Pharma Group sale details:Looks good to these eyes....
QA
Bioniche Signs Definitive Purchase Agreement for Sale of Pharma Group to RoundTable Healthcare Partners
08:00 EST Friday, January 13, 2006
- Potential Value to Bioniche of Approximately $33 Million U.S. -
BELLEVILLE, Ontario, Jan. 13 /PRNewswire-FirstCall/ -- Bioniche Life Sciences Inc. (TSX: BNC), a research-based, technology-driven Canadian biopharmaceutical company, today announced that it has entered into a definitive purchase and sale agreement for the sale of Bioniche Pharma Group Limited ("the Pharma Group"), its sterile injectibles manufacturing subsidiary based in County Galway, Ireland, to RoundTable Health Partners, a U.S. healthcare focused private equity group based in Lake Forest, Illinois.
This transaction was first announced on October 5, 2005 and is expected to close later this month. With a combination of cash, debt assumption, equity in the business going forward and deferred sale proceeds, this transaction has a potential value to Bioniche of approximately $33 million U.S. ($38.4 million Cdn.).
The sale achieves several corporate objectives for Bioniche: eliminating a significant portion of its consolidated debt; providing future liquidity that will be directed to core operations; and helping to maximize the success of the Pharma Group while allowing Bioniche an ongoing minority ownership position.
Upon closing of this transaction, Bioniche will have sufficient cash to repay the $7.5 million U.S. ($8.7 million Cdn.) bridge loan obtained from Laurus Funds, which was part of an $18.5 million U.S. ($21.5 million Cdn.) financing that was closed on December 8, 2005.
The balance of the proceeds will be applied to working capital and the Company's ongoing requirements in its areas of strategic focus. "Our proprietary cancer treatment -- Mycobacterial Cell Wall-DNA Complex (MCC) -- is entering a planned multi-centre Phase III/pivotal clinical trial in superficial bladder cancer," said Graeme McRae, President & CEO of Bioniche Life Sciences Inc. "At the same time, our E. coli O157:H7 cattle vaccine is nearing licensing, with final regulatory submission to the USDA expected early this year. These two key projects require significant attention and investment at this late stage of their development."
Mr. McRae added, "The Pharma Group business unit was established by Bioniche in 1992 as a means of generating revenue to support the Company's strategic research and development projects. At this point in the Pharma Group's development, it requires continued investment to reach its full potential. RoundTable's extensive experience in building companies in the sterile injectibles field gives us great confidence in the Pharma Group's future."
The Bioniche unaudited pro forma balance sheet is expected to significantly improve following this transaction by the:
* Removal of all Pharma Group liabilities, both current and long-term ($32
million Cdn. at September 30, 2005).
* Repayment of the bridge loan from Laurus Funds ($7.5 million U.S./$8.7
million Cdn.).
The Bioniche senior debt obligations post-transaction include a new U.S. financing of $10.5 million U.S. ($12.2 million Cdn.) that was closed on December 8, 2005. Under the terms of this financing, certain conversion privileges may apply.
As a result, the total liability to equity ratio of Bioniche Life Sciences Inc. should improve significantly from 3.5:1.0 at September 30, 2005 to approximately 1.0:1.0 post-transaction.
Under the terms of the transaction, Bioniche will receive:
* Approximately $13.25 million U.S. ($15.4 million Cdn.) in cash, prior to
transaction-related expenses.
* euro 1.0 million ($1.4 million Cdn.) for each of the calendar years
ending December 31, 2006 through December 31, 2010 inclusive (for a
total of euro 5.0 million, or $7.0 million Cdn.), provided that annual
non-U.S. net sales of Suplasyn(R) (a Bioniche-developed proprietary
product for the treatment of osteoarthritis (OA) of the knee) exceed
euro 6.5 million ($9.1 million Cdn.), and reducing in proportion if
sales are less than euro 6.5 million ($9.1 million Cdn.) in any such
calendar year.
* Up to $11.5 million U.S. ($13.4 million Cdn.) in aggregate performance
payments, calculated as 50% of the amount by which the EBITDA (adjusted
to primarily exclude the impact of acquisitions) of the Pharma Group for
each of the fiscal years ending June 30, 2007 through June 30, 2010
exceed the following thresholds: $10 million U.S. ($11.6 million Cdn.)
(2007); $12.5 million U.S. ($14.5 million Cdn.) (2008); $15.6 million
U.S. ($18.1 million Cdn.) (2009); and $15.6 million U.S. ($18.1 million
Cdn.) (2010).
* A 10% equity position in the new Pharma Group.
Blackmont Capital Inc. advised Bioniche on this transaction.
NOTE: The conversion rates used here were obtained from https://www.x-rates.com and represent the rates as at 3:00 p.m. EST on January 12, 2006.
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