MAYNARD, Mass., Nov. 7, 2016 /PRNewswire/ -- 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withdrawn its registration statement on Form 10, initially filed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 £20.3 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 £1:$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 AquAdvantageâ 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.
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SOURCE AquaBounty Technologies, Inc.