1st Jun 2009 15:48
1 June 2009
HENDERSON MORLEY PLC
(AIM: HML)
("Henderson Morley" or "the Company")
Posting of Offering Document and Strategic Review
Further to the announcement made on the 22 May 2009 regarding the forthcoming Share Offer, Henderson Morley, the AIM quoted biotechnology company, announces that the Offering Document has today been posted to shareholders. A copy of the Offering Document is also available on the Company's website www.henderson-morley.com. All definitions in this announcement shall bear the same meaning as those in the Offering Document.
Highlights
Seeking to raise up to £1 million of new equity at an offer price of 0.25 pence per share to finance working capital needs
As an incentive to existing shareholders one new ordinary share will be issued in addition to every ten new ordinary shares successfully subscribed at 0.25p
Share Offering partially underwritten by Executive Directors and other investors
Potential sale of ICVT for human applications
The Company's strategy is to re-focus as a 'pure play' vaccine company
Share Offering
Henderson Morley is seeking to raise up to £1,000,000 of new equity at an Offer Price of 0.25 pence per share to finance the Company's immediate working capital needs. The Board has decided to structure the fundraising as an open offer allowing existing Shareholders and other investors to participate, if they wish. As an incentive to the Company's existing shareholders, Shareholders on the register at 29 May 2009 who subscribe in the Offer will be issued with one New Ordinary Share in addition to every 10 New Ordinary Shares successfully subscribed at 0.25p. Existing shareholders will receive priority applications in the event of over-subscription.
Underwriters, including certain Directors of the Company, have underwritten 100 million Shares (with a value of £250,000 at the Offer Price); thereby guaranteeing (subject to the Underwriting Agreement) that the Company will receive minimum proceeds of £190,000 (net of expenses) from the Offer. As well as underwriting 50 million new ordinary shares (with a value of £125,000) under the current Offer, members of the Board have invested £1,066,743 in shares in the Company over the past 12 years, and no Board member has sold any of these shares other than to their Self Invested Pension Plan. This demonstrates their belief in the Company's prospects. The Offer opens on 2 June and is expected to close on 23 June 2009.
Enterprise Investment Scheme
Based on the information provided to it, H M Revenue and Customs has confirmed that the Company is a qualifying company under the Enterprise Investment Scheme legislation and providing that the New Ordinary Shares are held by eligible investors for three years, investors should qualify for the relevant tax relief on their investments in the Company.
Strategic Review
Following a strategic review of the business, conducted by professional advisers based both in the UK and overseas, the Company has decided to:
refocus the group; and
modify the business mobile to include the sale of technologies when appropriate.
The Company therefore intends to:
divest the human applications of Ionic Contra Viral Therapy (ICVT)
develop the Animal Health product candidates to a stage where an Animal Health subsidiary may be divested; and
refocus as a "pure play" vaccine company.
Divestment of ICVT
As an important aspect of the re-focussing of the Company as a vaccine company, the Board has resolved to seek buyers for the Company's intellectual property rights, and associated know-how, of the human applications of ICVT. Such a sale will benefit the Company by the provision of funds for the Company to develop its strategy, and a reduction of running costs.
Discussions are on-going with potential purchasers who have signed non-disclosure agreements and/or are currently undertaking due-diligence. Possible deal structures include the outright sale of the Intellectual Property Rights to the technology in all the patented territories, or on a regional basis. The Board anticipates making further announcements as negotiations progress.
Animal Health
The development of pharmaceutical products to treat animals offers a route to market that is faster and less expensive than comparable human products. The Company has a pipeline of six animal health development candidates, in the growth areas of companion animal health and aquaculture.
The Company intends to continue to develop each of the animal health opportunities with a view to forming a specific animal health subsidiary that may be ready for divestment within two years. The Group is investigating means by which external funding, including non-dilutive grants and other investment, may be accessed to develop this activity.
Vaccine company
Henderson Morley intends to become a ''pure play'' vaccine development company within two years. The Directors believe that this will offer the best opportunity for creating Shareholder value because;
The market for vaccines is growing rapidly. According to Datamonitor (Dec 2008), the global vaccine market grew by 46% between 2006-07, and this growth continues to outpace other areas of the pharmaceutical market. Considerable growth is also predicted in cancer vaccines and cancer immunotherapies.
The Company has been assigned the intellectual property rights to PREPS and L-particles, a vaccine technology platform.
The PREPS and L-particles technology has broad potential applicability in the treatment of diseases such as cancer and the potential for the prevention of several important virus infections for which there are no vaccines currently licensed.
The Company has already successfully engineered and manufactured trial batches of its first PREPS and L-particles vaccine candidates.
Collaborations are underway with International research organisations to further develop the technology.
The funding of vaccine development may be aided by grants from central governments, charities and Non-Government Organisations.
Current Trading
The Company reported losses of £490,000 on turnover of £41,000 in the six months ended 31 October 2008. Whilst the full year results to the year ended 30 April 2009 have not yet been announced it is expected that, based on unaudited management accounts, the Company has continued to trade broadly at these levels.
The Directors expect the Company to generate revenue in the next half year from a number of sources, principally from the sale of ICVT for humans and from other licensing income.
Related party
Mr Andrew Knight (Executive Chairman), Dr Ian Pardoe (Chief Executive and Medical Director) and Christopher Pate (Finance Director) are underwriting 32,000,000, 16,000,000 and 2,000,000 New Ordinary Shares respectively in the Offer. The respective participation by the Directors named above constitute related party transactions.
Pursuant to the Underwriting Agreement each underwriter will receive underwriting commission by way of the issue of 1 New Ordinary Share for every 10 New Ordinary Shares underwritten under the Underwriting Agreement.
The independent director, Professor Michael Fowler, having consulted with Brewin Dolphin, considers that the terms of these transactions are fair and reasonable insofar as Shareholders are concerned.
Commenting on the developments Andrew Knight, Executive Chairman said: "By restructuring Henderson Morley as a pure-play vaccine company we believe that we can utilise our strengths in an area where we are already making strong progress".
Expected timetable for the Offer
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2009
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Record Date for Existing Shareholders
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29 May
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Publication of the Document
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1 June
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Offer opens
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9.00am on 2 June
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Offer closes
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3.00pm on 23 June
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Allocation and allotment of Offer Shares
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25 June
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New Ordinary Shares credited to CREST (where applicable)
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1 July
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Commencement of trading of the New Ordinary Shares on AIM
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1 July
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Unsuccessful applicants' monies and balance cheques returned by
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5 July
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Dispatch of share certificates
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10 July
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Offer Details
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Assuming that the Offer is fully subscribed, the share capital of the Company shall be:
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Number of New Ordinary Shares the subject of the Offer
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400,000,000
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Number of Ordinary Shares in issue following completion of the Offer*
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1,131,261,963
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Market capitalisation at the Offer Price
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£2,828,155
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Percentage of enlarged issued ordinary share capital represented by the Offer
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35.4%
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Gross proceeds of the Offer†
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from £250,000 to £1,000,000
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Estimated net proceeds of the Offer:
Full subscription
Minimum (underwritten) subscription
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£784,000 to £875,000†
£190,000
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* includes any extra shares that may be issued to existing shareholders
† dependent on source of subscription (existing shareholders or new Investors)
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---ENDS---
ENQUIRIES:
HENDERSON MORLEY PLC 0121 442 4600
Andrew Knight, Chairman
BISHOPSGATE COMMUNICATIONS LTD 0207 562 3350
(Public Relations)
Maxine Barnes
Gemma O'Hara
BREWIN DOLPHIN INVESTMENT BANKING 0113 241 0126
(Nominated Adviser)
Neil Baldwin
RIVINGTON STREET CORPORATE FINANCE LTD 020 7562 3380
(Broker)
Monisha Varadan
Related Shares:
HML.L