U.S. tax purposes as a single security. The discussion
below further assumes that the NAV Bidco Share Units will not be treated as NQPS
under Section 351(g) of the Code even though, if treated as a separate security,
the NAV Bidco Preference Shares would constitute NQPS because those shares are
required to be redeemed within twenty years of the date on which they will have
been issued. Assuming that the NAV Bidco Share Units are regarded for U.S. tax
purposes as a single security, a US Holder receiving NAV Bidco Share Units or a
combination of cash and NAV Bidco Share Units under the Scheme will recognize
gain, if any, but not loss, equal to the lesser of (i) the cash that such US
Holder receives under the Scheme or (ii) the amount of gain "realized" under the
Scheme, which will equal the amount by which (a) the cash and fair market value
of the NAV Bidco Share Units such US Holder receives under the Scheme exceeds
(b) such US Holder's adjusted tax basis in the Bionostics Shares surrendered.
(d) Character of gain
Gain recognized by a US Holder, and loss recognized by a US Holder receiving
only cash consideration under the Scheme, generally will be taxed as a capital
gain or loss if the Bionostics Shares are a "capital asset" (generally, an asset
held for investment) in the hands of such US Holder, and such capital gain or
loss will constitute long-term capital gain or loss if the Bionostics Shares
have been held by such US Holder for more than one year at the time the Scheme
becomes effective. Generally, under present law, long-term capital gains
recognized by non-corporate US Holders will be subject to tax at a rate not to
exceed 15 per cent. The deductibility of capital losses by US Holders is subject
to limitations.
(e) Holding period
The holding period of any NAV Bidco Share Units will include the period during
which such US Holder held the Bionostics Shares surrendered.
(f) Tax basis
The aggregate tax basis of any NAV Bidco Share Units will be the same as the
aggregate tax basis of the Bionostics Shares surrendered, increased by such US
Holder's recognized gain, if any, and reduced by the amount of cash that such US
Holder receives under the Scheme.
(g) Alternative tax treatment if NAV Bidco Ordinary Shares and NAV Bidco
Preference Shares are regarded as separate securities
If the NAV Bidco Ordinary Shares and NAV Bidco Preference Shares are regarded
for U.S. tax purposes as separate securities and, consistent with that
treatment, the NAV Bidco Preference Shares constitute NQPS under Section 351(g)
of the Code, then a US Holder receiving NAV Bidco Share Units or a combination
of cash and NAV Bidco Share Units under the Scheme will recognize gain, if any,
but not loss, equal to the lesser of (i) the sum of the amount of cash and the
fair market value of the NAV Bidco Preference Shares that such US Holder
receives under the Scheme or (ii) the amount of gain "realized" under the
Scheme, which will equal the amount by which (a) the cash and fair market value
of the NAV Bidco Share Units such US Holder receives under the Scheme exceeds
(b) such US Holder's adjusted tax basis in the Bionostics Shares surrendered. In
that case, the US Holder's holding period for the NAV Bidco Ordinary Shares
would include the period during which such US Holder held the Bionostics Shares
surrendered but the holding period for any NAV Bidco Preference Shares would
begin the day following the date on which the Scheme becomes effective. In
addition, the US Holder's tax basis of any NAV Bidco Ordinary Shares would be
the same as the aggregate tax basis of the Bionostics Shares surrendered,
increased by such US Holder's recognized gain, if any, and reduced by the sum of
the amount of cash and the fair market value of the NAV Bidco Preference Shares
that such US Holder receives under the Scheme. The US Holder's tax basis in any
NAV Bidco Preference Shares received would be their fair market value at the
time of receipt.
19. Dealing disclosure requirements
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,
"interested" (directly or indirectly) in one per cent. or more of any class of
"relevant securities" of Bionostics, all "dealings" in any "relevant securities"
of Bionostics (including by means of an option in respect of, or a derivative
referenced to, any such "relevant securities") must be publicly disclosed by no
later than 3.30 p.m. (London time) on the Business Day following the date of the
relevant transaction. This requirement will continue until the Effective Date or
when the "offer period" for the purposes of the City Code otherwise ends. If two
or more persons act together pursuant to an agreement or understanding, whether
formal or informal, to acquire an "interest" in "relevant securities" of
Bionostics, they will be deemed to be a single person for the purpose of Rule
8.3.
Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant
securities" of Bionostics by Bionostics or NAV Bidco, or any of their respective
"associates", must also be disclosed by no later than 12.00 noon (London time)
on the Business Day following the date of the relevant transaction.
A disclosure table, giving details of the companies whose "relevant securities"
and "dealings" should be disclosed, and the number of securities in issue, can
be found on the Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website. If you are in any doubt as to whether or not you are
required to disclose a dealing under Rule 8, you should consult the Panel.
In accordance with normal United Kingdom market practice and subject to
applicable regulatory requirements, NAV Bidco or its nominees or its brokers
(acting as agents) may from time to time make certain purchases of, or
arrangements to purchase, shares in Bionostics outside the United States, other
than pursuant to the Offer. These purchases may occur either in the open market
at prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the United
Kingdom and under applicable regulatory requirements (including applicable US
securities laws).
20. Disclosure of interests
Save for the 13,489,076 Bionostics Shares already held by the NAV Funds, neither
NAV Bidco (nor any of its directors) nor, so far as NAV Bidco is aware, any
person acting in concert with NAV Bidco, owns or controls any Bionostics Shares
or any securities convertible or exchangeable into Bionostics Shares or any
rights to subscribe for or purchase the same, or holds any options (including
traded options) in respect of, or has any option to acquire, any Bionostics
Shares or has entered into any derivatives referenced to Bionostics Shares
("Relevant Securities") which remain outstanding, nor does any such person hold
any short positions in relation to Relevant Securities (whether conditional or
absolute and whether in the money or otherwise) including any short position
under a derivative, any agreement to sell or any delivery obligation or right to
require another person to purchase or take delivery, nor does any such person
have any arrangement in relation to Relevant Securities. For these purposes,
"arrangement" includes any indemnity or option arrangement, any agreement or
understanding, formal or informal, of whatever nature, relating to Relevant
Securities which may be an inducement to deal or refrain from dealing in such
securities.
21. General
The Offer will be subject to the requirements of the City Code and will be on
the terms and subject to the Conditions set out herein and in Appendix I and to
be set out in the Scheme Document and the Form of Election. The Scheme Document
will include full details of the Scheme, together with notices of the Court
Meeting and the EGM and the expected timetable. It will be accompanied by Forms
of Proxy for the Meetings and a Form of Election for the Unlisted Securities
Alternative.
In deciding whether or not to vote in favour of the Scheme in respect of their
Bionostics Shares, Bionostics Shareholders should rely on the information
contained in, and follow the procedures described in, the Scheme Document, the
Forms of Proxy and the Form of Election.
As at 7.00 a.m. (London time) on the Reference Date, Bionostics had 50,411,194
ordinary shares of 25 pence each in issue (ISIN number GB0008381823).
Enquiries:
NAV Bidco Limited Tel: 020 7747 5678
Christopher Mills, Director
Maarten Hemsley, Director
Strand Partners Limited Tel: 020 7409 3494
(Financial Adviser to NAV Bidco)
Simon Raggett
Stuart Faulkner
Matthew Chandler
Bionostics Plc
Dr Paul Haycock, Non-Executive Chairman Tel: 020 7067 0700
Michael Thomas, Group Chief Executive Tel: 020 7067 0700
N M Rothschild & Sons Limited
(Financial Adviser to Bionostics)
Paul Simpson Tel: 0121 600 5252
John Byrne Tel: 0121 600 5252
22. Appendices
Appendix I sets out the Conditions to implementation of the Proposals.
Appendix II sets out the bases and sources of information from which the
financial calculations used in this announcement have been derived.
Appendix III contains a summary of the key rights attaching to NAV Bidco
Ordinary Shares and NAV Bidco Preference Shares.
Appendix IV contains the definitions of terms used in this announcement.
Strand Partners Limited, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively as financial adviser
for NAV Bidco Limited and no-one else in connection with the matters described
in this announcement and will not be responsible to anyone other than NAV Bidco
Limited for providing the protections afforded to clients of Strand Partners
Limited or for providing advice in relation to matters set out in this
announcement or any other matter referred to herein.
Rothschild, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively as financial adviser to
Bionostics and no-one else in connection with the matters described in this
announcement and will not be responsible to anyone other than Bionostics for
providing the protections afforded to clients of Rothschild or for providing
advice in relation to the matters described in this announcement or any other
matter referred therein.
This announcement has been approved on behalf of NAV Bidco by Strand Partners
Limited for the purpose of section 21 of the Financial Services and Markets Act
2000. The principal place of business of Strand Partners Limited is 26 Mount
Row, London W1K 3SQ.
The full terms and conditions of the Scheme will be set out in the Scheme
Document and the Form of Election. Bionostics Shareholders are advised to read
carefully the formal documentation in relation to the Proposals once it has been
despatched.
THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR AN INVITATION TO
SUBSCRIBE FOR OR PURCHASE, ANY SECURITIES OR THE SOLICITATION OF ANY VOTE OR
APPROVAL IN ANY JURISDICTION, NOR SHALL THERE BE ANY SALE, ISSUANCE OR TRANSFER
OF THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT IN ANY JURISDICTION IN
CONTRAVENTION OF APPLICABLE LAW.
The availability of the Offer and the Unlisted Securities Alternative and the
release, publication or distribution of this announcement to persons who are not
resident in the United Kingdom may be affected by the laws of the relevant
jurisdictions in which they are located. Persons who are not resident in the
United Kingdom should inform themselves of, and observe, any applicable
requirements. Any failure to comply with such applicable requirements may
constitute a violation of the securities laws of any such jurisdictions. This
announcement has been prepared for the purpose of complying with English law and
the City Code and the information disclosed may not be the same as that which
would have been disclosed if this announcement had been prepared in accordance
with the laws of jurisdictions outside England.
NAV Bidco Shares have not been and will not be registered under the US
Securities Act or under the securities laws of any state in the United States
and may not be offered or sold directly or indirectly in or into the United
States unless registered under the US Securities Act or issued pursuant to an
exemption therefrom. Accordingly, notwithstanding the Unlisted Securities
Alternative, all Scheme Shareholders who are US Persons shall receive cash, and
there shall be no issuance of NAV Bidco Shares to such Scheme Shareholders,
unless NAV Bidco considers that they may be so issued pursuant to an exemption
from the registration requirements of the US Securities Act provided by Section
3(a)(10) of that Act and the registration requirements of the securities laws of
any state in the United States provided that NAV Bidco has the right to deem a
Scheme Shareholder not to have made an election under the Unlisted Securities
Alternative where such election is by a Scheme Shareholder to whom the issue of
NAV Bidco Shares would be subject to the securities laws of the state of New
York or the securities law of any other state in the United States which imposes
regulatory obligations in connection with the sale of such securities which NAV
Bidco considers unduly onerous or with which they are unable to comply. Any such
issue, and the availability of the Unlisted Securities Alternative, will be
subject to the additional restrictions noted in paragraph 3 above.
No steps have been taken, nor will any be taken, to enable NAV Bidco Shares to
be offered in compliance with the applicable securities laws of Canada or Japan
and no prospectus in relation to NAV Bidco Shares has been, or will be, lodged
with or registered by the Australian Securities and Investments Commission.
Accordingly, NAV Bidco Shares may not be offered, sold, resold, taken up,
delivered or transferred, directly or indirectly, in or into Canada, Japan or
Australia (except in transactions exempt from or not subject to the registration
requirements of the relevant securities laws of Canada, Japan or Australia).
In accordance with normal United Kingdom market practice and subject to
applicable regulatory requirements, NAV Bidco or its nominees or its brokers
(acting as agents) may from time to time make certain purchases of, or
arrangements to purchase, Bionostics Shares outside the United States, other
than pursuant to the Offer. These purchases may occur either in the open market
at prevailing prices or in private transactions at negotiated prices. Any
information about such purchases will be disclosed as required in the United
Kingdom and under applicable regulatory requirements (including applicable US
securities laws).
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and business of Bionostics and
certain plans and objectives of the boards of Bionostics and NAV Bidco with
respect thereto. These forward-looking statements can be identified by the fact
that they do not relate only to historical or current facts. Forward-looking
statements often use words such as "anticipate", "target", "expect", "estimate",
"intend", "plan", "goal", "believe", "will", "may", "should", "would", "could",
or other words of similar meaning. These statements are based on assumptions and
assessments made by the boards of Bionostics and NAV Bidco in light of their
experience and their perception of historical trends, current conditions,
expected future developments and other factors they believe appropriate. By
their nature, forward-looking statements involve risk and uncertainty, because
they relate to events and depend on circumstances that will occur in the future
and the factors described in the context of such forward-looking statements in
this announcement could cause actual results and developments to differ
materially from those expressed in or implied by such forward-looking
statements. Although Bionostics and NAV Bidco believe that the expectations
reflected in such forward-looking statements are reasonable, Bionostics and NAV
Bidco can give no assurance that such expectations will prove to have been
correct and Bionostics and NAV Bidco therefore caution you not to place undue
reliance on these forward-looking statements which speak only as at the date of
this announcement.
Appendix I
Conditions to the implementation of the Scheme
Implementation of the Scheme will be subject to the conditions set out below and
(in relation to the Unlisted Securities Alternative) in the Form of Election.
1. The Scheme will be conditional upon, and accordingly the necessary actions to
make the Scheme become effective will only be taken upon:
(i) approval of the Scheme by a majority in number of Scheme Shareholders who
are present and voting, either in person or by proxy, at the Court
Meeting or at any adjournment of that Meeting representing 75 per cent.
or more in nominal value of the Scheme Shares voted at the Court Meeting;
(ii) the special resolution set out in the notice of the EGM being duly passed
by the requisite majority or majorities at the EGM or at any adjournment
of that Meeting; and
(iii)the sanction (with or without modification (but subject to such
modification being acceptable to Bionostics and NAV Bidco)) of the Scheme
and the confirmation of the Reduction of Capital by the Court, an office
copy of each of the Court Orders and of the minute confirming the
Reduction of Capital being delivered to the Registrar of Companies and,
in the case of the Court Order confirming the Reduction of Capital,
registration of such Court Order by the Registrar of Companies.
2. Bionostics and NAV Bidco have agreed that, subject as stated in paragraph 5
below, the Scheme will also be conditional upon, and accordingly the
necessary actions to make the Scheme become effective will only be taken
upon, the following conditions being satisfied or waived:
(a) no government or governmental, quasi-governmental, supranational,
statutory, regulatory or investigative body, authority, court, trade
agency, association or institution or professional or environmental body
or any other similar person or body whatsoever in any relevant
jurisdiction (each a "Relevant Authority") having decided to take,
institute, implement or threaten any action, proceedings, suit,
investigation, enquiry or reference or having required any action to be
taken or information to be provided or otherwise having done anything or
having made, proposed or enacted any statute, regulation, order or
decision or having done anything which would or might reasonably be
expected to (in any case to an extent which is material in the context of
the Wider Bionostics Group taken as a whole or in the context of the
Proposals):
(i) make the Proposals or their implementation, or the Acquisition or
the acquisition by NAV Bidco of control of, Bionostics or of the
Wider Bionostics Group void, illegal or unenforceable in any
jurisdiction, or otherwise restrain, prohibit, restrict, prevent or
materially delay the same or impose additional material conditions
or material financial or other obligations with respect thereto;
(ii) impose any material limit on the ability of NAV Bidco or any member
of the Wider Bionostics Group to conduct all or any part of their
respective businesses or to own or control any of their respective
assets or properties or any part thereof or to require, prevent or
materially delay the divestiture (or materially alter the terms of
any proposed divestiture) by NAV Bidco or by any member of the Wider
Bionostics Group of all or a part of their respective businesses,
assets or properties, which in each case is material in the context
of the Wider Bionostics Group taken as a whole;
(iii)impose any material limitation on, or result in any material delay
in, the ability of NAV Bidco or any member of the Wider Bionostics
Group to acquire, hold or exercise effectively, directly or
indirectly, all or any rights of ownership of Bionostics Shares or
any shares or securities convertible into Bionostics Shares or to
exercise voting or management control over any member of the Wider
Bionostics Group or on the ability of any member of the Wider
Bionostics Group to hold or exercise effectively, directly or
indirectly, all or any rights of ownership of shares or other
securities (or the equivalent) in, or to exercise management control
over, any other member of the Wider Bionostics Group which is
material in the context of the Wider Bionostics Group taken as a
whole;
(iv) save as otherwise referred to in this announcement, require NAV
Bidco and/ or any member of the Wider Bionostics Group to acquire or
repay any shares or other securities in and/or indebtedness of any
member of the Wider Bionostics Group; or
(v) otherwise adversely affect any or all of the businesses, assets,
financial or trading position, profits or prospects of any member of
the Wider Bionostics Group in a manner which is material in the
context of the Wider Bionostics Group taken as a whole, and all
applicable waiting and other time periods during which any Relevant
Authority could institute, implement or thereafter take any such
action, proceedings, suit, investigation, enquiry or reference or
otherwise intervene under the laws of any relevant jurisdiction
having expired, lapsed or been terminated where the directors of NAV
Bidco reasonably believe that the completion of the Acquisition
prior to such expiry, lapse or termination may be materially
detrimental to NAV Bidco or the Wider Bionostics Group;
(b) except as (i) publicly announced by Bionostics through a Regulatory
Information Service (an "RIS") prior to 5.30 p.m. on 5 December 2007,
(ii) disclosed in the annual report and accounts of Bionostics for the
financial year ended 31 August 2006, (iii) disclosed in the preliminary
financial information announced by Bionostics for the year ended 31
August 2007, (iv) disclosed in the preliminary financial information
announced by Bionostics for the year ended 31 August 2007, (v) disclosed
in this announcement or as otherwise disclosed in writing to NAV Bidco or
its advisers prior to 5.30 p.m. on 5 December 2007, there being no
provision of any arrangement, agreement, licence, permit, franchise or
other instrument to which any member of the Wider Bionostics Group is a
party or by or to which any such member or any of its respective assets
is or are or may be bound, entitled or subject to any circumstance which,
in consequence of the making of the Offer or implementation of the
Proposals or the proposed acquisition of any shares or other securities
in, or control of, Bionostics by NAV Bidco or because of a change in the
management of Bionostics or otherwise, in each case would or could
reasonably be expected to result in (to an extent which is material in
the context of the Wider Bionostics Group taken as a whole):
(i) any indebtedness or liabilities (actual or contingent) of, or any
grant available to, any member of the Wider Bionostics Group (which
is not already repayable on demand) being or becoming repayable or
capable of being declared repayable immediately or prior to its
stated maturity or the ability of any such member to borrow monies
or incur any indebtedness being withdrawn or inhibited or capable of
being withdrawn or inhibited;
(ii) the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business,
property, assets or interests of any member of the Wider Bionostics
Group or any such security (whenever created, arising or having
arisen) being enforced or becoming enforceable;
(iii)any member of the Wider Bionostics Group ceasing to be able to carry
on business under any name under which it presently does so;
(iv) any such arrangement, agreement, licence, permit, franchise or other
instrument, or any right, liability, obligation, interest or
business of any member of the Wider Bionostics Group thereunder (or
any arrangement, agreement, licence, permit, franchise or other
instrument relating to any such right, liability, obligation,
interest or business) or the interests or business of any such
member in or with any other person, firm, company or body being or
becoming capable of being terminated or adversely modified or
adversely affected or any adverse action being taken or any onerous
obligation or liability arising thereunder;
(v) any asset or interest of, or any asset the use of which is enjoyed
by any member of the Wider Bionostics Group, being or falling to be
disposed of or charged (otherwise than in the ordinary course of
business) or ceasing to be available to any member of the Wider
Bionostics Group or any right arising under which any such asset or
interest would or might reasonably be expected to be required to be
disposed of or charged or would or might reasonably be expected to
be available to any member of the Wider Bionostics Group otherwise
than in the ordinary course of business;
(vi) the value or financial or trading position or prospects of any
member of the Wider Bionostics Group being prejudiced or materially
adversely affected in a manner which would be material in the
context of the Wider Bionostics Group taken as a whole; or
(vii)the creation of any material liability, actual or contingent, by any
member of the Wider Bionostics Group other than in the ordinary
course of trading, and no event having occurred which, under any
provision of any such arrangement, agreement, licence, permit,
franchise or other instrument to which any member of the Wider
Bionostics Group is a party or by or to which any such member or any
of its assets may be bound, entitled or subject, might reasonably be
expected to result in any of the events referred to in this
paragraph (b) to an extent which is material in the context of the
Wider Bionostics Group taken as a whole;
(c) since 31 August 2006 and except as (i) publicly announced by Bionostics,
or on Bionostics' behalf, through an RIS prior to 5.30 p.m. on 5 December
2007, (ii) disclosed in the annual report and accounts of Bionostics for
the financial year ended 31 August 2006, (iii) disclosed in the
preliminary financial information announced by Bionostics for the year
ended 31 August 2007, (iv) disclosed in the preliminary financial
information announced by Bionostics for the year ended 31 August 2007,
(v) disclosed in this announcement, or as otherwise disclosed in writing
to NAV Bidco or its advisers prior to 5.30 p.m. on 5 December 2007, no
member of the Wider Bionostics Group having:
(i) issued or agreed to issue or authorised or proposed the issue of
additional shares or securities of any class, or securities
convertible into or exchangeable for shares, or rights, warrants or
options to subscribe for or acquire any such shares, securities or
convertible securities (save for issues between Bionostics and any
of its wholly-owned subsidiaries or between such wholly-owned
subsidiaries Options as disclosed to NAV Bidco granted before 5
December 2007, the issue of any Bionostics Shares allotted upon the
exercise of Options granted before 5 December 2007 and issues
pursuant to the Proposals);
(ii) recommended, declared, made or paid or proposed to recommend,
declare, make or pay any dividend or other distribution, whether
payable in cash or otherwise, other than any distribution by any
wholly-owned subsidiary within the Bionostics Group;
(iii)save as between wholly-owned subsidiaries of Bionostics or between
Bionostics and any of its wholly-owned subsidiaries, effected,
authorised, proposed or announced its intention to propose any
merger, demerger, reconstruction, arrangement, amalgamation,
commitment or scheme (other than the Scheme) or any material
acquisition, disposal or transfer of assets or shares (other than in
the ordinary course of business) or any right, title or interest in
any assets or shares or other transaction or arrangement in respect
of itself or another member of the Wider Bionostics Group which in
each case would be material in the context of the Wider Bionostics
Group taken as a whole;
(iv) acquired or disposed of or transferred (in each case other than in
the ordinary course of business) or mortgaged, charged or encumbered
any assets or shares or any right, title or interest in any assets
or shares (in each case other than in the ordinary course of
business) or authorised the same or entered into, varied or
terminated or authorised, proposed or announced its intention to
enter into, vary, terminate or authorise any agreement, arrangement,
contract, transaction or commitment (in each case other than in the
ordinary course of business and whether in respect of capital
expenditure or otherwise) which is of a loss-making, long-term or
unusual or onerous nature or magnitude, or which involves or could
involve an obligation of such a nature or magnitude or which is
other than in the ordinary course of business, in each case which is
material in the context of the Wider Bionostics Group taken as a
whole;
(v) redeemed, purchased, repaid or reduced or proposed the redemption,
purchase, repayment or reduction of any part of its share capital or
any other securities;
(vi) save as between Bionostics and its wholly-owned subsidiaries or in
relation to the Proposals, effected, authorised, proposed or
announced its intention to propose any change in its share or loan
capital;
(vii)other than in the ordinary course of business, issued, authorised or
proposed the issue of or made any change in or to any debentures, or
incurred or increased any indebtedness or liability, actual or
contingent, in each case which is material in the context of the
Wider Bionostics Group taken as a whole;
(viii)save in relation to the Proposals, taken or proposed any corporate
action or had any proceedings started or threatened against it, in
each case for its winding-up (voluntary or otherwise), dissolution,
striking-off or reorganisation or for the appointment of a receiver,
administrator (including the filing of any administration
application, notice of intention to appoint an administrator or
notice of appointment of an administrator), administrative receiver,
trustee or similar officer of all or any material part of its assets
or revenues or for any analogous proceedings or steps in any
jurisdiction or for the appointment of any analogous person in any
jurisdiction;
(ix) entered into any contract, transaction or arrangement which is or
would be materially restrictive on the business of any member of the
Wider Bionostics Group or NAV Bidco or which involves or might
reasonably be expected to involve obligations which would or might
reasonably be expected to be so restrictive in each case other than
to a nature and extent that is normal in the context of the business
concerned;
(x) been unable or admitted that it is unable to pay its debts or having
stopped or suspended (or threatened to stop or suspend) payment of
its debts generally or ceased or threatened to cease carrying on all
or a substantial part of its business or proposed or entered into
any composition or voluntary arrangement with its creditors
generally (or any class of them) or the filing at court of
documentation in order to obtain a moratorium prior to a voluntary
arrangement or, by reason of actual or anticipated financial
difficulties, commenced negotiations with one or more of its
creditors with a view to rescheduling any of its indebtedness, in
each case which is material in the context of the Wider Bionostics
Group taken as a whole;
(xi) save in relation to any amendments to the Bionostics Share Schemes
described in this announcement or any changes to the terms of the
appointment of any of the Bionostics Directors referred to in this
announcement made, or announced any proposal to make, any change or
addition to any retirement, death or disability benefit or any other
employment-related benefit of or in respect of any of its directors,
employees, former directors or former employees;
(xii)made or consented to any material change to the terms of the trust
deeds or rules constituting the pension schemes established for its
directors and/or employees and/or their dependants or to the
benefits which accrue, or to the pensions which are payable
thereunder, or to the basis on which qualification for or accrual or
entitlement to such benefits or pensions are calculated or
determined, or to the basis upon which the liabilities (including
pensions) of such pension schemes are funded or made, or agreed or
consented to any change to the trustees, in each case where the
consequence would be material in the context of the Wider Bionostics
Group taken as a whole;
(xiii)save as between Bionostics and its wholly-owned subsidiaries,
granted any lease or third party rights in respect of any of the
leasehold or freehold property owned or occupied by it or
transferred or otherwise disposed of any such property, in each case
where the consequence would be material in the context of the Wider
Bionostics Group taken as a whole;
(xiv)entered into or varied or made any offer (which remains open for
acceptance) to enter into or vary the terms of any service agreement
with any director or senior executive of Bionostics or any director
or senior executive of the Wider Bionostics Group;
(xv) made any amendment to its memorandum or articles of association;
(xvi)waived or compromised any claim or authorised any such waiver or
compromise otherwise than in the ordinary course of business, which
is material in the context of the Wider Bionostics Group taken as a
whole;
(xvii)taken, entered into or had started or threatened against it in a
jurisdiction outside England and Wales any form of insolvency
proceeding or event similar or analogous to any of the events
referred to in sub-paragraphs (viii) and (x) above; or
(xviii)agreed to enter into or entered into an agreement or arrangement
or commitment or passed any resolution or announced any intention to
effect any of the transactions, matters or events referred to in
this paragraph (c);
(d) since 31 August 2006, except as (i) publicly announced by Bionostics, or
on Bionostics' behalf, through an RIS, (ii) disclosed in the annual
report and accounts of Bionostics for the financial year ended 31 August
2006, (iii) disclosed in the preliminary financial information announced
by Bionostics for the year ended 31 August 2007, (iv) disclosed in the
preliminary financial information announced by Bionostics for the year
ended 31 August 2007, (v) disclosed in this announcement or as otherwise
disclosed in writing to NAV Bidco or its advisers prior to 5.30 p.m. on 5
December 2007:
(i) there having been no material adverse change or deterioration in the
business, assets, financial or trading position or profits or
prospects of the Wider Bionostics Group taken as a whole;
(ii) no steps having been taken and no omissions having been made which
are or are reasonably likely to result in the withdrawal,
cancellation, termination or adverse modification of any material
licence held by any member of the Wider Bionostics Group, which is
necessary for the proper carrying on of its business and the
withdrawal, cancellation, termination or adverse modification of
which would be material in the context of the Wider Bionostics Group
taken as a whole; and
(iii)no litigation, arbitration proceedings, prosecution or other legal
proceedings to which any member of the Wider Bionostics Group is or
may become a party (whether as claimant or defendant or otherwise),
and no enquiry or investigation by or complaint or reference to any
Relevant Authority, against or in respect of any member of the Wider
Bionostics Group, having been threatened, announced or instituted or
remaining outstanding by, against or in respect of any member of the
Wider Bionostics Group, the consequence of which could reasonably be
expected to be materially detrimental to the Wider Bionostics Group
taken as a whole;
(e) other than in respect of matters disclosed in (i) public announcements
issued by Bionostics, or on Bionostics' behalf, through an RIS prior to
5.30 p.m. on 5 December 2007, (ii) the annual report and accounts of
Bionostics for the financial year ended 31 August 2006, (iii) the
preliminary financial information announced by Bionostics for the year
ended 31 August 2007, (iv) the preliminary financial information
announced by Bionostics for the year ended 31 August 2007, (v) this
announcement, or otherwise disclosed in writing to NAV Bidco or its
advisers prior to 5.30 p.m. on 5 December 2007, NAV Bidco not having
discovered that:
(i) any financial, business or other information concerning Bionostics
or the Wider Bionostics Group which is contained in the information
publicly disclosed at any time by or on behalf of any member of the
Wider Bionostics Group either publicly or in the context of the
Offer contains a material misrepresentation of fact which has not,
prior to 5 December 2007 been corrected by public announcement
through an RIS or omits to state a fact necessary to make the
information contained therein not materially misleading and in each
case the consequence of which could reasonably be expected to be
materially detrimental to the Wider Bionostics Group taken as a
whole;
(ii) there has been a disposal, spillage or leakage of waste or hazardous
substance or any substance likely to impair the environment or harm
human health on, or there has been an emission or discharge of any
waste or hazardous substance or any substance likely to impair the
environment or harm human health from, any land or other asset now
or previously owned, occupied or made use of by any past or present
member of the Wider Bionostics Group which in each case would be
reasonably likely to give rise to any liability (whether actual or
contingent, civil or criminal) or cost on the part of any member of
the Wider Bionostics Group which is material in the context of the
Wider Bionostics Group taken as a whole; and
(iii)any past or present member of the Wider Bionostics Group has failed
to comply with any and/or all applicable legislation or regulations
of any relevant jurisdiction with regard to the use, treatment,
handling, storage, transport, disposal, spillage, release,
discharge, leak or emission of any waste or hazardous substance or
any substance reasonably likely to impair the environment or harm
human health or animal health or otherwise relating to environmental
matters, or that there has otherwise been any such use, treatment,
handling, storage, transport, disposal, spillage, release,
discharge, leak or emission (whether or not the same constituted a
non-compliance by any member of the Wider Bionostics Group with any
such legislation or regulations, and wherever the same may have
taken place) any of which use, treatment, handling, storage,
transport, disposal, spillage, release, discharge, leak or emission
would be reasonably likely to give rise to any liability (actual or
contingent, civil or criminal) or cost on the part of any member of
the Wider Bionostics Group which is material in the context of the
Wider Bionostics Group taken as a whole.
3. If the Scheme does not become effective by 29 February 2008 (the "longstop
date"), it shall lapse provided that the longstop date may be extended to
such later date as NAV Bidco and Bionostics may agree and, if appropriate,
the Court may approve.
4. Subject to the requirements of the Panel, NAV Bidco reserves the right to
waive in whole or in part, in its discretion, all or any of the Conditions
contained in paragraph 2 of this Appendix I. NAV Bidco shall be under no
obligation to waive or treat as fulfilled any of the conditions in paragraph
2 of this Appendix I earlier than the date of the sanction of the Scheme
referred to in paragraph 1(iii) of this Appendix I notwithstanding that the
other conditions of the Proposals may at such earlier date have been waived
or fulfilled and that there are at such earlier date no circumstances
indicating that any of such conditions may not be capable of fulfilment or
waiver.
5. If NAV Bidco is required by the Panel to make an offer for Bionostics Shares
under the provisions of Rule 9 of the City Code, NAV Bidco may make such
alterations to the terms and conditions of the Offer and/or the Unlisted
Securities Alternative as are necessary to comply with the provisions of that
Rule.
6. NAV Bidco reserves the right to elect to implement the Acquisition by way of
a takeover offer. In such event, such offer will be implemented on the same
terms (subject to appropriate amendments, including (without limitation) an
acceptance condition set at 90 per cent. (or such lesser percentage (being
more than 50 per cent.) as NAV Bidco may decide) of the Bionostics Shares to
which such offer relates), so far as applicable, as those which would apply
to the implementation of the Acquisition by means of the Scheme. In the event
that the Acquisition is implemented by way of a takeover offer, it may be
subject to Section 14(e) and Regulation 14E of the US Exchange Act which
regulate tender offers for non-listed securities in the United States.
Appendix II
Bases and sources of information
In this announcement, unless otherwise stated, or the context otherwise
requires, the following bases and sources have been used:
1. financial information concerning the Bionostics Group has been extracted from
the audited consolidated statutory accounts of Bionostics for the relevant
financial year or unaudited preliminary statements of Bionostics for the
relevant financial year;
2. information relating to NAV Bidco has been provided by persons duly
authorised by the board of directors of NAV Bidco;
3. information relating to NAV LLP has been extracted from published sources and
provided by persons duly authorised by NAV LLP;
4. the market prices of Bionostics Shares are closing middle market quotations
derived from the Daily Official List;
5. the value of the existing share capital of Bionostics is based upon
50,411,194 Bionostics Shares in issue on the Reference Date;
6. the maximum cash consideration payable under the Proposals is based on
36,922,118 Scheme Shares in issue on the Reference Date and Options with
exercise prices below 30 pence per share and which are expected to become
exercisable as a consequence of the Scheme over no more than 62,632 Bionostics
Shares (assuming an exchange rate of US$2:#1).
Appendix III
Summary of the Articles of NAV Bidco
1. Share capital
1.1 The share capital of NAV Bidco is divided into two classes:
(i) Ordinary shares of 5p each (NAV Bidco Ordinary Shares); and
(ii) Zero-dividend redeemable preference shares of 25p each (NAV Bidco
Preference Shares).
1.2 The rights attaching to the NAV Bidco Ordinary Shares and the NAV Bidco
Preference Shares are set out in paragraphs 2 and 3 below.
1.3 Any unissued shares are, before issue, to be offered to existing
shareholders pro rata to their existing holdings.
1.4 NAV Bidco has power to issue redeemable shares and, subject to the Companies
Act, to purchase its own shares.
2. NAV Bidco Ordinary Shares
The NAV Bidco Ordinary Shares have the following rights:
2.1 Voting
The NAV Bidco Ordinary Shares entitle their holders to receive notice of, attend
and vote at all general meetings of NAV Bidco. On a poll each NAV Bidco Ordinary
Share has one vote attached to it.
2.2 Dividends and distributions
The NAV Bidco Ordinary Shares confer the right to dividends declared and other
distributions made by NAV Bidco.
2.3 Return of capital
Subject to the rights of the NAV Bidco Preference Shares, the NAV Bidco Ordinary
Shares entitle their holders to receive repayment of all sums paid up or
credited as paid up on the NAV Bidco Ordinary Shares held by them and to
participate in any other distributions made by NAV Bidco in the context of a
winding-up.
2.4 Transfer
Transfers of NAV Bidco Ordinary Shares are subject to the restrictions set out
in paragraph 4 below.
2.5 Variation of rights
Paragraph 5 below applies.
3. NAV Bidco Preference Shares
The NAV Bidco Preference Shares have the following rights and are subject to the
following restrictions:
3.1 Voting
The NAV Bidco Preference Shares entitle their holders to receive notice of, but
not to attend or vote at any general meetings of NAV Bidco, save in respect of
separate general meetings of the holders of NAV Bidco Preference Shares to
consider any variation(s) of class rights.
3.2 Dividends and distributions
The NAV Bidco Preference Shares do not carry the right to any dividend or to
participate in any other distributions made by NAV Bidco.
3.3 Return of capital
On a winding-up of NAV Bidco the NAV Bidco Preference Shares entitle their
holders, in priority to any payment in respect of the NAV Bidco Ordinary Shares,
to repayment of all sums paid up or credited as paid up on the NAV Bidco
Preference Shares but do not carry any right to participate in any further
distribution(s) made by NAV Bidco in the context of a winding-up.
3.4 Redemption
The NAV Bidco Preference Shares shall, subject to NAV Bidco being able lawfully
to do so, be redeemed on 31 December 2017, or on such earlier date as NAV Bidco
may determine.
3.5 Transfer
Transfers of NAV Bidco Preference Shares are subject to the restrictions set out
in paragraph 4 below.
3.6 Variation of rights
Paragraph 5 of below applies.
4. Transfer of NAV Bidco Shares
4.1 General restrictions on transfer
No transfers of NAV Bidco Shares are permitted save for permitted transfers (see
paragraph 4.2 below) and transfers pursuant to the drag along and tag along
rights (see paragraph 4.3 below). NAV Bidco Shares must be transferred in
stapled units (see paragraph 4.4 below).
4.2 Permitted transfers
NAV Bidco Shares are freely transferable:
(a) between members of the same group of companies, investments funds, close
family members and certain family trusts; and
(b) by any one of the NAV Funds to any other NAV Fund.
4.3 Drag along and tag along rights
(a) in the event of any offer being received for the entire issued share capital
of NAV Bidco and such offer being accepted by the holders of 50 per cent. or
more of the issued NAV Bidco Shares ("Accepting Shareholders") the Accepting
Shareholders have the right by notice in writing to the remaining holders of
NAV Bidco Shares ("Dragged Along Shareholders") to require the Dragged Along
Shareholders to accept the offer and transfer their shares to the offeror on
the same terms as those applying to the Accepting Shareholders.
(b) no transfer of shares may be made or registered if, as a result of the
transfer, the proposed transferee and/or parties related to it, would become
the holders or beneficial owners of more than 50 per cent. of the issued NAV
Bidco Shares unless the proposed transferee has offered to purchase all the
issued NAV Bidco Shares for a sum in cash equal to the highest price per
share paid or payable by the proposed transferee (or any such related party)
within the last 12 months.
(c) on an offer being made as described in (b) those holders of NAV Bidco Shares
who receive the offer are entitled to accept and to sell their NAV Bidco
Shares to the proposed transferee at the same time and on the same terms as
those applying to the original proposed transfer.
4.4 Stapled units
For so long as there are equal numbers of NAV Bidco Ordinary Shares and NAV
Bidco Preference Shares in issue, NAV Bidco Shares may only be transferred in
"stapled units" of 1 NAV Bidco Ordinary Share and 1 NAV Bidco Preference Share.
4.5 General
Each certificate for a NAV Bidco Share is to contain wording advising the holder
of the above restrictions on transfer which will be set out in the Articles of
NAV Bidco.
5. Variation of rights
No variation of the rights attaching to either class of NAV Bidco Shares is to
be effective without the consent in writing of the holders of not less than
three-quarters in nominal value of the issued shares of the relevant class or
the sanction of a resolution passed at a separate general meeting of the holders
of the shares of the relevant class.
At every such separate general meeting (except an adjourned meeting) the quorum
shall be two persons holding or representing by proxy not less than one-third in
nominal value of the issued shares of the class.
The rights conferred upon the holders of any shares shall not, unless otherwise
expressly provided in the rights attaching to those shares, be deemed to be
varied by the creation or issue of further shares ranking pari passu with them.
6. Alteration of share capital
NAV Bidco may by ordinary resolution increase, consolidate and then divide, or
(subject to the Companies Act) sub-divide its shares. NAV Bidco may, subject to
the Companies Act, by special resolution reduce its share capital, capital
redemption reserve or share premium account.
7. General meetings
Subject to the provisions of the Companies Act, an annual general meeting and a
general meeting convened for the passing of a special resolution or a resolution
of which special notice has been given to NAV Bidco shall be called by not less
than 21 clear days' notice in writing. All other general meetings shall be
called by not less than 14 clear days' notice in writing.
The notice must specify the place, day and time of the meeting and the general
nature of the business transacted.
Notices shall be given to all members other than any who, under the provisions
of the articles or the terms of issue of the shares they hold, are not entitled
to receive such notice. Each holder of NAV Bidco Ordinary Shares shall be
entitled to receive notice of general meetings of NAV Bidco.
Each director shall be entitled to attend and speak at any general meeting.
8. Directors
8.1 Number of directors
The directors shall be not less than two.
8.2 Directors' shareholding qualification
A director shall not be required to hold any shares in NAV Bidco.
8.3 Appointment of directors
Directors may be elected by NAV Bidco by ordinary resolution or appointed by the
board.
The board may from time to time appoint one or more directors to hold any
employment or executive office for such period and on such terms as they may
determine and may also revoke or terminate any such appointment.
8.4 Age of directors
No person is disqualified from being a director of NAV Bidco or is required to
vacate that office, by reason only of the fact that he has attained the age of
70 years or any other age, nor is it necessary to give special notice of a
resolution appointing or electing such a director.
8.5 Retirement of directors
The directors are not required to retire by rotation.
8.6 Vacation of office
The office of a director of NAV Bidco shall be vacated if:
(a) he resigns;
(b) he is or has been suffering from mental ill health or he becomes a patient
for the purposes of any statutes relating to mental health and the board
resolves that his office be vacated;
(c) he and any alternate appointed by him is absent without the permission
of the board from four consecutive meetings of the board;
(d) he is unable to pay his debts or compounds with his creditors generally;
(e) he is prohibited or disqualified by law from being a director;
(f) he is suffering from mental disorder; or
(g) he is removed from office pursuant to section 168 of the Companies Act
2006.
If the office of a director is vacated for any reason, he shall cease to be a
member of any committee or sub-committee of the board.
9. Alternate director
Any director may appoint any person to be his alternate and may at his
discretion remove such an alternate director. If the alternate director is not
already a director, the appointment, unless previously approved by the board,
shall have effect only upon and subject to being so approved.
10. Proceedings of the board
Subject to the provisions of the articles, the board may regulate its
proceedings as it thinks fit. The quorum necessary for the transaction of the
business of the board may be fixed by the board and, unless so fixed at any
other number, shall be two. A meeting of the board at which a quorum is present
shall be competent to exercise all the powers, authorities and discretions
vested in or exercisable by the board.
The board may appoint a director to be the chairman or a deputy chairman and may
at any time remove him from that office. Questions arising at any meeting of the
board shall be determined by a majority of votes. In the case of an equality of
votes, except with the approval of a majority of the board, the chairman of a
meeting of the board shall have a second or casting vote.
All or any of the members of the board may participate in a meeting of the board
by means of a conference telephone or any communication equipment which allows
all persons participating in the meeting to speak to and hear each other. A
person so participating shall be deemed to be present at the meeting and shall
be entitled to vote and to be counted in the quorum.
The board may delegate any of its powers, authorities and discretions (with
power to sub-delegate) to any committee, consisting of at least two directors.
The meetings and proceedings of any committee shall be governed by the
provisions contained in the articles for regulating the meetings and proceedings
of the board so far as the same are applicable and are not superseded by any
regulations imposed by the board.
11. Remuneration of directors
Each of the directors shall be paid a fee at such rate as may from time to time
be determined by the board. Any director who is appointed to any executive
office shall be entitled to receive such remuneration as the board may think
fit. Each director may be paid his reasonable travelling, hotel and incidental
expenses of attending and returning from meetings of the board, or committees of
the board of NAV Bidco or any other meeting which as a director he is entitled
to attend, and shall be paid all expenses properly and reasonably incurred by
him in the conduct of NAV Bidco's business or in the discharge of his duties as
a director.
12. Permitted interests of directors
Subject to the provisions of the Companies Act, and provided he has declared the
nature and extent of any material interest, a director of NAV Bidco is not
disqualified by his office from being a party to or interested in any
transaction or arrangement with NAV Bidco in any manner and any director who is
so interested is not liable to account to NAV Bidco or the members for any
benefit which he derives from any such transaction or arrangement.
A director who has declared his interest may vote on and be counted in the
quorum in relation to any resolution of the board concerning the transaction or
arrangement in which he is interested.
13. Indemnity of directors
Every director is entitled to be indemnified by NAV Bidco against any liability
incurred by him as a director of NAV Bidco, including any liability incurred in
defending any proceedings in which judgment is given in his favour, he is
acquitted or in connection with any application in which relief is granted to
him by a court. NAV Bidco may purchase and maintain for any director, or officer
of NAV Bidco, insurance against such liability.
Appendix IV
Definitions
The following definitions apply throughout this announcement unless the context
requires otherwise:
"Acquisition" the proposed acquisition of the entire issued and to be issued
share capital of Bionostics by NAV Bidco
"Approved The Ferraris Group Plc 1997 Approved Share Option Scheme
Scheme"
"Articles" articles of association
"Australia" Australia, its possessions and territories and all areas
subject to its jurisdiction and any political subdivision
thereof
"Barclays" Barclays Bank PLC
"Bionostics" or Bionostics Plc (registered in England and Wales with number
"Company" 531142)
"Bionostics Anthony William Fay, Dr Paul Haycock, Dr Gerald Heinz Moller
Directors" and Michael Thomas
"Bionostics Bionostics and its subsidiary undertakings
Group"
"Bionostics the Approved Scheme, the Unapproved Scheme, the Sharesave
Share Schemes" Scheme and the US Plan, in each case operated by Bionostics
"Bionostics holders of Bionostics Shares
Shareholders"
"Bionostics ordinary shares of 25 pence each in the capital of the
Shares" Company
"Business Day" a day (excluding Saturdays, Sundays and UK public holidays) on
which banks in the City of London are generally open for
business
"Canada" Canada, its possessions and territories and all areas subject
to its jurisdiction and any political subdivision thereof
"Cash the cash consideration due to Scheme Shareholders under the
Consideration" basic terms of the Offer
"City Code" the City Code on Takeovers and Mergers
"Closing the closing middle market quotation of a Bionostics Share as
Price" derived from the Daily Official List
"Companies the Companies Act 1985 and the Companies Act 2006 (to the
Act" extent in force), in each case as amended or re-enacted
"Conditions" the conditions to the implementation of the Scheme which are
set out in Appendix I to this announcement
"Court" the High Court of Justice in England and Wales
"Court the meeting of the Scheme Shareholders to be convened pursuant
Meeting" to an order of the Court pursuant to section 425 of the
Companies Act 1985 for the purpose of considering and, if
thought fit, approving the Scheme (with or without
modification), and any adjournment thereof
"Court Orders" the Scheme Court Order and the Reduction Court Order
"Daily Official the Daily Official List published by London Stock Exchange
List"
"Effective the date on which the Scheme becomes effective in accordance
Date" with its terms
"EGM" the extraordinary general meeting of Bionostics Shareholders to
be convened in connection with the Proposals, and any
adjournment thereof
"Form of the form of election sent to Scheme Shareholders by or on
Election" behalf of the Company pursuant to which a certificated Scheme
Shareholder may make an election for the Unlisted Securities
Alternative in respect of some or all of his Scheme Shares
"Forms of the form of proxy for use at the Court Meeting and the form of
Proxy" proxy for use at the EGM and "Form of Proxy" means either of
them
"Fortress" Fortress Credit Corporation
"FSMA 2000" the Financial Services and Markets Act 2000, as amended
"HMRC" or "HM Her Majesty's Revenue & Customs
Revenue and
Customs"
"Inducement Fee the inducement fee and non-solicitation agreement between NAV
Agreement" and Bionostics dated 5 December 2007
"Japan" Japan, its possessions and territories and all areas subject to
its jurisdiction and any political subdivision thereof
"London Stock London Stock Exchange plc
Exchange"
"Meetings" the Court Meeting and/or the EGM as the case may be
"NAV Bidco" NAV Bidco Limited (registered in England and Wales with number
6366731)
"NAV Bidco ordinary shares of 5 pence each in the capital of NAV Bidco
Ordinary
Shares"
"NAV Bidco zero-dividend redeemable preference shares of 25 pence each in
Preference the capital of NAV Bidco having the rights set out in the
Shares" Articles of NAV Bidco
"NAV Bidco NAV Bidco Ordinary Shares and/or NAV Bidco Preference Shares
Shares"
"NAV Bidco Share a unit comprising 1NAV Bidco Ordinary Share and 1NAV Bidco
Unit" Preference Share
"NAV Funds" funds managed by NAV LLP
"NAV LLP" North Atlantic Value LLP a UK limited liability partnership
incorporated under the Limited Liability Partnerships Act 2000
with registered number OC304213
"Offer" the recommended cash offer to be made by NAV Bidco to acquire
the entire issued and to be issued ordinary share capital of
Bionostics on the terms set out in this announcement and, where
the context admits, any subsequent revision, variation,
extension or renewal of such offer
"Options" subsisting options or awards to acquire or subscribe for
Bionostics Shares granted in accordance with the terms of any
of the Bionostics Share Schemes
"Overseas Bionostics Shareholders (or nominees of, or custodians or
Shareholders" trustees for, Bionostics Shareholders) not resident in or
citizens of the United Kingdom
"Panel" the Panel on Takeovers and Mergers
"Proposals" the Scheme and the other matters to be considered at the
Meetings, but for the avoidance of doubt the unanimous
recommendation by the Bionostics Directors to the Bionostics
Shareholders to vote in favour of the Proposals does not
include a recommendation in respect of the Unlisted Securities
Alternative
"Reduction of the reduction of Bionostics' share capital pursuant to section
Capital" 135 of the Companies Act 1985, involving the cancellation and
extinguishing of the Scheme Shares provided for by the Scheme
"Reduction Court the hearing at which the Court's confirmation of the Reduction
Hearing" of Capital will be sought
"Reduction Court the order of the Court confirming under section 137 of the
Order" Companies Act 1985 the Reduction of Capital
"Reference 5 December 2007 (the latest practicable date prior to the date
Date" of this announcement)
"Registrar of the Registrar of Companies for England and Wales
Companies"
"Regulation S" Regulation S under the US Securities Act
"Regulatory a channel recognised by the Financial Services Authority from
Information time to time as a channel for the dissemination of regulatory
Service" or information
"RIS"
"Reorganisation 6.00 p.m. on the Last Business Day immediately prior to the
Record Time" date of the Reduction Court Hearing
"Rothschild" N M Rothschild & Sons Limited
"Scheme" or the proposed scheme of arrangement under section 425 of the
"Scheme of Companies Act 1985 between Bionostics and Scheme Shareholders,
Arrangement" with or subject to any modification, addition thereto or
condition approved or imposed by the Court and agreed to by
Bionostics and NAV Bidco
"Scheme Court the order of the Court sanctioning the Scheme under section 425
Order" of the Companies Act 1985
"Scheme the document to be posted to Bionostics Shareholders and others
Document" containing, inter alia, details of the Scheme and the notices
of the Meetings
"Scheme Record 6.00 p.m. on the Business Day immediately prior to the date of
Time" the Effective Date
"Scheme the Bionostics Shares:
Shares"
(i) in issue at the date of the Scheme Document;
(ii) (if any) issued after the date of the Scheme Document and
before the Voting Record Time; and
(iii)(if any) issued on or after the Voting Record Time but on
or before the Reorganisation Record Time either on terms
that the original or any subsequent holder thereof shall
be bound by the Scheme or in respect of which the holder
thereof shall have agreed in writing to be bound by the
Scheme in each case excluding the shares held by the NAV
Funds and any shares held by NAV Bidco
"Scheme holders of Scheme Shares
Shareholders"
"SDRT" UK stamp duty reserve tax
"Sharesave The Ferraris Group Plc Sharesave Scheme
Scheme"
"Strand Strand Partners Limited
Partners"
"Subscription/ the agreement dated 5 December 2007 and made between NAV LLP on
Cancellation behalf of the NAV Funds and NAV Bidco
Agreement"
"subsidiary" have the meaning given to them in the Companies Act
and "subsidiary
undertaking"
"UK Listing the Financial Services Authority acting in its capacity as the
Authority" competent authority for the purpose of Part VI of FSMA 2000 (as
amended)
"Unapproved The Ferraris Group Plc 1997 Unapproved Share Option Scheme
Scheme"
"United Kingdom" The United Kingdom of Great Britain and Northern Ireland
or "UK"
"Unlisted the facility provided for in the Scheme whereby a Scheme
Securities Shareholder may elect, in respect of all or some of their
Alternative" Scheme Shares, to receive NAV Bidco Share Units in lieu of the
Cash Consideration to which he is entitled under the terms of
the Offer
"US" or "United the United States of America as defined in Rule 902(l) under
States" Regulation S
"US Exchange the United States Securities Exchange Act of 1934, as amended
Act" and rules and regulations thereunder
"US Holder" a holder of the applicable security including a US Person who
is resident in the United States, where securities held of
record by persons resident in the United States shall be
determined as provided in Rule 12g5-1 of the US Exchange Act,
except that securities held of record by a broker, dealer, bank
or nominee for any of them for the accounts of customers
resident in the United States shall be counted as held in the
United States by the number of separate accounts for which the
securities are held
"US Person" a US Person as defined in Rule 902(k) under Regulation S
including, but not limited to, any natural person in the United
States
"US Plan" The Ferraris Group Plc US Employee Stock Purchase Plan
"US Securities the United States Securities Act of 1933, as amended and rules
Act" and regulations thereunder
"Wider the Bionostics Group and any other body corporate, partnership,
Bionostics joint venture or person in which members of the Bionostics
Group" Group (aggregating their interests) have an interest of more
than 20 per cent. of the voting or equity capital or
equivalent
"X Shares" the X ordinary shares of 25 pence each in the capital of the
Company created pursuant to the reclassification of Scheme
Shares held by Bionostics Shareholders who have not validly
elected for the Unlisted Securities Alternative, as provided
for in the Scheme
"Y Shares" the Y ordinary shares of 25 pence each in the capital of the
Company created pursuant to the reclassification of Scheme
Shares held by Bionostics Shareholders who have validly
elected for the Unlisted Securities Alternative, as provided
for in the Scheme
"Z Shares" the Z ordinary shares of 25 pence each in the capital of the
Company created pursuant to the reclassification of Bionostics
Shares held by the NAV Funds, as provided for in the Scheme
This information is provided by RNS
The company news service from the London Stock Exchange
END
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