Innovotech acquires shares of NexgenRX, Cipher Pharma
2021-01-05 10:10 ET - News Release
See News Release (C-IOT) Innovotech Inc
Mr. James Timourian reports
INNOVOTECH REPORTS ACQUISITION OF SHARES OF LISTED HEALTH SECTOR COMPANIES
Innovotech Inc. has agreed to issue 599,211 common shares of the company at a deemed price of 19 cents per common share for the acquisition of 250,000 NexgenRx Inc. shares and 60,000 Cipher Pharmaceuticals Inc. shares. The company currently does not hold any of the mentioned shares prior to this acquisition. The transaction is valued at $113,850, calculated at the closing price of NexgenRx at 22.5 cents per share, and Cipher at 96 cents per share on Jan. 4, 2021.
The NexgenRx and Cipher shares are being acquired from Lonsdale Capital Corp. in a non-arm's-length transaction that will be subject to regulatory approval by the TSX Venture Exchange, and these shares are intended to be held as long-term investments. A written submission has been made to the TSX-V for the required approval of this acquisition.
As reported in sequential management discussion and analysis, the company has been seeking to grow through whole company acquisitions, and it will continue to do so; however, in the interim, the company believes that fractional strategic acquisitions as outlined herein can provide superior long-term returns on investment with no increase in costs, at lower dilution of equity than whole company acquisitions, while adding flexible liquidity. The opportunity to trade shares for shares in this transaction has the result of expanding the company's already strong balance sheet while providing diversification into other biotechnology and health industry segments.
The issuance of shares to an insider pursuant to the acquisition will constitute a related party transaction as defined under Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. The acquisition will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101. In particular, the company anticipates that the exemptions set out in paragraphs (a) and (b) in Section 5.5 of MI 61-101 are applicable since the aggregate consideration to be paid by the related party will not exceed 25 per cent of the market capitalization of the company and the company is not listed on the Toronto Stock Exchange, but only on the TSX Venture Exchange. In addition, regarding the minority shareholder approval exemptions, the independent directors have determined that the exemptions set out in paragraphs (1)(a) and (b) in Section 5.7 of MI 61-101 are applicable in that the aggregate consideration to be paid by the related party will not exceed 25 per cent of the market capitalization of the company, the distribution of the securities to the related party will have a fair market value of not more than $2.5-million and the company is not listed on the Toronto Stock Exchange, but only on the TSX Venture Exchange.
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