FRIDAY 24 FEBRUARY 2006
CONJUCHEM ANNOUNCES REORGANIZATION AND NON-DILUTIVE FUNDING
MONTREAL, Feb. 24 - ConjuChem Inc. (TSX: CJC) today announced today that it has entered into an agreement with 1211417 Alberta Inc, an investor group led by Sheldon Reid, a co-founder of Capitol Energy Resources Ltd ("Investor Group") to recapitalize and reorganize the Company's business, providing ConjuChem with a non-dilutive capital injection of $6.4 million.
Pursuant to the agreement, the Investor Group will invest $6.4 million in ConjuChem by way of convertible debentures. ConjuChem will subsequently transfer its existing assets (including the $6.4 million proceeds) and liabilities to a subsidiary company ("Newco"), the shares of which will be distributed to ConjuChem's current shareholders on a onefor- one basis. Existing shareholders of ConjuChem will retain their equity interest. Current holders of stock options and warrants of ConjuChem will exchange their existing options and warrants for options and warrants in Newco. Newco will also assume the current Senior Convertible Notes of ConjuChem. As part of the reorganization, Newco will maintain a Toronto Stock Exchange (TSX) listing.
The restructuring will be completed by way of a plan of arrangement to be approved by the Quebec Superior Court and ConjuChem security holders (by a majority of at least 75% of the securityholders voting). The transaction is also subject to all necessary regulatory approvals, including approval of the TSX and the receipt by the Board of Directors of ConjuChem of a favourable fairness opinion to be provided by an independent third party financial advisor. An independent committee of the Board of ConjuChem established in connection with the arrangement and the loan transaction referred to below determined that they are in the best interests of the Company and its shareholders. Subject to these conditions, the Board has unanimously approved the transaction.
Following the transaction, Newco will change its name to "ConjuChem Biotechnologies Inc." and, fuelled by a nondilutive capital injection of $6.4 million, continue to advance a pipeline of next-generation peptide therapeutics developed by ConjuChem toward commercialization. The current management of ConjuChem will continue in the same capacity with Newco.
Newco will grant the current holders of Senior Convertible Notes and warrants of ConjuChem, as contemplated by the trust indentures governing such instruments, additional common shares of Newco (or a cash equivalent) upon conversion or exercise of the notes or warrants, respectively, having a value equivalent to the value at such time, if any, of the shares they would have retained in the existing entity as a result of this transaction, the whole subject to a maximum aggregate amount of $4.0 million.
ConjuChem was advised on the reorganization transaction by Orion Securities Inc. Concurrent with the reorganization transaction, ConjuChem has entered into a loan transaction with Baker Bros. Advisors, LLC which will provide ConjuChem with a short term loan of $6.4 million in order to effectively provide the Company with access to the proceeds from the non-dilutive funds resulting from the reorganization prior to its completion. "The combination of these two transactions provides ConjuChem with additional liquidity with which to deliver on short term milestones and enhance the value of our technology platforms. The structuring of these transctions is highly positive for our stakeholders as it strengthens our balance sheet without dilution," said Lennie Ryer, Vice-President and Chief Financial Officer. "Our shareholders will maintain their current interest in ConjuChem and, at the same time, receive an equity interest in a oil and gas venture."
Additional details regarding the transaction will be provided to shareholders in an information circular expected to be mailed in March 2006. Completion of the transaction is expected to occur in April 2006.
About ConjuChem
ConjuChem, developer of next generation medicines from therapeutic peptides, is creating long-acting compounds based
on bioconjugation platform technologies. When applied to peptides, the Company's systemic DAC™ Technologies enable
the creation of new drugs with significantly enhanced therapeutic properties as compared to the original peptide. The
Company is developing compounds to treat various disorders including diabetes, human growth deficiencies and
HIV/AIDS.
Detailed descriptions of the Company can be viewed on the Company's website www.conjuchem.com
Forward-Looking Statements
Some of the statements made herein constitute forward-looking statements. These statements relate to future events or
our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause
ConjuChem's actual results, performance or achievements to be materially different from those expressed or implied by
any of the Company's statements. Actual events or results may differ materially. We disclaim any intention, and assume
no obligation, to update these forward-looking statements.
For more information, please contact:
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Lennie Ryer, CA Vice President Finance, CFO ConjuChem Inc. 514-844-5558 ext 224 ryer@conjuchem.com |
James Smith Investor Relations The Equicom Group Inc. 416-815-0700 ext. 229 jsmith@equicomgroup.com |