Restructure update


 

TIDMYRK 
 
RNS Number : 1382S 
York Pharma plc 
12 May 2009 
 

 
 
 
 
 
 
12 May 2009 
 
 
York Pharma plc 
(YRK.L) ("York" or the "Company") 
 
 
Restructure update and divestment of French subsidiary 
 
 
In January 2009, York announced that its newly appointed management team was 
conducting a strategic review to investigate options to restructure the 
Company's operations. 
 
 
Following completion of the review, the Board has now decided to simplify the 
ownership of its international distribution partnership network. This is being 
achieved through the reorganisation of the group's operations in France, Belgium 
and Luxembourg (the "Territory"), resulting in the divestment today of its 51% 
owned OTC focused subsidiary, ACM Crawford SAS ("ACM"), to ACM's minority 
shareholders, Thierry Leveillé and Sebastien Baudinot (the "Minority 
Shareholders"). ACM will continue to represent the Company as exclusive 
distributor in the Territory focused on the marketing of York's prescription 
brands. 
 
 
Background to divestment 
The Company's 51% interest in ACM was acquired as one of the assets of Derms 
Development Limited in November 2007. ACM is a sales and marketing business, 
which has been engaged in selling the Company's products in the Territory and 
which took prime responsibility for managing the Company's international 
distributor network. ACM had also developed a range of dermacosmetic products 
which it marketed principally in France. 
 
 
The various rights and management responsibilities of each of the Company and 
the Minority Shareholders in relation to ACM were set out in a Shareholders' 
Agreement entered into at the time of the establishment of the joint ownership 
and subsequently modified by the parties during 2008 (the "SHA"). The SHA 
contained provisions creating an obligation on the Company to acquire the 
outstanding minority interest in ACM of 49% for a pre-agreed aggregate amount of 
EUR6.25m. The SHA provided that any failure by the Company to complete the 
acquisition and remit the requisite payments in relation to the minority stake 
on time would entitle the Minority Shareholders to trigger a call option, 
enabling them to acquire the Company's 51% shareholding in ACM for a nominal sum 
of EUR2,550 (representing an amount of EUR10 per share) and to the write off of all 
intercompany debts owed by ACM to the Company. 
 
 
Divestment of ACM 
As the next step in implementing the revised corporate strategy, the Company has 
negotiated and entered into a separation agreement with ACM, the key terms of 
which are as follows: 
 
 
  *  An amount of EUR777,000 standing to the balance of an inter-company debt owed by 
  ACM to the Company has, with effect immediately prior to the conduct of the 
  separation, been capitalised through the issuance of 10,500 shares in ACM to the 
  Company; 
  *  The Company's aggregate interest in ACM (comprising its initial 51% shareholding 
  together with the additional 10,500 new shares in ACM mentioned above) was 
  acquired as of today by the Minority Shareholders for a total of EUR23,661 in 
  cash; 
  *  The balance of all and any intercompany debt owed by ACM to the Company, 
  totalling in aggregate EUR51,795 has been forgiven; 
  *  The Company's existing rights and interest in two non-prescription dermacosmetic 
  products, Vitix and Viticolor, have been transferred to ACM; 
  *  Any and all interests held by ACM in the prescription product Zindaclin and in 
  the Company's international network of distributors have been transferred to the 
  Company; 
  *  The Company has appointed ACM as its exclusive distributor for three years in 
  the Territory; 
  *  ACM has granted the Company an option to distribute its products in the US 
  market; and 
  *  ACM will provide support for future product acquisitions on a success fee basis. 
 
 
 
As a result of completing the divestment of its interest in ACM, the Company 
will be a prescription dermatology and skin care business, selling products 
directly in the UK market and through an international network of distributors 
covering 70 countries. Whilst the divestment will result in a lower annual rate 
of sales for the Company, it is expected to have a minimal impact on the group's 
results (after accounting for the minority interest) and will save the Company 
from the requirement to fund the previously agreed purchase price for the 
minority interest of EUR6.25m. 
 
 
The Company's last set of published results was for the interim period of six 
months ended on 31 March 2008. The unaudited net assets of ACM at 30 September 
2008 were GBP78,811 and its unaudited revenues and loss before taxation for the 
eleven months ended 30 September 2008 were GBP2,809,189 and GBP191,748 
respectively (Source: Company Management Accounts). 
 
 
After careful deliberation, the Directors consider, having consulted with the 
Company's Nominated Adviser, that the terms of the divestment of ACM are fair 
and reasonable insofar as its shareholders are concerned. 
 
 
Update on possible offer 
On 30 March 2009, the Company announced that it had entered into an agreement 
with Uluru Inc. ("Uluru") under which Uluru has provided the Company with a 
secured revolving credit facility and on 6 April 2009 the Company further 
announced that it had also signed a non-binding offer letter with Uluru for 
Uluru to acquire the Company. Drawdown of the credit facility is required to 
allow the Company to continue trading through the period needed to complete any 
formal offer for the Company under the Takeover Code. 
 
 
In accordance with the requirements of the Takeover Panel, Uluru has been 
notified of the divestment of ACM and has confirmed that, in accordance with 
Rule 21 of the Takeover Code, it does not consider the divestment to constitute 
a frustrating action in relation to the current ongoing discussions between the 
parties. 
 
 
The Board stresses that there can be no certainty that the discussions between 
the Company and Uluru will lead to an offer being made for the Company. In the 
event that no offer is made for the Company, it will need to raise additional 
capital to fund its operating activities and to repay indebtedness in due 
course. Shareholders should be aware that if the offer is not completed or if 
the Company's capital raising efforts are unsuccessful, this will have a 
material adverse effect on the Company's financial position and operations. The 
Company will provide a further update as and when appropriate. 
 
 
Richard Anderson, Chief Executive of York said: "We are pleased that following 
the conclusion of this restructuring, the Company will continue to work with ACM 
in Continental European markets. The settlement which we have negotiated enables 
us to move forward and exploit fully our international Zindaclin franchise, 
whilst protecting the Company and its shareholders from the uncertainty which 
would have arisen as a result of the contractual obligation of the Company to 
acquire the minority interest becoming due." 
 
 
 
 
For more information please contact: 
+-----------------------------------------+------------------------------+ 
| York Pharma plc                         | Tel: +44 (0) 1908 764020     | 
| Richard Anderson, Chief Executive       |                              | 
| Officer                                 |                              | 
| Ian Miscampbell, Chief Financial        |                              | 
| Officer                                 |                              | 
+-----------------------------------------+------------------------------+ 
| Collins Stewart Europe Limited          | Tel: +44 (0) 207 523 8350    | 
| Hugh Field / Adam Cowen                 |                              | 
+-----------------------------------------+------------------------------+ 
| FinnCap                                 | Tel: +44 (0) 207 600 1658    | 
| Geoff Nash                              |                              | 
+-----------------------------------------+------------------------------+ 
| Financial Dynamics                      | Tel: +44 (0) 207 831 3113    | 
| Ben Brewerton / Emma Thompson           |                              | 
+-----------------------------------------+------------------------------+ 
 
 
Collins Stewart Europe Limited, which is authorised and regulated in the United 
Kingdom by the Financial Services Authority, is acting as Nominated Advisor and 
broker to York Pharma plc and will not be responsible to anyone other than York 
Pharma plc for providing the protections afforded to clients of Collins Stewart 
Europe Limited nor for providing advice in connection with any other matter 
referred to herein. 
About York Pharma PLC 
York Pharma is a pharmaceutical Group, established in 2003, which develops, 
markets and supplies branded dermatological products to pharmaceutical 
wholesalers, hospitals and general practitioners within the field of 
dermatology. 
 
 
 
 
=-o-- 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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