Trouble with the Hyal Takeover
8/17/99 - Cangene withdraws takeover bid Hyal Pharmaceutical
TORONTO, Aug 17, 1999 (The Canadian Press via COMTEX) -- Cangene Corp. has withdrawn a proposed tender bid for insolvent Hyal Pharmaceutical Corp. in the wake of PricewaterhouseCoopers being appointed Hyal's receiver.
The Mississauga, Ont. company said Tuesday it couldn't satisfy certain conditions of its offer. In particular, it couldn't reach an accord with Hyal's nine debenture holders, who last week sold their $5 million US of securities to SkyePharma PLC of Britain.
John Langstaff, president and chief executive of Cangene, said the company hasn't decided whether it will submit an offer to the receiver for certain Hyal assets.
As part of its proposed eight-cent-a-share Cdn offer, Cangene agreed to provide Hyal with $350,000 of interim operating funds, of which Hyal used $150,000.
Cangene contends the money was lent to Hyal on a secured basis. However, SkyePharma, who petitioned Hyal into receivership, contends that it holds 100 per cent of Hyal's secured debt of about $1 million and $5.2 million US, or 83 per cent of the unsecured debt.
''Maybe that's why we had our lawyer in court Monday,'' Langstaff said, referring to the hearing that appointed the chartered accountants as Hyal's receiver. He said the status of the loan as either secured or unsecured debt remains in dispute.
Robert Holmes, a senior vice-president of PricewaterhouseCoopers, said his firm will begin placing ads in newspapers this week, seeking buyers for Hyal's assets. ''We hope to begin reviewing bids early in September, '' he added.
At the end of 1998, Hyal had assets of $4.8 million Cdn. However, by the end of the first quarter this year, that number had shrunk to $2.1 million.
In addition to its ''drug delivery'' technology and a topical gel for sunspots awaiting marketing approval in the United States, Hyal has about $50 million of tax-loss carry-forwards to tempt potential bidders.
Hyal failed when it was unable to repay a $750,000 demand loan from SkyePharma that made the loan as part of its unsuccessful seven-cent-a-share takeover bid for Hyal.
SkyePharma hopes to parlay its position as Hyal's largest creditor into an offer to buy the company's assets, chief executive Michael Ashton said Monday. (The Globe and Mail)
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