Life Science Developments Limited Suspension of trading and potential acquisition (8226L)
October 06 2016 - 1:30AM
UK Regulatory
TIDMLIFE
RNS Number : 8226L
Life Science Developments Limited
06 October 2016
7:30 am on 6 October 2016
Life Science Developments Limited
Suspension of trading in shares and potential acquisition
Since the General Meeting Held in October 2015, the Board of
Life Science Developments Limited (the "Company" or "LIFE") has
been reviewing a number of possible acquisition opportunities with
a view to implementing its investing policy. Against this
background, the Company is now pleased to announce that it has
signed a non-binding (save as regards exclusivity) Term Sheet to
acquire up to 100% of the issued share capital of The Diabetic Boot
Company Limited ("DBC") for new shares in LIFE (the "Acquisition").
The Acquisition, if completed, would result in the Company's
shareholders having at least a minimum of 7 per cent. of the
enlarged group (the "Group") prior to the impact of any associated
fund raising. The precise valuation of DBC will be determined on
Admission to AIM of the combined Group in accordance with agreed
principles set out in the Term Sheet.
DBC, founded in 2010 with the HQ in Buckinghamshire, UK and an
office in Ohio, USA, is a medical appliances manufacturer,
producing patented wearable technology for the treatment of
diabetic foot ulcers ("DFU") under the PulseFlowDF(TM) brand. The
highly specialised device, which allows DFUs the best chance of
healing, received US Food and Drug Administration 510k clearance in
December 2015 for US sales. By combining two established
treatments: firstly, by offloading body weight to reduce pressure
on the ulcer, and secondly, providing intermittent pneumatic
compression to improve the circulation of oxygenated blood to the
ulcer, both optimising wound healing in the diabetic foot. A
patented device, the PulseFlowDF(TM) diabetic boot technology is
unique insofar as it is currently the only solution that is
wearable, allowing the user to walk normally, while the pressure
pumping action is powered by the built-in lithium battery. (Further
information is available at http://www.pulse-flow.net).
Diabetes is a growing problem in every country in the world.
Around 5-15% of diabetics will have a DFU on any given day, and 25%
of all diabetics get an ulcer at some stage in their life. Around
20% of these ulcers do not heal, leading to some part of the foot
or leg being amputated. PulseFlowDF(TM) enables ulcers to heal more
quickly, and will prevent some patients suffering an amputation,
thereby becoming disabled. The five-year survival rate for a
diabetic post amputation is worse than for breast cancer victims.
These figures lead to considerable amounts of money being spent
each year on treating DFUs. For example, the UK spends over GBP600
million annually for this treatment but still amputates around 135
feet or legs per week. In the US, the estimate for patients with
DFUs is approximately 3 million, and that represents DBC's largest
market opportunity. DBC is now approved to begin European and US
marketing PulseFlowDF(TM) as a durable medical appliance.
The proposed transaction with DBC will provide it with a cash
injection and access to capital markets in order to deliver this
sizeable growth opportunity.
The Acquisition is subject, inter alia, to the completion of due
diligence, documentation and compliance with all regulatory
requirements, including the AIM Rules. There can be no guarantee
that all such matters can be completed.
As a precursor to the Acquisition, the Company has also agreed
to provide DBC with a short-term loan ("Loan") of GBP200,000 for
working capital purposes to be drawn down in two tranches, with
GBP78,000 being drawn down immediately and the balance available
subject to certain conditions being satisfied by DBC over the next
7 days. The Loan will pay a coupon of 7 per cent., is unsecured and
is fully repayable on the earlier of 31 March 2017 or the date on
which DBC secures additional equity funding of GBP1,000,000.
Under the AIM Rules, DBC is a related party to the Company,
given that Jim Mellon, a non-executive Director of the Company, has
an approximate 44 per cent. direct and indirect interest in DBC.
Denham Eke is the sole Director of Galloway Limited (a company
which is indirectly wholly owned by Jim Mellon, which is a
shareholder of DBC and accordingly is not considered independent of
the purposes of the AIM Rules). Accordingly, Mitch Alland the
executive Chairman, as the only independent Director, has reviewed
the Loan and having consulted with the Company's Nominated Adviser,
considers that the terms thereof are fair and reasonable in so far
as the Company's shareholders are concerned.
It is also envisaged that the Company will seek to raise
additional funds from both existing shareholders and new investors
to finance the development of the enlarged Group going forward.
As the Acquisition would, if completed, amount to a Reverse
Takeover under the AIM Rules and, as such, requires trading in the
Company's shares to be suspended. This coincides with the scheduled
suspension of trading in the shares in accordance with AIM Rule 15
which, as previously announced, takes effect from 7.30 a.m. this
morning. The Company then has a further six months to complete a
Reverse Takeover, failing which trading in the Company's shares on
AIM will be cancelled.
Should the Acquisition proceed, the Company intends to hold an
Extraordinary General Meeting in due course in order to seek
specific shareholder for the Reverse Takeover under AIM Rule 14 and
associated matters.
Life Science Developments Limited
Denham Eke, Chief Financial Officer
+44 (0)1624 639396
Nominated Advisor and Broker
Beaumont Cornish Limited
Roland Cornish and Felicity Geidt
+44 (0)207 628 3396
This information is provided by RNS
The company news service from the London Stock Exchange
END
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October 06, 2016 02:30 ET (06:30 GMT)
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