The whole announcement was too big to cut & paste, but here's some stuff on the loan notes
(and here's the link:
moneyworld.uk-wire.com .....
The Secured Loan Note Offer
For every 10 Scheme Shares US$1.10 nominal value of Secured Loan Notes
or for every 1 Xenova ADS Equivalent to 60.44 pence
assuming £1 = $1.82
and so in proportion for any other number of Scheme Shares or Xenova ADSs held.
The Cash and Secured Loan Note Alternative:
For every 10 Scheme Shares 30 pence in cash
or for every 1 Xenova ADS and
US$0.50 nominal value of Secured Loan Notes
In aggregate, equivalent to 57.47 pence assuming
£1 = $1.82
and so in proportion for any other number of Scheme Shares or Xenova ADSs held.
The Cash Alternative:
For every 10 Scheme Shares 45 pence in cash
or for every 1 Xenova ADS
In all circumstances, fractional entitlements to Secured Loan Notes will be
remitted in cash and any cash payment will be rounded down to the nearest whole
penny.
The Secured Loan Notes will be denominated and issued in US Dollars. The
Secured Loan Notes will be issued, credited as fully paid, in multiples of US$1
nominal amount. The Secured Loan Notes will accrue compound interest at a rate
of 15 per cent. per annum.
The equivalent values shown in pence throughout this announcement are calculated
on an exchange rate of £1=US$1.82 and are provided for illustrative purposes.
Except for certain Restricted Overseas Persons those Xenova Shareholders who
have either: (a) not accepted the Proposal; or (b) accepted the Proposal, but
failed to submit a valid Form of Election, will be deemed to have accepted the
Secured Loan Note Offer in the event that the Scheme becomes effective.
3. Valuation of the Scheme
Broadview, which is acting as financial adviser to Celtic, has advised that, in
its opinion, a reasonable estimate of the current value of the Secured Loan
Notes, if they had been in existence at this time, is in the range of between
approximately 78 per cent. and 88 per cent. of their nominal value.
None of the Xenova Directors or Lazard is expressing an opinion as to the
estimated value of the Secured Loan Notes. A letter from Broadview setting out
the basis for its estimate of the value of the Secured Loan Notes will be
contained in the Scheme Document. Before deciding which form of consideration to
receive under the Scheme, Xenova Securityholders should consider the factors set
out in paragraph 4(c) of this announcement and are strongly advised to take
their own independent professional advice.
The following table sets out, for illustrative purposes only and on the bases
and assumptions set out in the notes below, the financial effects on capital
value for a holder of 10 Xenova Shares assuming the Scheme becomes effective. It
compares the value of the Secured Loan Notes issued and the amount of cash due
under the Cash and Secured Loan Note Alternative and the Cash Alternative in
respect of 10 Xenova Shares with the value of 10 Xenova Shares on 23 June 2005
(the last trading day immediately prior to the Announcement Date). In assessing
the financial effects of the Scheme, no account has been taken of any potential
liability to taxation of a Xenova Securityholder or ability to defer taxation.
Secured Loan Cash and Secured Cash
Note Offer Loan Note Alternative
Alternative
MARKET VALUE OF 10 XENOVA SHARES ON 23 JUNE 38.75 38.75 38.75
£/p
Value as at 23 June
Nominal value of Secured Loan Notes (p) 60.44 27.47 -
Current value of Secured Loan Notes(1) (p) 47.14 to 53.19 21.43 to 24.18 -
Cash consideration (p) - 30.00 45.00
____ ____ ____
Total current value (inc. cash where 47.14 to 53.19 51.43 to 54.18 45.00
relevant) (p)
____ ____ ____
Increase in capital value 21.7% to 37.3% 32.7% to 39.8% 16.1%
Total current value (inc. cash where £20.3m to £23.0m £22.2m to £23.4m £19.4m
relevant) (£m)
Value of the entire issued share capital of £26.1m £24.8m £19.4m
Xenova(2)
Value at time of redemption of Secured Loan
Notes
Value assuming redemption at par of Secured 60.44 57.47 45.00
Loan Notes after 24 months(3)(p)
Value assuming redemption or conversion of 79.93 66.33 45.00
Secured Loan Notes at par plus compound
interest after 24 months(4) (p)
Value of Secured Loan Notes after 72 months 139.80 93.54 45.00
(5)(p)
Notes
(1) Based on the Broadview valuation of the Secured Loan Notes in the range of 78% to 88% of their nominal
value.
(2) Based on the nominal value of the Secured Loan Notes and an exchange rate of £1/US$1.82.
(3) Assuming that Celtic Pharma does not exercise its call option to purchase all of the outstanding
Secured Loan Notes before being able to make Pharmaceutical Investment Notes available to Noteholders (in
which event, Noteholders would be entitled to have their Secured Loan Notes redeemed for nominal value
plus Compound Interest) and assuming that, at the time of purchase, Noteholders do not instead choose to
exchange their Secured Loan Notes for Pharmaceutical Investment Notes if and when they are made available.
(4) Assuming either that Celtic Pharma redeems all of the outstanding Secured Loan Notes without making
available Pharmaceutical Investment Notes (in which event, Noteholders would be entitled to have their
Secured Loan Notes redeemed for nominal value plus Compound Interest) or that a Noteholder elects to
receive Pharmaceutical Investment Notes in the event that Pharmaceutical Investments Notes are made
available by Celtic Pharma (in which case, Noteholders would receive Pharmaceutical Investment Notes with
a nominal value equal to the nominal value of the Secured Loan Notes plus Compound Interest). Celtic
Pharma has confirmed that it intends to structure the offering of Pharmaceutical Investment Notes such
that they trade initially at or around par at the time of listing.
(5) Assuming Secured Loan Noteholders choose to receive Pharmaceutical Investment Notes at redemption and
receive Compound Interest for a further four years until redemption of the Pharmaceutical Investment
Notes.
4. The Secured Loan Notes
The Secured Loan Notes will be denominated and issued in US Dollars. The
Secured Loan Notes will be issued, credited as fully paid, in multiples of US$1
nominal amount. The Secured Loan Notes will accrue compound interest at a rate
of 15 per cent. per annum.
(a) Security arrangements and ring-fencing
Celtic Pharma is a public limited liability company incorporated under the laws
of England and Wales for the purposes of making the Proposal. Celtic Pharma is
a subsidiary of Celtic X, a limited liability company incorporated under the
laws of Malta. Celtic X is a subsidiary of Celtic Pharma Capital, also a limited
liability company incorporated under the laws of Malta, which is a subsidiary of
Celtic Pharma Holdings, a Bermuda-based limited partnership established by John
Mayo and Stephen Evans-Freke in October 2004. Celtic Pharma Holdings' general
partner is Celtic Pharma General L.P., which is itself a limited partnership
which is managed by its general partner, Celtic Pharma GP Ltd, a limited
liability company incorporated under the laws of Bermuda. Celtic X Licensee is
a subsidiary of Celtic Pharma Capital.
The Secured Loan Notes will be secured against the rights of Celtic X Licensee
under the Licence Agreement, which are in respect of TA-CD and TA-NIC.
Additionally, Celtic Pharma intends to put in place certain other arrangements
for the benefit of Noteholders as follows:-
• Neither Celtic Pharma Holdings nor any other members of the Celtic
Pharma Group with respect to which Celtic Pharma Capital is a subsidiary shall
receive payments of principal in relation to the Facility Agreement until the
earlier of the Exchange Date and the Long Stop Date save that this shall be
without prejudice to the set-off provisions contained in the Facility Agreement.
• Neither Celtic Pharma Holdings nor any other members of the Celtic
Pharma Group with respect to which Celtic Pharma is a subsidiary will be
entitled to receive any dividends or distributions of capital from any of Celtic
Pharma or Xenova until the earlier of the Exchange Date and 40 days from and
including the Long Stop Date. Any amounts realised in relation to the assets of
either Xenova or its subsidiaries prior to that time will be retained or
reinvested in the development of the assets of Xenova or its subsidiaries until
the earlier of the Exchange Date and 40 days from and including the Long Stop
Date.
• Celtic Pharma will, under the terms of the Secured Loan Note
Instrument, be precluded from incurring any indebtedness or any security
interest relating to such indebtedness which would rank in seniority to the
Secured Loan Note.
• Celtic Pharma shall on or before the issuance of the Secured Loan Notes
procure a guarantor which shall irrevocably and unconditionally undertake with
Celtic Pharma and the Noteholders from time to time on the terms of the
guarantee annexed to the Secured Loan Instrument to guarantee payments in
respect of the principal amount of the Secured Loan Notes and interest (if any)
payable in cash under the Secured Loan Note Instrument. This guarantee will
cease on the earlier of (i) the Exchange Date; and (ii) 40 days from and
including the Long Stop Date.
• As part of this transaction, Celtic Pharma agrees that it will not
grant security in respect of the assets of the Xenova Group save for the Licence
Agreement, save for the ability to grant security in respect of such assets for
the Pharmaceutical Investment Notes (if issued) into which the Secured Loan
Notes will be exchangeable.
(b) Exchange rights into Pharmaceutical Investment Notes and
options to redeem Secured Loan Notes
The Secured Loan Notes will be issued in certificated form and will not be
transferable except to any member of the Celtic Pharma Group or, at the time of
issue, by the ADS Depositary to the registered holders of Xenova ADSs. Celtic
Pharma may transfer its obligations under the Secured Loan Notes to any other
member of the Celtic Pharma Group.
Celtic Pharma has agreed to use all reasonable endeavours to procure that, on or
prior to the Long Stop Date (expected to be in August 2007), Pharmaceutical
Investment Notes will be made available to Noteholders in exchange for the
Secured Loan Notes then held by them and that these Pharmaceutical Investment
Notes will, when issued, be listed and admitted to trading on a Regulated Market
or such other major stock exchange as Celtic Pharma Capital shall reasonably
determine. When such Pharmaceutical Investment Notes are made available, each
Noteholder will be entitled to elect to either:
(i) receive cash in an amount equal to the nominal US Dollar value of
the Secured Loan Notes (but not including any Compound Interest which shall not
be payable) then held by him, and payable in US Dollars; or
(ii) receive Pharmaceutical Investment Notes with a nominal value equal
to the aggregate of: (a) the nominal amount of the Secured Loan Notes then held
by him; and (b) Compound Interest accrued up to (but not including) the date of
issue of the Pharmaceutical Investment Notes. Celtic Pharma has confirmed that
it intends to structure the offering of Pharmaceutical Investment Notes such
that they trade initially at or around par at the time of listing.
In addition, under the terms of the Secured Loan Notes, Celtic Pharma will, at
any time after the Scheme Effective Date and prior to the issue of the
Pharmaceutical Investment Notes, be entitled to exercise the Loan Note Call
Option to require the Noteholders to transfer to it or another member of the
Celtic Pharma Group all of the Secured Loan Notes then held by them for a cash
amount equal to the aggregate of: (a) their nominal value; and (b) Compound
Interest accrued up to but not including the date of transfer.
If Celtic Pharma does not exercise this Loan Note Call Option, Celtic Pharma
will, under the terms of the Secured Loan Note Instrument, be obliged to use all
reasonable endeavours to procure that Pharmaceutical Investment Notes are made
available to Noteholders on or prior to the Long Stop Date and that they are
listed as aforesaid. If Celtic Pharma is unable to make Pharmaceutical
Investment Notes available to Noteholders on this basis, it shall have no
liability to Noteholders for not making them available but will be required to
inform the Noteholders of this on or prior to the Long Stop Date, as a result of
which Noteholders will then be entitled to require Celtic Pharma to purchase
their Secured Loan Notes for a cash amount equal to the aggregate of: (a) their
nominal value as at the date of such notice; and (b) Compound Interest accrued
up to but not including the date of such purchase.
Xenova Securityholders should consider the factors set out in paragraph 4(c)
below of this announcement and are strongly advised to take their own
independent professional advice before deciding whether to accept Secured Loan
Notes under the Scheme....
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