I sent the following to the various authorities -amf, tmx x2
Complaint Re Prometic Science de la vie (PLI)
April 18, 2019
Subject : Prometic Life Science inc. (PLI)
Complaint addressed to TSX regarding PLI’s refinancing plan
Dear Sir/Madam,
The present letter is to formally complain about Prometic Life Science (PLI)’s refinancing plan announced on April 15, 2019. I strongly believe that PLI’s current management team and board fallaciously and deliberately acted in order to force the company in a dire financial position. Once in a privileged position, the management team pretended to rightfully refinance in favor of Structured Alpha LP (SALP) and did so against the current shareholder’s interest.
I kindly request that you (TMX) deny the recent application by Prometic Life Sciences for ‘Hardship’ consideration to avoid having to go to its shareholders for approval of the financing and debt conversion plan announced a couple of days ago (15 April 2019).
The plan as announced, wipes out existing retail investors and priced the company at approximately 5% of its 5 day trading average and even less of it 30 day average. It is an attempt to blatantly skirt its obligations to shareholders (other than Thomvest) and prices the company at a substantially lower valuation than that implied or suggested in the most recent guidance provided with 4th quarter 2018 numbers and conference call.
TMX has the responsibility to investigate this fire sale in the context of the recent (and historic) announcements and forward-looking statements by the company indicating that partnerships were imminent.
A decision of this magnitude cannot happen without approval from its retail shareholders and I once again request that the TMX deny this application and investigate this matter.
Examples of misleading statements :
• On October 29, 2018, PLI announced that the dept repayment deadline was to be postponed to 2024. However, the conversion of debt into equity through the refinancing announced on April 15 2019, includes all the interests in this day’s current value, even if the interest payments are not yet due. Once completed, this financial reorganisation will let SALP own 95% of the company.
• Neither schedules nor deadlines were mentioned in regards to the CMC advancements required for FDA’s Ryplasim approbation. “We are close” and “making progress” are not sufficient answers and mislead investors in order to evaluate cash flows and future fund requirements to unlock money before reaching this important milestone.
• April 3rd, 2019 is the first time PLI mentioned being in a "dire financial position." Prior to this date statements were as such "partnerships are around the corner, we have many suitors, FDA approval for Ryplazim (Plasminogen) is near”. Many options were still available before this drastic statement including a minor dilution.
One particularly egregious example of the foul play used is the false determination that the outstanding debt owed to SALP is $229 Mil dollars. However on Oct. 23, 2017 PR announced that it has entered into a binding letter of intent to secure a USD $80 million (CAD $100 million) line of credit (the “Credit Facility”) from Structured Alpha LP (“SALP”), an affiliate of Peter J. Thomson’s investment firm, Thomvest Asset Management Inc. At 8.5% per annum.
Then on Nov. 24, 2018, announced that it has closed the transaction previously disclosed on October 29, 2018 with Structured Alpha LP (SALP), an affiliate of Peter J. Thomson’s investment firm, Thomvest Asset Management Inc., extending the maturity dates of its USD $80 million (CAD $100 million) line of credit and Original Issue Discount Notes (collectively the “Debt”) to September 2024. Prometic also agreed to cancel 100,117,594 existing warrants and grant new warrants to SALP, bearing a term of 8 years and exercisable at a per share price equal to $1.00. The exact number of warrants to be granted will be set at a number that will result in SALP having a 19.99% fully-diluted ownership level in Prometic. As a result of the transaction, the maturity dates of the Debt have been extended to September 2024. Interest will continue to be paid quarterly on the Line of Credit. There will be no additional interest charges in relation to the Original Issue Discount Notes until their original maturity date of July 31, 2022. As of July 31, 2022, said notes will be restructured into cash paying loans bearing an annual interest rate of 10%.
Then on Feb 25, 2019, Prometic Life Sciences Inc. (TSX: PLI, OTCQX: PFSCF) announced that it has secured an additional USD $10 million (CAD $13.2 million) tranche from Structured Alpha LP (“SALP”), an affiliate of Thomvest Asset Management Inc., under the existing loan agreement originally entered into with SALP in November 2017. Other than the extension of this additional tranche, the provisions of the existing credit facilities with SALP remain in full force and effect.
Then finally on April 15, 2019, Prometic announced the restructuring arrangement, whereby the previous loans somehow magically converted to $229 MILLION some $120 MILLION to high because they included all the unearned interest out to 2024 that was NEVER EARNED and NEVER DUE TO SALP!! This further increased the SALP grab of shares to the tune of some additional totally fictious 7-8 BILLION shares (at about 1.521 cents) they would under no conditions be entitled to. The highlights of this press release read in relevant part: the conversion of approximately $229 million of the outstanding debt of Prometic owned by Structured Alpha LP (“SALP”) into Common Shares (the "Debt Conversion") at the Transaction Price, comprising all but $10 million of SALP’s outstanding debt.
This very much shows that they extended the loan to 2024 with the express intention in order to fraudulently claim the interest that far out even though never earned in the coming restructure as part of their plan to take this company from its rightful owners.
That is one of the many reasons SALP wishes to fraudulently take away the right to vote from the shareholders who would never approve this unlawful taking by SALP so they filed for a “hardship” application to the TSX in order to avoid this vote that they know they would lose – rather than give the retail investors their fair share for the billions of investments they already put into this highly promising technology that SALP wants for itself.
Another issue is that the restructure is a document designed to benefit SALP unfairly at the great disadvantage to the retail investors. They limit the “RIGHTS” issue to a maximum of $75 Million. But if all the investors choose to benefit from this bone tossed to the investors then only about one third of the rights shares will be issued thus reducing the “rights” shares per current common share to just 7 shares per right rather than the 20 shares per shares they announced up front on April 15 NR whereas they allow themselves BILLIONS of shares at this highly preferential1.5 cent cost. Again another reason why SALP does NOT want this to go to a shareholders vote that they would lose! Therefore they filed for the “HARDSHIP” application that we respectfully ask you to deny.
The sequence of the various NR clearly show the flow and intent of SALP moving with a plan to this horrible restructure and to NOT PERMIT THE SHAREHOLDERS THEIR RIGHT TO VOTE ON THIS IMPORTANT MATTER THAT SO SERIOUSLY AFFECTS THEM.
Many of the investors feel, the normal course of seeking shareholder votes in support of such a proposal should be had. There are other alternative means for Prometic Life Sciences, including the sale of current assets, financings open to the public or partnership agreements. PLI had at their disposal additional funds from the ATM financing, yet they chose to discontinue and accept additional funds from Thomvest and put the current proposal into process. They could have exercised the ATM in it’s fullest, which would have brought in considerable more assets and may have carried them to the point of filing BLA or at least bought them more time, rather than saying their hands were forced. To this point, on the conference call Monday April 15th, they stated a pivotal deal on their product plasminogen has signed letters of engagement pending filing of BLA. Would Thomvest really let PLI fail when there is a very high degree of confidence that within months this deal would happen, also which they would have full disclosure on?
The irony of a major deal and financial failure of PLI we hope cannot be ignored given the immanent commercialization of their technology. It is clear there were sufficient events leading up to this restructuring that drove the prices down. We have an email from their IR person Frederic Dumais, where he is suggesting to a client the likely failure of PLI, whereas one month prior he was expressing his confidence at the highest level. This email was then posted on the bulleting boards as Mr. Dumais knew it would be. The extreme behaviour of the primary contact for retail investors is absurd at best.
The restructuring is clearly to benefit Thomvest Asset Management. The actions of the Board and officers is questionable, their compensation should be considered in this review as to what was their motives for seeing this as the only alternative? The question needs to be answered, why in the final hours before this company will successfully commercialize a core asset, that over 95% of the value of the company will be put into the hands of two institutions at dire financial cost to many retail investors?
The Board has not governed for the long term view of the organization and not managed its challenges over the last year. There are many opportunities still to move forward without such a simple yet drastic dilution of the organization.
As such, please deny their hardship case and force them to use the other means and the democratic protocols that protect investors, large and small.
Given the behaviour and failure of the board and officers to act in the best interests of all owners, we urge you to deny their hardship case and recommend other means that are fair to all.
The kiss of death was there from the moment that PLI granted SALP a lien on the patents and the IP. That eventually led to no 3rd party willing to step up for the final bridge loan with SALP ahead of them on the lien. The writing was on the wall since then and I have no doubt that the SALP lawyers planned this carefully step by step and engineered the take over they desired. They provided just enough debt to PLI, and cut off the knowingly cut off the funding just as PLI was approaching the finnish line and told them go get the rest of the financing elsewhere, knowing full well that their lien for their debt made that near impossible. Shame on the wealthiest family in Canada for being so greedy. They have taken the life savings from many simple retail investors who trusted them, in order to add a few more billion to their own pockets.
All they had to do was provide the final bridge loan to PLI in an investment they know to be full of tremendous future profits as they were well aware of the potential with a seat on the board and which they could easily afford. Instead they manufactured a crisis for PLI to be able to take over the company, that drove the stock price down so they could take it over.- and now they want to deprive the shareholders of their right to a vote to approve the restructure. A vote they know they would lose. they have applied for a "hardship" exemption to bypass the SH vote so they can do the restructure with impunity. The only hope to stop the restructure is for the tsx to deny the hardship application.
In fact, The slant from promising to dire changed almost over night. PLI knew they were having trouble financing last year and could have made a prudent decision to hire Lazard back then to actually investigate partial or full sale of PLI when PLI were saying that big USA bank valued PLI at $8-10US /share. 5 suitors in advanced negotiations last summer led to nothing despite fibrosis reversal in 5 organs. Nothing to see here - no valid offers, for sure. Then, that conference call 2 weeks ago saying all of a sudden everything was delayed or insufficient data or assays with the quick 50% drop all orchestrated to lead up to this blood bath day. Of course, Thomvest converted $229M after extending loan from 2019 to 2024 and demanded all interest of $90M to 2024 while knowing they would come to this point back in October after all deals had apparently failed or were not considered and instead they rejected deals and have no external validation to cram down little shareholder in this recap? Conference call so negative with deal delays, weak data, uncertainty they can get CMC working after another year, etc etc. Definitely only in best interest of TV. They shouldn’t get away with it. Class action should be investigated with all of the unsurprising sequence of events put forth by management in Thomson’s favour.
The above must be considered in the real light of the many alternative paths available to PLI moving forward by various alternatives that would allow the full repayment to SALP of the amount TRULY OWED THEM and not the trumped up number of $229 Million and thus get rid of the yolk of the liens on patents and IP and move forward. I offer just three of many possibilities. Even bankruptcy would be a better result as I explain below. This understates the self serving purpose of SALP (owned by Thomvest) to take all the future promise away from the current investors and greedily take it for themselves even while they force the current investors to invest yet another $75 Million for a hope of some minor recovery and thus causing the injured party to further take risk and further finance the bankers who will not need to put up yet another $75 Million. All this while they have the gall to promote this without even giving the investors a chance to vote on the future of THEIR company. The alternatives are far superior for the investors (owners) of the company.
1) Sell the entire company to the highest bidder on the open market and payoff the SALP loan with plenty left over for the investors. This company if sold could easily bring $1 to $2 per share which amounts to from $750,000,000 to $1.5 Billion. This will easily pay off the $229 Mil loan form SALP with plenty left over for the investors.
2) Sell the various major parts to separate biopharmas such as PPPS to one, the Plasminogen to another, the PBI4050 antifibrotic platform to yet another. (Or more difficult partner them for up front payments. These are each Billion dollar future revenue streams – the makings of a huge new major biopharma. THIS IS WHY SALP WANTS THIS COMPANY FOR ITSELF AND WISHES TO AVOID A SHAREHOLDER VOTE WHICH THEY KNOW THEY WILL LOSE!! The only reason for the hardship application is so SALP can steal this company from the share holders without their vote! The only emergency here is to insure that the SALP goal is achieved which can only happen if the investors are denied their right to vote!
3) 3) Place the company into bankruptcy and let the judge manage the sale of the assets to the highest bidder (NOT CONTROLLED BY SELF SERVING SALP) and the investors will still be much better off than with this horrible one-sided, self-serving restructure put forward by SALP! Even this worst case option is far superior to the self serving restructure proposed by SALP. THEIR IS NO EMERGENCY HERE OTHER THAN FOR THE DESIRES OF SALP TO TAKE THIS COMPANY FROM THE RIGHTFUL SHAREHOLDERS WHO HAVE BEEN MISLED BY SALP AND THE BOARD OF PLI AND ITS MANAGEMNET (WHO WILL NO DOUBT CONTINUE WITH GREAT OPTIONS IN THE NEW COMPANY FROM SALP FOR LEADING US DOWN THE GARDEN PATH!). April 2019 is the first time they mentioned being in a "dire financial position." Prior to that it's always been "partnerships are around the corner, we have many suitors, FDA approval from Ryplazim (Plasminogen) is near....etc." This significant refinancing is NOT acting in the best interest of shareholders.
They are stealing the life savings of many simple retail investors who trusted them and now they want to steal our RIGHT TO VOTE ON THIS AS WELL.
The following article enunciates the unfairness involved in PLI’s restructuring manifestly in favor of SALP:
https://seekingalpha.com/article/4254907-retail-investors-look-prometics-refinancing-plan
It is now clear that Prometic’s management team and board deliberately induced PLI into insolvency for the benefit of SALP.. As stated above, they are solely responsible for the current precariousness of PLI and PLI’s shareholders shouldn’t have to shoulder the burden of their inaction. The management team and board have basically failed in their fiduciary duty towards the shareholders of PLI.
Therefore, I insist that TSX blocks the upcoming refinancing and requires a vote involving the current shareholders.
They are stealing the life savings of many simple retail investors who trusted them and now they want to steal our RIGHT TO VOTE ON THIS AS WELL. Your decision will have an impact on the trust and confidence investors have in TSX and the market regulations.
Thank you,
Respectfully,