TIDMABTU
RNS Number : 5085O
Aqua Bounty Technologies, Inc.
07 November 2016
7 November 2016
AquaBounty Technologies Inc.
("AquaBounty" or the "Company")
Filing of Form 10 with the Securities and Exchange
Commission
and conditional equity subscription from Intrexon
AquaBounty Technologies, Inc. (AIM: ABTU; OTC: AQBT), a
biotechnology company focused on enhancing productivity in
aquaculture and a majority-owned subsidiary of Intrexon Corporation
(NYSE: XON) ("Intrexon"), announces that it has filed a
registration statement for its common shares ("Common Shares") in
the United States and has agreed to a conditional equity
subscription from Intrexon.
Registration Statement
Further to the Company's announcement of 12 October 2016 that it
had voluntarily withdrawn its registration statement on Form 10,
initially filed with the U.S. Securities and Exchange Commission
("SEC") on 25 April 2014, AquaBounty now announces that it has
filed a new Form 10 (the "New Registration Statement") with the SEC
to register its Common Shares pursuant to Section 12(b) of the
Securities Exchange Act of 1934. A copy of the New Registration
Statement is available on www.sec.gov and on the Company's website:
www.aquabounty.com.
To help AquaBounty satisfy the initial listing requirements for
listing its Common Shares on the NASDAQ exchange in the United
States, the Company has agreed to an equity subscription from, and
a conversion of the outstanding convertible debt held by, Intrexon.
Additionally, Intrexon plans to distribute a share dividend to its
shareholders of a portion of its holding of AquaBounty Common
Shares, further details of which are set out below.
Equity Subscription
The Company executed a share purchase agreement ("Share Purchase
Agreement") with Intrexon today for the issuance and sale of
72,632,190 Common Shares (subject to adjustment to give effect to
any share dividend, share split, combination, or other similar
recapitalization, the "Subscription Shares") raising $25.0 million
(approximately GBP20.3 million) before expenses (the
"Fundraising"). This equity subscription is conditional, inter
alia, on admission of the Subscription Shares to trading on AIM
("Admission") as well as the approval of the Company's listing on
NASDAQ. This funding will help AquaBounty satisfy certain equity
requirements for its listing on NASDAQ as well as provide funding
for its ongoing working capital and investment requirements to
progress its strategy, as detailed below. The issue price of the
Subscription Shares is 28.0 pence ($0.3442, based on a conversion
rate of GBP1:$1.2293) per share, which represents the closing price
of the Company's Common Shares on AIM on 2 November 2016, which was
the latest practical date for calculation prior to the approval of
the transaction by AquaBounty's Independent Directors.
Debt Conversion and Share Distribution
In conjunction with the filing of the New Registration Statement
and the Fundraising, Intrexon plans to convert the $10.0 million in
principal, plus accrued interest, outstanding on its convertible
loan with AquaBounty into approximately 36.7 million new Common
Shares (the "Conversion Shares") at a price of 23 pence as per the
terms of the convertible loan announced on 24 February 2016,
conditional on these new Common Shares also being admitted to
trading on AIM. The exact number of Conversion Shares will depend
on the date of the conversion, which is expected before year
end.
Intrexon has also expressed its intention to distribute a
portion of its holdings of Common Shares of AquaBounty (the
"Distribution Shares") via a share dividend to its shareholders.
This distribution is intended to help AquaBounty satisfy certain
listing requirements on NASDAQ for publicly held shares. The exact
number of Distribution Shares will depend upon the number of
Conversion Shares issued.
Background
As stated in the Company's interim results announcement of 28
July 2016, the Company had cash and cash equivalents of $1.9
million on 30 June 2016, with $5.0 million remaining on its
convertible debt line with Intrexon. It also noted that these
balances would be sufficient to fund its operations through Q1
2017.
Following advice from its advisors, it was determined that the
Company's near-term need for funds and the legal and regulatory
constraints associated with a public offering of securities to its
shareholders made it impractical and costly to open the Fundraising
to all existing shareholders.
Strategy
Management is evaluating several paths to revenue generation
that follow different timelines, including production of
AquAdvantage(รข) fish at the Company's existing farm in Panama,
purchase of an existing production facility in North America, and
construction of a new production facility in North America. The
Fundraising should provide AquaBounty with sufficient resources to
meet its operational needs for at least the next two years from
Admission as well as its investment requirements to progress its
strategy.
Related party transaction
Two Directors of the Company, Jack Bobo and Rick Sterling, as
employees of Intrexon (the "Intrexon Directors"), recused
themselves from the vote by the Board to approve and authorize the
Company to enter into the Share Purchase Agreement. The Directors
other than the Intrexon Directors (the "Independent Directors"),
along with the Company's officers, negotiated the terms of the
Share Purchase Agreement on behalf of the Company.
As Intrexon is a "substantial shareholder" of the Company, its
participation in the Fundraising constitutes a "related party
transaction" under the AIM Rules. The Independent Directors
determined, having consulted with the Company's nominated adviser,
Stifel Nicolaus Europe Limited, that the terms on which Intrexon is
participating in the Fundraising are fair and reasonable insofar as
the Company's shareholders are concerned.
Admission
The Subscription Shares and Conversion Shares would be issued
subject to Admission, and Intrexon can terminate the Subscription
Agreement prior to completion under certain conditions. The
Subscription Shares and Conversion Shares would be credited as
fully paid and would rank pari passu in all respects with the
existing Common Shares.
Intrexon currently holds 99,114,668 Common Shares (representing
62.92% of the outstanding Common Shares) and has agreed with the
Company to subscribe for all 72,632,190 Subscription Shares in the
Fundraising. Following completion of the Fundraising and the issue
of the Subscription Shares and the Conversion Shares, Intrexon
would have an interest in approximately 78% of the Company's
enlarged share capital before distribution of the Distribution
Shares. The Fundraising is expected to follow the distribution of
the Distribution Shares such that Intrexon's holding never reaches
this level. Intrexon intends to distribute a number of Distribution
Shares sufficient to allow the Company to satisfy the NASDAQ
listing requirements while maintaining an ownership level above 50%
of the Company's enlarged share capital. Based on our expectations,
following Admission of the Subscription Shares and Conversion
Shares, and the distribution of the Distribution Shares, Intrexon
would hold at least 133.7 million Common Shares in the Company,
representing greater than 50% of the enlarged issued share capital.
Application will be made for Admission of the Subscription Shares
and Conversion Shares to trading on AIM, and it is expected that
Admission would occur on or around 30 December 2016.
Existing shareholders that have not participated in the
Fundraising will suffer a dilution following this issue of the
Subscription Shares and the Convertible Shares of approximately
41%.
Reverse Share Split
In order to satisfy the NASDAQ listing requirements related to
pricing of its Common Shares, the Company plans to effect a reverse
share split of its Common Shares effective at the time the New
Registration Statement is declared effective by the SEC. Consistent
with past shareholder approvals, the Company intends to seek
shareholder approval to effect a reverse share split at various
ratios, with the ultimate ratio to be determined by the Company's
Directors. Any such reverse split requires the approval of a
majority of the Company's shareholders, and the Company plans to
convene a general meeting (the "General Meeting") of its
shareholders for that purpose, which is expected to be held on 28
November 2016. The circular in relation to the General Meeting will
be circulated to all shareholders in due course and will contain
further details on the timing of the reverse share split.
The Company expects that, following Admission of the
Subscription Shares and Conversion Shares, the Company's issued
share capital will be approximately 266.9 million Common Shares.
The Company does not hold any Common Shares in treasury. These
figures are before the impact of any reverse split, and the Company
will provide further details on its expected capital structure at
the time it posts the related circular to its shareholders.
Safe Harbour Statement
Some of the statements made in this press release are
forward-looking statements. These forward-looking statements are
based upon the Company's current expectations and projections about
future events and generally relate to the Company's plans,
objectives, and expectations for the development of the business,
including the occurrence and timing of the Fundraising, the
conversion of outstanding amounts under the Company's convertible
loan, the Admission of the Subscription Shares and Conversion
Shares, and the listing of Common Shares on NASDAQ, as well as the
length of time the Fundraising will allow the Company to operate.
Although management believes that the plans and objectives
reflected in or suggested by these forward-looking statements are
reasonable, all forward-looking statements involve risks and
uncertainties and actual future results may be materially different
from the plans, objectives, and expectations expressed in this
press release.
This announcement contains inside information.
Enquiries:
AquaBounty
David Frank, Chief
Financial Officer +1 978 648 6048
Stifel Nicolaus Europe Limited
Stewart Wallace +44 20 7710 7600
Luther Pendragon
Harry Chathli, Claire
Norbury +44 20 7618 9100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
November 07, 2016 06:41 ET (11:41 GMT)
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