Receptagen Ltd. Announces Recapitalization Plan
BURNABY, British Columbia--(BUSINESS WIRE)--Feb. 7, 1997-- Receptagen Ltd.(TSE
RCG., OTC Bulletin Board RCEPF. ) Receptagen Ltd. (TSE:RCG/OTCBB:RCEPF) today
announced that it has entered into an agreement to recapitalize the Company in three separate
stages. Shareholder approval in writing is required for all three stages of the plan from shareholders
holding a majority of the outstanding shares of the Company. Approval must also be obtained from
the applicable securities regulators. The first stage involves the Company and its subsidiary,
Receptagen Corporation, each filing a Notice of Intention to Make a Proposal on February 7, 1997
under the Canadian Bankruptcy and Insolvency Act in order to protect the assets of the Company
and its subsidiary, and the interest of their creditors and shareholders.
The Company and its subsidiary have 30 days from the date of the filing to submit their Proposal to
the Official Receiver under the Bankruptcy and Insolvency Act unless an extension is granted by the
court, and another 21 days thereafter to present their Proposal to their creditors. Each Proposal
must be approved by a special resolution of the respective creditors and by the court. A special
resolution requires the approval of a majority in number of the creditors voting upon the Proposal,
representing two-thirds in value of their claims. Under the Company's Proposal, it is contemplated
that the creditors will exchange their debt for common shares of InterUnion Financial Corporation ("
Interunion Financial Corp , an investment bank based in Palm Beach, Florida.
InterUnion will then receive units of Receptagen Ltd. at $0.07 (CDN) per unit, the amount of which
depends upon the settlement amount with the creditors. Each unit consists of one common share and
one non-transferable common share purchase warrant (the "Warrant"). Each Warrant will be
exerciseable into one common share at $0.14 (CDN) for a two year period. Receptagen Ltd. will
also pay an advisor's fee to Credifinance Capital Inc. (a wholly owned subsidiary of InterUnion) in
the amount equal to 10 percent of the settlement amount agreed to by the creditors.
The second stage involves a bridge loan from InterUnion of $300,000 (CDN) to maintain the
Company's operations until the proceeds from the proposed Special Warrants Offering are released
to the Company. $100,000 (CDN) is available to the Company as of February 7, 1997. The bridge
loan is secured by a security agreement, granting security in patents and patent rights, and is
convertible into units at $0.105 (CDN) per unit for a period of five years. Each unit consists of
common shares and common share purchase warrants of Receptagen Ltd. pursuant to a secured
convertible debenture.
The third stage involves an agreement between Receptagen Ltd. and Credifinance Securities
Limited, a Canadian investment dealer based in Toronto with seats on both the Montreal and
Toronto Stock Exchanges, and a wholly-owned subsidiary of Credifinance Capital Inc., for a
$2,500,000 (CDN) Special Warrants Offering priced at $0.116 (CDN) per Special Warrant. The
expected closing date for this Offering is on or about May 23, 1997.
There will be a total of 21,551,724 Special Warrants offered for sale. Each Special Warrant will be
exercisable, without payment of additional consideration, for one unit (the "Unit") consisting of one
common share and one non-transferable common share purchase warrant (the "Subscription
Warrant"). Each Subscription Warrant will be exercisable into one common share at $0.14 (CDN)
for a two year period.
The Company has agreed to prepare and file a prospectus qualifying the distribution of the Units and
to use its best efforts to obtain a final receipt for the prospectus within four months from the closing
of the private placement. If a final receipt for the prospectus is not issued within this period, each
Unit will consist of 1.1 common shares and one Subscription Warrant.
The $2,500,000 (CDN) Special Warrants Offering is subject to the Proposals being accepted by
the regulators, shareholders, creditors of the Company and its subsidiary, and the court in order to
become effective. The net proceeds of the Special Warrants Offering will be delivered to the
Company on the closing date of its private placement and will be used to fund research and
development.
Credifinance Securities will act as agent for the Offering and will be paid a commission equal to 7.5
percent of the gross proceeds of the private placement offering. Additionally, Credifinance Securities
will receive a two-year non-transferable warrant to buy that number of common shares of the
Company that is equal to 10 percent of the number of common shares forming part of the Units at
$0.14 (CDN) per share. Credifinance Securities is well known for its research coverage and its
underwriting capability in the biotech sector.
Warren Wheeler, Chief Executive Officer and President of the Company stated, "The management
team is pleased to be working with InterUnion and Credifinance on this transaction. With the track
record that Credifinance has experienced within this industry sector, we are looking forward to
utilizing the proceeds from the Offering to refocus on the research and development of our platform
technologies".
He commented further by adding, "We are anticipating the Proposal will be accepted by our
creditors. One of the primary goals going forward will be to seek out strategic partners and/or
acquisitions to enhance the value of our technology. InterUnion will assist the Company in pursuing
these relationships and will be appointing a person to Receptagen's board".
In an effort to resolve other business matters, the Company has sent formal notice to Pharmaceutical
Consultants and Investments, Inc. ("PCI") regarding its "failure to perform" under the Agreement
entered into on July 18, 1996.
Receptagen has been actively involved in three operations: Receptagen Corporation in Edmonds,
Washington, which has been pursuing worldwide development of proprietary "Growth Blocker"
drugs to induce apoptosis (programmed cell death) in cancer cells; Ryan Pharmaceuticals Inc. in
Edmonds, Washington, which owns the exclusive rights to U.S. commercialization of Coenzyme
Q10 (CoQ10) for use in treating AIDS symptoms; and VWD Distributors which is a wholesale drug
and durable medical equipment (DME) division in Burnaby, British Columbia, Canada.
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