Commenting, ImmuPharma’s Chairman, Tim McCarthy, said:
“We are delighted to be welcoming back Lanstead as a significant shareholder of the Company. Lanstead has been very supportive of the Company since their first investment in 2016 and this latest subscription demonstrates their continued support and the alignment of both the Company and Lanstead’s belief of the potential of substantial value enhancement for shareholders in the future execution of the Company’s recently stated corporate strategy.”
ImmuPharma PLC (LON:IMM), the specialist drug discovery and development company, today announced that it has entered into a subscription agreement with Lanstead Capital Investors LP, an institutional investor, together with a related sharing agreement, raising approximately £2.66 million.
· Subscription for 26,565,200 new ordinary shares of 10 pence each in the Company (“Ordinary Shares”) (the “Subscription Shares”) by Lanstead at an issue price of 10 pence per Subscription Share (the “Issue Price”) to raise gross proceeds of approximately £2.66 million, representing approximately 19% of the Company’s existing issued share capital (the “Subscription”). The issue price represents a 26.5% discount to the closing mid-market price on 25 June.
· This current subscription by Lanstead is the maximum amount under the Company’s existing authorisation of disapplication of pre-emption rights and represents a further supportive investment in the Company by Lanstead following the £4.43 million investment in February 2016, from which the Company ultimately received just over £5.0 million from Lanstead including the additional funds received through the Sharing Agreement over time.
· The £2.66 million gross proceeds of the Subscription will be pledged by the Company pursuant to the Sharing Agreement with Lanstead. The Sharing Agreement, details of which are set out below, entitles the Company to receive back those proceeds on a pro rata monthly basis over a period of 24 months, structured to commence two months following the admission to AIM of the Subscription Shares, subject to adjustment upwards or downwards each month depending on the Company’s share price at the time. The Sharing Agreement provides the opportunity for the Company to benefit from positive future share price performance.
· The Company has also agreed to issue to Lanstead 1,328,290 Ordinary Shares (the “Value Payment Shares”) in connection with entering into the Sharing Agreement.
· The proceeds of the Subscription will be used primarily to fund the execution of the Company’s corporate strategy as announced on 7 May 2019. This includes progressing Lupuzor™ through both corporate partnerships and regulatory pathways and proactively pursuing the ‘spin-off’ of the subsidiary companies, Ureka and ELRO, in order to unlock their future potential and enhance value to shareholders.
· Stanford Capital Partners acted as Coordinator and Broker on the transaction.
Further information on the Subscription
Pursuant to the subscription agreement between the Company and Lanstead (the “Subscription Agreement”), 26,565,200 Subscription Shares will be issued to Lanstead at 10 pence per Subscription Share for an aggregate subscription of £2.66 million before expenses.
The Subscription proceeds of £2.66 million will be pledged to Lanstead under the Sharing Agreement under which Lanstead will then make, subject to the terms and conditions of that Sharing Agreement, monthly settlements (subject to adjustment upwards or downwards) to the Company over 24 months, as detailed below. As a result of entering into the Sharing Agreement the aggregate amount received by the Company under the Subscription and the related Sharing Agreement may be more or less than £2.66 million, as further explained below.
The Subscription Shares and the Value Payment Shares will rank pari passu with the existing Ordinary Shares and application has been made to the London Stock Exchange for admission to trading on AIM (“Admission”). The Subscription is conditional, inter alia, on Admission and there being: (i) no breach of certain customary warranties given by the Company to Lanstead at any time prior to Admission; and (ii) no force majeure event occurring prior to Admission. Admission and dealings is expected to commence at 8.00am on 1 July 2019.
The Sharing Agreement
As part of the Subscription, the Company will enter into the Sharing Agreement, pursuant to which Immupharma will return the £2.66 million gross proceeds of the Subscription to Lanstead. The Sharing Agreement will enable the Company to share in any share price appreciation over the Benchmark Price of 13.3333 pence (as defined below). However, if the Company’s share price is less than the Benchmark Price then the amount received by the Company under the Sharing Agreement will be less than the gross proceeds of the Subscription which were pledged by the Company to Lanstead at the outset.
The Sharing Agreement provides that the Company will receive 24 equal monthly settlement amounts as measured against a benchmark share price of 13.3333 pence per Ordinary Share (the “Benchmark Price”). The monthly settlement amounts for the Sharing Agreement are structured to commence two months following the admission to AIM of the Subscription Shares.
The Benchmark Price is a 2% discount to 13.60 pence, being the closing mid-market price of the Company’s Ordinary Shares on 25 June 2019.
If the measured share price (the “Measured Price”), calculated as the average volume weighted share price of the Company’s Ordinary Shares over a period of 20 trading days prior to the monthly settlement date, exceeds the Benchmark Price, the Company will receive more than 100 per cent. of that monthly settlement due on a pro rata basis according to the excess of the Measured Price over the Benchmark Price. There is no upper limit placed on the additional proceeds receivable by the Company as part of the monthly settlements and the amount available in subsequent months is not affected. Should the Measured Price be below the Benchmark Price, the Company will receive less than 100 per cent. of the monthly settlement calculated on a pro rata basis and the Company will not be entitled to receive the shortfall at any later date.
For example, if on a monthly settlement date the calculated Measured Price exceeds the Benchmark Price by 10 per cent., the settlement on that monthly settlement date will be 110 per cent. of the amount due from Lanstead on that date. If on the monthly settlement date the calculated Measured Price is below the Benchmark Price by 10 per cent., the settlement on the monthly settlement date will be 90 per cent. of the amount due on that date. Each settlement as so calculated will be in final settlement of Lanstead’s obligation on that settlement date.
Assuming the Measured Price equals the Benchmark Price on the date of each and every monthly settlement, Immupharma would receive aggregate proceeds of £2.66 million (before expenses) from the Subscription and Sharing Agreement.
The Company will pay Lanstead’s legal costs incurred in the Subscription and in entering into the Sharing Agreement and, in addition, has agreed to issue to Lanstead 1,328,290 Value Payment Shares.
In no event will fluctuations in the Company’s share price result in any increase in the number of Subscription Shares issued by the Company or received by Lanstead. A decline in the Company’s share price would not result in any advantage accruing to Lanstead and the Sharing Agreement allows both Lanstead and the Company to benefit from future share price appreciation.
Total Voting Rights
The Subscription will result in the issue of 27,893,490 Ordinary Shares, being 26,565,200 Subscription Shares and 1,328,290 Value Payment Shares. Following Admission the Company’s enlarged issued share capital will comprise 167,360,920 Ordinary Shares with voting rights. The figure of 167,360,920 Ordinary Shares may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure Guidance and Transparency Rules.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 (“MAR”). In addition, market soundings (as defined in MAR) were taken in respect of the Subscription with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.