TIDMVERS
RNS Number : 8804Q
Verseon Corporation
23 October 2019
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (596/2014/EU) ("MAR"). WITH THE
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION
SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE
PUBLIC DOMAIN.
October 23, 2019
Verseon Corporation
("Verseon" or the "Company")
Sale-Leaseback of Verseon's Research, Development, and
Operations Facility in Fremont, CA
FREMONT, Calif.-Further to the announcement of October 18, 2019
and pursuant to AIM Rule 15, Verseon Corporation (AIM:VERS), the
clinical-stage pharmaceutical company developing products and
technologies to advance global health, today announces that it is
negotiating a sale-leaseback agreement (the "Sale-Leaseback") with
Catalus Capital Management LLC (the "Purchaser") for the Company's
research, development, and operations facility located at 47071
Bayside Parkway, Fremont, CA (the "Facility"). The final
Sale-Leaseback agreement is expected to consist of substantially
the same terms as laid out below or better.
Upon successful completion of the Sale-Leaseback, Catalus
Capital Management LLC will purchase the Facility from the
Company's wholly owned subsidiary VRH1 for a total cash
consideration of $34.7 million. Net proceeds of the Sale-Leaseback
after real estate broker and closing costs, holdbacks, and
repayment of the $21.7 million mortgage on the Facility (see
announcement dated June 13, 2018) are expected to be approximately
$9.5 million. The Sale-Leaseback is expected to complete on October
29, 2019 local time and will provide working capital for
Verseon.
The Sale-Leaseback will involve a disposal of Company assets,
which, under AIM Rule 15, requires shareholder approval at the 2019
Annual General Meeting ("AGM"), notice of which was given to
shareholders on October 18, 2019. Verseon encourages all
shareholders to vote at the AGM, in person or by proxy. The Proxy
Information Statement and Proxy Form can be downloaded from the
Company's website at
http://www.verseon.com/investor-notices/agm2019.
Details of the Sale-Leaseback are set out in a circular that is
being sent to Shareholders today and will also be made available
for download from the Company's website at www.verseon.com.
For further information, please contact
Verseon Corporation www.verseon.com
Sebastian Wykeham / Tina Schlafly +1 (510) 225 9000
Arden Partners (NOMAD and Broker)
Ruari McGirr / Ciaran Walsh / Dan Gee-Summons
(Corporate Finance) / Fraser Marshall +44 (0) 20 7614
(Equity Sales) 5900
For trade and pharma media enquiries, please contact
Vane Percy & Roberts
+44 (0) 1737 821
Simon Vane Percy 890
The following summary is extracted without material adjustment
from the circular being sent to shareholders. It should be read by
shareholders in conjunction with the circular.
1. Introduction
The Company announced today that, contingent on final
negotiations, it intends to sign a sale-leaseback transaction (the
"Sale-Leaseback") for its research, development, and operations
facility in Fremont, CA (the "Facility") with Catalus Capital
Management LLC (the "Purchaser"). Pursuant to the Sale-Leaseback
Agreement, the Purchaser will acquire the Facility for a total cash
consideration of $34.7 million from the Company's wholly owned
subsidiary VRH1. Simultaneously, the Purchaser and the Company
intend to sign a 10-year lease agreement for the Facility with an
initial monthly rent of $277,000 with 3% annual increases for the
first three years. The final Sale-Leaseback Agreement is expected
to consist of substantially the same terms as laid out in the
Circular or better.
The Sale-Leaseback is intended to provide for working capital
and other business needs of the Company. To expedite the
transaction, the agreed sales price has been set at an
approximately 30% discount to the approximately $51 million balance
sheet value of the Facility as at June 30, 2019. Net proceeds of
the Sale-Leaseback after real estate broker and closing costs,
holdbacks, and repayment of the $21.7 million mortgage on the
Facility (see announcement dated June 13, 2018) are expected to be
approximately $9.5 million.
The Sale-Leaseback is expected to complete on October 29, 2019
local time and will involve a disposal of Company assets, which,
under AIM Rule 15, requires shareholder approval at the 2019 Annual
General Meeting ("AGM"), notice of which was given to shareholders
on October 18, 2019. Verseon encourages all shareholders to vote at
the AGM, in person or by proxy.
The purpose of the Circular is to explain the background to the
Sale-Leaseback and the reasons why the Directors believe the
Sale-Leaseback to be in the best interest of the Company and its
Shareholders.
The AGM, at which the resolution pertaining to the
Sale-Leaseback will be proposed to Shareholders, has been convened
for 9:00 a.m. Pacific Time on October 28, 2019. It is important
that Shareholders complete, sign, and return the Form of Proxy for
use at the AGM. The Directors consider that it is in the best
interest of the Company and its Shareholders to proceed with the
Sale-Leaseback and recommend that Shareholders vote in favor of the
resolutions to be proposed at the AGM for the reasons stated in
paragraph 7 below.
2. Background and reasons for the Sale-Leaseback
Verseon is a clinical-stage technology-driven pharmaceutical
company developing products and technology to advance global
health. The Company is using its proprietary, computational drug
discovery platform paired with a comprehensive in-house chemistry
and biology workflow to build a growing drug development pipeline.
The Company currently has active drug programs in anticoagulation,
diabetic macular edema, hereditary angioedema, metabolic disorders,
and oncology.
During the recent months, market events outside of the Company's
control impacting various external shareholders have put Verseon's
Common Share price under extreme pressure and have negatively
impacted the Company's attempts to raise new capital. In its
interim results announced on September 30, 2019, the Company stated
that it is currently pursuing alternate efforts to raise working
capital, including a refinancing or sale-leaseback of its
headquarters, a bridge debt facility, as well as the previously
announced preferred share offering. As at June 30, 2019, the date
of the Company's most recent interim results, the Company had total
assets of $57.6 million, of which approximately $51 million
reflected the value of the Facility, and cash, cash equivalents,
and short-term investments of $2.3 million.
After careful consideration of all available options and an
evaluation of the Company's working capital requirements, the Board
has decided that an expedited sale-leaseback transaction at a
discount to the balance sheet value of the Facility is in the
Company's best interest to ensure its continued operation as a
going concern.
3. Principal terms of the Sale-Leaseback
The Company and Catalus Capital Management LLC (the "Purchaser")
expect to enter into a Sale-Leaseback Agreement pursuant to which
the Purchaser is expected to acquire the Facility from the
Company's wholly owned subsidiary VRH1, subject to the approval of
the Sale-Leaseback by Shareholders at the AGM.
The principal terms of the Sale-Leaseback Agreement, subject to
changes based on further negotiations, are as follows:
-- The consideration payable by the Purchaser on completion of
the Sale-Leaseback Agreement is a cash sum of $34.7 million, less
holdbacks of $2.23 million for security deposit, various facilities
improvements, and tax assessments.
-- The lease agreement between the Company and the Purchaser is
for a 10-year term with an initial monthly rent of $277,000 with 3%
annual increases for the first three years.
-- The Sale-Leaseback is subject to a PACE financing prepayment
requirement. As disclosed on September 22, 2017, the Company has
closed a PACE financing for the Facility, for which the current
full payout amount of approximately $6.3 million is set to be paid
off by the Company within the next five years. As a security, the
Purchaser will place a priority lien of approximately $9.3 million
on the Company, which will be enforced if: (1) the Company misses
its 2020 PACE repayment tranche of $1.3 million (due by September
30, 2020) or (2) the Company defaults on its rent or real estate
taxes. These lien rights will end when the following occurs: (a)
the Company increases its security deposit to $3.5 million and (b)
the Company can verify at least $20 million of liquid assets.
-- The Sale-Leaseback is expected to close on October 29, 2019
with funds expected to flow to the Company the same day.
The final Sale-Leaseback Agreement would be expected to consist
of substantially the same terms as laid out above or better.
4. Information on the Purchaser
Catalus Capital is a multi-strategy private equity firm founded
in early 2011. It is composed of two strategies: Catalus Growth
Partners, a buyout fund focused on acquiring majority stakes in
growing technology companies, and Catalus Special Opportunities,
focused on finding deep value in corporate, real estate, and
esoteric assets. The flexibility of the firm's mandates sets it
apart from its peers.
Catalus is an experienced middle market investor employing an
entrepreneurial and collaborative approach. The firm has
significant structural flexibility that it utilizes to help its
partners realize their goals.
Catalus was built on a foundation of discipline, attention to
detail, and holding itself to the highest standards of integrity.
It seeks partners that exemplify the same values.
5. 2019 Annual General Meeting
As explained above, the Sale-Leaseback transaction is
conditional upon the approval of Shareholders at the 2019 Annual
General Meeting.
A notice of convening the AGM to be held at 9:00 a.m. Pacific
Time on October 28, 2019 at the Critosphere Cowork Space, 7100
Stevenson Blvd. Fremont, CA 94538, USA, was given to Shareholders
on October 18, 2019. A Form of Proxy to be used in connection with
the AGM is available for download from the Company's website at
http://www.verseon.com/investor-notices/agm2019. For holders of
depository interests in the Company, a Form of Instruction to be
used in connection with the AGM is also available for download from
the Company's website at the above URL. The Record Date for the AGM
is September 30, 2019.
In addition to seeking Shareholder approval for the
Sale-Leaseback, the Shareholders will also be asked to vote on the
re-election of two non-executive Class I Directors (Dr. Thomas
Hecht and Dr. Sangtae Kim) as well as on such other business as may
properly come before shareholders present, in person or by
proxy.
The attention of Shareholders is drawn to the voting
recommendation of the Directors set out in the paragraph entitled
"Recommendation" below.
6. Recommendation
The Board considers the Sale-Leaseback and the passing of the
resolutions to be proposed at the AGM to be in the best interests
of the Company and the Shareholders as a whole. Accordingly, the
Directors recommend that Shareholders vote in favor of the
resolutions to be proposed at the AGM.
7. Consequences of voting against the Sale-Leaseback
The Board believes that the recent performance of the Company's
Common Shares, triggered by events outside the Company's control,
is severely restricting the Company's fundraising options. At
present, the Board considers the Sale-Leaseback the only viable
option for the Company to continue to operate as a going
concern.
8. Working capital requirements and strategy
The net proceeds of the Sale-Leaseback will address the
Company's working capital requirements and other business needs
into early 2020 while it completes the next stage of its
fundraising strategy.
9. Action to be taken
A Form of Proxy for use at the AGM is available for download
from the Company's website at
http://www.verseon.com/investor-notices/agm2019. To be valid, a
Form of Proxy must be completed, signed, and returned in accordance
with the instructions thereon as soon as possible.
For holders of depository interests in the Company's shares, a
Form of Instruction for use at the AGM is available for download
from the Company's website at
http://www.verseon.com/investor-notices/agm2019. To be valid, the
Form of Instruction must be completed, signed, and returned in
accordance with the instructions thereon as soon as possible.
The completion and return of a Form of Proxy or Form of
Instruction will not prevent Shareholders who are entitled to vote
from attending and voting in person at the AGM if they so wish.
Further details relating to voting by proxy are set out in the
Proxy Information Statement and in the Form of Proxy.
10. Documents available
Copies of this document will be available to the public, free of
charge, at the Company's registered office during usual business
hours on any business day from the date of this document until the
date of the AGM. This document is also available on the Company's
website, www.verseon.com. Except to the extent expressly stated in
this document, information on that website, any website mentioned
in this document, or any website directly or indirectly linked to
those websites has not been verified and does not form part of this
document and Shareholders should not rely on it.
Definitions
The following definitions apply throughout this document unless
the context requires otherwise:
Act the Companies Act 2006, as amended
AGM the 2019 annual general meeting of the Company convened for
9:00 a.m. Pacific Time on October 28, 2019 (4:00 p.m. GMT) to
approve resolutions, including the Sale-Leaseback, or any
adjournment of it
AIM the market of that name operated by the London Stock
Exchange
AIM Rules the AIM Rules for Companies published by the London
Stock Exchange, as amended from time to time
Arden Arden Partners plc, the Company's nominated adviser and
broker
Board or Directors the directors of the Company, whose names are
set out on page 5 of the circular
Purchaser or Catalus Capital Catalus Capital Management LLC, the
purchaser of the Facility pursuant to the Sale-Leaseback
Circular or the Document the circular dated October 23, 2019
Common Shares the AIM-listed common shares in the share capital
of the Company
Company Verseon Corporation, incorporated and registered in the
State of Delaware, USA, with registration number 3549267
Computershare the Company's registrar, Computershare Investor
Services (Jersey) Limited, whose address is set out on page 5 of
this document
Facility the Company's research, development, and operations
facility located at 47071 Bayside Parkway, Fremont, CA, 94538,
USA
FCA the Financial Conduct Authority
Form of Instruction the form of instruction for use at the AGM
by holders of depository interests in the Company's shares that is
available for download from the Company's website at
http://www.verseon.com/investor-notices/agm2019
Form of Proxy the form of proxy for use by Shareholders at the
AGM that is available for download from the Company's website at
http://www.verseon.com/investor-notices/agm2019
FSMA the Financial Services and Markets Act 2000, as amended
LSE London Stock Exchange plc
Notice of Meeting or the notice of the 2019 AGM issued by the
Company on October 18,
Notice of AGM 2019
Sale-Leaseback the sale-leaseback transaction for the Facility,
to be effected pursuant to the Sale-Leaseback Agreement
Record Date the record date for the 2019 AGM, September 30,
2019
Sale-Leaseback Agreement the expected agreement between the Company and the Purchaser
or Agreement relating to the Sale-Leaseback of the Facility
Shareholders the holders of the Company's Common Shares
- Ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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