VANCOUVER, BC, Oct. 4, 2023 /CNW/ - Kalon Acquisition Corp. ("Kalon") (TSXV: KAC.P) and Pharmachal Health Group Pty Ltd, an arms-length pharmaceutical, medical device and veterinary company based in Melbourne, Australia ("Pharmachal"), are pleased to announce that they have entered into a term sheet dated September 29, 2023 (the "Term Sheet").
About Pharmachal
Pharmachal is a Melbourne-based pharmaceutical development company specialising in nano drug-delivery. Pharmachal's Nano Drug Delivery System ("NDDS") is the only patent-certified, clinically-trialed and approved formulae that releases an active nanoparticle drug encapsulated in oil into the blood. Its 3% lidocaine NDDS product NOPAYNE™, which was developed under the supervision of renowned burns doctor Professor Fiona Wood AO, is in the final stages of commercialisation and is expected to provide breakthrough relief for burns, cuts, wounds and a range of other indications. Pharmachal was incorporated on December 1, 2015, and its controlling shareholders are Charlie Fridlender and Alan Leeming.
Transaction Terms
Pursuant to the terms of the Term Sheet, Kalon and Pharmachal will negotiate and enter into a definitive agreement incorporating the principal terms of the Term Sheet (the "Definitive Agreement"), whereby the parties will combine their respective businesses by way of a share exchange, merger, amalgamation, plan of arrangement, or such other similar form of transaction (the "Proposed Transaction").
Upon completion of the Proposed Transaction, it is anticipated that Kalon will have changed its name to "Pharmachal Health Group Ltd." (the "Name Change") or such other name as Pharmachal may determine (the "Resulting Issuer"). The Proposed Transaction, if completed, will constitute Kalon's Qualifying Transaction (as such term is defined in Policy 2.4 – Capital Pool Companies ("Policy 2.4") of the TSX Venture Exchange (the "TSX-V")). Upon completion of the Proposed Transaction, the Resulting Issuer will carry on the business of Pharmachal and intends to list as a Tier 2 life sciences issuer on the TSX‑V.
It is currently anticipated that with a relative valuation of CAD $20 million for Pharmachal and approximately CAD $2.2 million for Kalon, upon the closing of the Proposed Transaction (the "Closing"), the number of common shares in the authorized share capital of the Resulting Issuer (each, a "Resulting Issuer Share") held by the former shareholders of Pharmachal, including any Resulting Issuer Shares issuable on the conversion of the outstanding Kalon stock options but without giving effect to the Concurrent Financing (as defined below), will be 90% with the remaining 10% held by current shareholders of Kalon.
Pursuant to the terms of the Term Sheet, until the earlier of (i) the execution of the Definitive Agreement, and (ii) the date that is 45 days following the date of the Term Sheet, neither Kalon nor Pharmachal nor any of their affiliates, or any of their respective officers, employees, directors, agents and representatives will take any action of any kind which may reasonably be expected to reduce the likelihood of success of the Proposed Transaction or the satisfaction of any term or condition contained in the Term Sheet.
The completion of the Proposed Transaction is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including but not limited to (i) the negotiation and execution of the Definitive Agreement; (ii) completion of satisfactory technical, legal and general due diligence by the parties; (iii) absence of a material adverse change in respect of either party or the Pharmachal assets included in the Proposed Transaction; (iv) the receipt of shareholder approval for the Proposed Transaction to the extent required by applicable law and policies of the TSX-V; (v) the filing with the applicable securities regulatory authorities of a filing statement or information circular regarding the Proposed Transaction; (vi) the receipt of conditional approval from the TSX-V for the Proposed Transaction and the listing of the Resulting Issuer Shares upon completion of the Proposed Transaction; and (vii) the completion of the Concurrent Financing. There can be no assurance that the Proposed Transaction will be completed on the terms proposed above or at all.
The Proposed Transaction is not expected to be a Non-Arm's Length Qualifying Transaction (as defined in Policy 2.4), and therefore approval from the shareholders of Kalon is not expected to be required. No finders' fees are payable by Kalon in connection with the Proposed Transaction, and Kalon does not anticipate advancing any funds to Pharmachal prior to completion of the Proposed Transaction. Trading in Kalon's common shares has been halted at Kalon's request and the halt is expected to continue pending the negotiation of the Definitive Agreement and the TSX-V's review and acceptance of materials for the Proposed Transaction.
This is an initial press release. Kalon and Pharmachal intend to issue a further press release once the parties have entered into the Definitive Agreement to provide, among other things, the selected financial information related to Pharmachal and additional commercial terms for the Proposed Transaction and the Concurrent Financing.
Concurrent Financing
Immediately prior to or concurrently with Closing, Kalon or a financing vehicle will complete a private placement financing (the "Concurrent Financing") for gross proceeds of at least CAD $2,500,000. The net proceeds of the Concurrent Financing will be held in trust by an escrow agreement and released immediately prior to Closing.
Sponsorship
Sponsorship of a Qualifying Transaction (as such term is defined in Policy 2.4) is required by the TSX-V unless a waiver from the sponsorship requirement is obtained. Kalon intends to apply for a waiver from sponsorship for the Proposed Transaction. There is no assurance that a waiver from this requirement will be obtained.
Management and Board of Directors of Resulting Issuer
It is currently anticipated that management and the board of directors of the Resulting Issuer will, subject to regulatory approval, consist of the following individuals:
Charles Fridlender – Chief Executive Officer and Director
Mr. Fridender has over 30 years' experience in pharmaceutical innovation, development, manufacturing, and marketing. He founded NS Technologies and Norimed International, is a former Director of Komipharn International (Australia) and has held roles in global pharmaceutical companies such as Leo Laboratories Pharmaceuticals. Mr. Fridlender has qualifications in Medical Science, Business Administration, Regulatory and GMP Code of Manufacturing.
Tim Dean, Chief Financial Officer, Chief Operating Officer and Director
Tim Dean has over 30 years' experience in pharmaceutical roles focused on finance, general management and international business development. He held senior roles with Australia's largest pharma company CSL, which included Head of Business Development for its plasma fractionation business. Mr. Dean has also held General Manager and CEO positions in the pharmaceutical industry. His qualifications include a Bachelor Degree in Accounting (CPA) and a Master in Business Administration.
Andrew Mendelawitz, VP Corporate and Investor Relations and Director
Andrew Mendelawitz has extensive experience in senior corporate affairs and investor relations roles with private and listed organisations in mining and energy, technology, and pharmaceutical industries. He is the Honorary Consul to Guatemala in Melbourne and the Secretary of the Diplomatic Corps. His qualifications include a Bachelor's Degree in Marketing and Media and a Master in Business Administration.
Peter Shaerf, Chairman and Director
Peter Shaerf, is currently Chairman of Kalon. He is also Chairman of Delta Corp Holdings Limited, a global logistics company that is scheduled to be listed on the NASDAQ exchange. He is a Director of Interlink Maritime a Bermuda based shipowner and Harbor Harvest who operate a short sea cargo ferry service in the North East of the U.S. He has served on numerous public company boards including serving as Deputy Chairman of Vancouver based Seaspan Corporation. He is a partner in the transportation investment bank, AMA Capital Partners.
Dr. Aishwarya Paliwal, Director
Dr. Aishwarya Paliwal is the Co-founder of Delta Corp Holdings Limited, a global logistics company that is scheduled to be listed on the NASDAQ exchange. She has been instrumental in building the footprint of Delta Corp in India particularly in initiatives though its Foundation and the Sustainability efforts. The outreach is directed towards child education and affordable medical care, medical facilities, and equipment. Dr. Paliwal has also authored several papers in cognitive human psychology & human associative memory.
Jonathan Lotz, Director
Jonathan Lotz is the senior lawyer and the founder of Lotz & Company. Prior to Lotz & Company, Mr. Lotz worked as a partner at the international law firm, Heenan Blaikie LLP, where he headed the firm's Vancouver corporate securities and mining practices. He has represented public and private companies in all aspects of corporate and securities matters, and has acted for a variety of clients in different sectors in North and South America, Europe, Asia, Africa, and Oceania. Mr. Lotz is a member of the Bars of British Columbia and New York, and holds a B.Comm and LL.B from the University of British Columbia.
David Moore, Corporate Secretary
David Moore has extensive experience as a CFO and Head of Finance across a range of industries, including pharmaceuticals, media, manufacturing and professional services and was Company Secretary for NetRatings Australia. Mr. Moore is a Chartered Accountant with a Bachelor of Business Degree (Accounting).
Kalon has the right to nominate two individuals to the board of directors of the Resulting Issuer, of which it intends to nominate Peter Shaerf and Dr. Aishwarya Paliwal.
About Kalon Acquisition Corp.
Kalon is a capital pool company within the meaning of the policies of the TSX-V that has not commenced commercial operations and has no assets other than cash. Kalon's business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction under the policies of the TSX-V.
For more information, please refer to Kalon's prospectus available on SEDAR+ (www.sedarplus.ca).
On Behalf of the Board of Directors of Pharmachal Health Group Pty Ltd
Charlie Fridlender
Managing Director
On Behalf of the Board of Directors of Kalon Acquisition Corp.
Peter Shaerf
Chairman and Director
Neither the TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this release.
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSX-V acceptance and if applicable pursuant to TSX-V Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX-V has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.
Forward-Looking Statements:
This news release contains forward-looking statements and forward-looking information (collectively, "forward looking statements") within the meaning of applicable Canadian and U.S. securities legislation. All statements, other than statements of historical fact, included herein including, without limitation, statements about the completion of the Proposed Transaction, the entry into of a Definitive Agreement, the completion of the Concurrent Financing, and the anticipated business plans and timing of future activities of the parties, are forward looking statements. Although each of Kalon and Pharmachal believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: "believes", "will", "expects", "anticipates", "intends", "estimates", "plans", "may", "should", "potential", "scheduled", or variations of such words and phrases and similar expressions, which, by their nature, refer to future events or results that may, could, would, might or will occur or be taken or achieved. In making the forward-looking statements in this news release, the parties have applied several material assumptions, including without limitation, that there will be investor interest in future financings, the receipt of any necessary permits, licenses and regulatory approvals in connection with the future development of Pharmachal's business in a timely manner, the availability of financing on suitable terms for the development of Pharmachal's assets, results of operations, performance, industry trends and future growth opportunities.
Kalon and Pharmachal caution investors that any forward-looking statements by the parties are not guarantees of future results or performance, and that actual results may differ materially from those in forward-looking statements as a result of various factors, including, the inability of Pharmachal to obtain the necessary financing required to conduct its business and affairs, as currently contemplated, the ability of Pharmachal to execute their proposed business plans, changes in general economic conditions, changes in the financial markets, lack of investor interest in future financings, accidents, labour disputes and other risks of Pharmachal's industry, delays in obtaining governmental approvals, permits or financing, risks relating to epidemics or pandemics such as COVID–19, including the impact of COVID–19 on Pharmachal's business, financial condition and results of operations, changes in laws, regulations and policies affecting Pharmachal's operations, the inability of Kalon or Pharmachal to obtain any necessary permits, consents, approvals or authorizations, including of the TSX-V, the timing and possible outcome of any pending litigation, and other risks and uncertainties disclosed in Kalon's latest Management's Discussion and Analysis and filed with certain securities commissions in Canada. All of Kalon's Canadian public disclosure filings may be accessed via www.sedarplus.ca and readers are urged to review these materials.
Readers are cautioned not to place undue reliance on forward-looking statements. The parties undertake no obligation to update any of the forward-looking statements in this news release or incorporated by reference herein, except as otherwise required by law.
SOURCE Kalon Acquisition Corp.
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