TIDMNSCI
RNS Number : 2300Q
NetScientific PLC
15 February 2019
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM
ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
15 February 2019
NetScientific plc
("NetScientific" or the "Company")
Conclusion of Strategic Review and proposed cancellation of
trading on AIM
1. Background
On 26 November 2018, the Company announced that it had decided
to conduct a review (the "Strategic Review") of the various
strategic options open to it (the "Strategic Options"), including a
sale of the Company to be conducted within the formal sale process
framework under the Takeover Code (the "FSP") or a sale of certain
of its portfolio companies, to maximise value for Shareholders.
On 20 December 2018, the Company provided an update on the
progress of the Strategic Review and FSP (the "Update
Announcement"), informing the market that the Company had not
received any binding or non-binding offers for any of its portfolio
companies nor was it in receipt of any approaches or in discussions
with any potential offeror regarding a sale of the Company, and
that, accordingly, the Board was continuing to assess all of its
Strategic Options, which included the possibility of seeking a
delisting of the Company's Ordinary Shares from admission to AIM in
order to reduce further the Company's costs.
On the same date, the Company also announced that it expected to
have (i) available cash resources of approximately GBP3 million as
at 31 December 2018, (ii) central costs of approximately GBP2
million per annum and (iii) investments of up to approximately GBP5
million in its Portfolio Companies in each of 2019 and 2020, should
they fail to raise external financing.
On 15 January 2019, the Company announced that the status of the
Strategic Review remained as set out in the Update Announcement and
that the Board was not aware of any parties who might make an
approach or initiate discussions regarding the sale of the Company,
and that it had therefore decided to close the FSP.
As at 31 December 2018, the available cash resources of the
Company were approximately GBP3.3 million.
2. Conclusion of Strategic Review
The Company announces today that the Board has now concluded its
Strategic Review, including a review of the benefits and drawbacks
to the Company and its Shareholders in retaining its quotation on
AIM and the Board has concluded it is in the best interest of the
Company and its Shareholders as a whole to adopt a revised
strategy. That revised strategy is to seek to maximise shareholder
value from the Company's portfolio companies (the "Portfolio
Companies") based upon the remaining cash resources of the Company
by:
a) reducing the Company's central functions and costs
significantly such that as much of the remaining cash as possible
can be allocated to the Portfolio Companies on the basis detailed
below and the Company can continue to operate for as long as is
reasonably possible whilst it seeks to generate Shareholder value
from the Portfolio Companies (the "Revised Strategy");
b) assessing the funding requirements of each Portfolio Company
against its prospects of generating a Shareholder return within the
anticipated lifespan of the Company; and
c) subsequently allocating the Company's remaining cash to
managing the Company's stakes in those Portfolio Companies which
the Board believes provide the most realistic prospects of
delivering Shareholder returns within the anticipated lifespan of
the Company.
In line with the Revised Strategy, the Board has concluded that
it is in the best interests of the Company and its Shareholders as
a whole to cancel the admission of the Ordinary Shares to trading
on AIM, re-register the Company as a private limited company and
amend the Company's Current Articles to reflect the Company's new
status as a private limited company (the "Proposals").
In reaching this conclusion, the Directors have considered the
following key factors:
(a) the failure to generate any interest in a sale of the
Company or elicit any binding or non-binding offers for any of its
Portfolio Companies;
(b) the Company's limited cash resources compared to its
expected aggregate expenditure as referred to above and the need to
reduce costs significantly in line with the Revised Strategy;
(c) the reluctance of the market to provide funds of sufficient
quantum to the Company on terms which the Directors believe would
give the Company a realistic prospect of delivering greater value
to its Shareholders than the Directors believe may be achieved by
adopting the Revised Strategy;
(d) the Board's view that there is a limited investor appetite for investing in listed IP commercialisation companies, such as the Company;
(e) the considerable cost, management time, and the legal and
regulatory burden associated with maintaining the Company's
admission to trading on AIM which are, in the Directors' opinion,
disproportionate to the benefits that its AIM quotation now
provides to the Company; and
(f) the Directors' belief that a wind-down of the Company now
would be unlikely to generate material value for Shareholders.
The Directors believe, having discussed in principle the Revised
Strategy with the Company's major Shareholders, that the Revised
Strategy has the most realistic potential to deliver value for the
Shareholders. The Directors have therefore concluded that it is in
the best interest of the Company and Shareholders as a whole to
seek the proposed Cancellation at the earliest opportunity.
The Company is therefore distributing to Shareholders today a
circular containing a resolution (the "Resolution") to approve
implementation of the Proposals.
3. Off-market trading facility
The Directors are aware that certain Shareholders may be unable
or unwilling to hold Ordinary Shares in the event that the
Cancellation is approved and becomes effective. Such Shareholders
should consider selling their interests in the market prior to the
Cancellation becoming effective.
However, the Company intends to make arrangements for an
off-market trading facility to facilitate Shareholders to trade in
the Ordinary Shares, which will be put in place from the date of
the Cancellation for at least one year. The details of this trading
facility will be announced prior to the date of the
Cancellation.
4. Current Trading
The Company released its interim results for the six months
ended 30 June 2018 on 28 September 2018.
Since that date there are the following updates on the Company
and its Portfolio Companies:
(a) Central costs have continued to be incurred at a similar rate;
(b) Vortex Biosciences ("Vortex") entered into a global
manufacturing partnership agreement with STRATEC Consumables GmbH
to produce a customised chip, a crucial component of Vortex's
automated liquid biopsy platform, VTX-1. Vortex also presented a
study that demonstrates the feasibility of combining its technology
with impedance spectroscopy to improve the analysis of circulating
tumour cells ("CTCs"). The researchers believe the results provide
feasibility for label-free, reliable, fully-integrated cell
enumeration, whilst keeping the cells collected intact for
downstream transcriptomic, genomic or proteomic analysis;
(c) Glycotest, Inc. ("Glycotest") agreed to a $10m Series A
financing round with Shanghai Fosun Pharmaceutical Co., Ltd., a
leading healthcare group based in China. The transaction has been
approved by the Chinese ODI (outbound direct investment) committee
and the first tranche of investment has been received;
(d) ProAxsis Ltd ("ProAxsis") had two products selected for
inclusion in the BRIDGE study, a major upcoming clinical trial
funded by the European Respiratory Society ("ERS"), following
receiving a CE Mark for its ProteaseTag(R) Active Proteinase-3
Immunoassay;
(e) Wanda, Inc. ("Wanda") launched its new digital health
application, Wanda CareLink(TM). This application allows the Wanda
Patient Management solution to be used on a wide variety of
internet-enabled devices including iOS and Android devices. This
enhances the ability for patients and doctors alike to improve
clinical and financial outcomes. Wanda has signed a pilot contract
with ACO Florida, and 50 patients have been enrolled thus far.
Wanda also has several pilot contracts pending with key home health
agencies; and
(f) PDS BioTechnology ("PDS") announced that the respective
boards of directors of PDS and Edge Therapeutics, Inc. approved a
definitive merger agreement, which is expected to close in the
first quarter of 2019.
5. Revised Strategy
The Revised Strategy is to seek to maximise shareholder value
from the Portfolio Companies based upon the remaining cash
resources of the Company by:
(a) reducing the Company's central functions and costs
significantly such that as much of the remaining cash as possible
can be so allocated to the Portfolio Companies and the Company can
continue to operate for as long as is reasonably possible whilst it
seeks to generate shareholder value from the Portfolio Companies on
the basis detailed below. This includes implementing each of the
Proposals. In addition, it is the intention to restructure the
Board, as more fully explained below;
(b) assessing the funding requirements of each Portfolio Company
against its prospects of generating a Shareholder return within the
anticipated lifespan of the Company. At this stage, Glycotest,
ProAxsis and PDS do not require further funding from the Company.
However, Wanda and Vortex do require further funding and,
currently, have not secured such funding from third parties;
and
(c) subsequently allocating the Company's remaining cash to
managing the Company's stakes in those Portfolio Companies which
the Board believes provide the most realistic prospects of
delivering Shareholder returns within the anticipated lifespan of
the Company. At this stage, those Portfolio Companies would be
Glycotest, ProAxsis and PDS.
Notice has been served to terminate the lease of the Company's
headquarters at 6 Bevis Marks London EC3A 7BA.
6. Changes to the Board of Directors
In the event that the Resolution is approved, the Board has
agreed that, upon Cancellation:
(a) Francois Martelet will resign as a Director;
(b) the employment contract of Francois Martelet will be
terminated in accordance with its terms;
(c) Ian Postlethwaite will remain Chief Finance Officer of the
Company for a transitional period until 1 June 2019, at which point
his employment will be terminated in accordance with its terms and
he will resign as a director;
(d) Barry Wilson will resign as a Non-Executive Director; and
(e) Sir Richard Sykes and Professor Stephen Smith will continue
as Non-Executive Directors on terms to be agreed.
From 1 June 2019, the Company intends to engage a consultant who
will be responsible for managing the Company's interests in the
Portfolio Companies under the supervision of the Non - Executive
Directors.
7. Circular and letter to Shareholders
A circular to shareholders containing details of the Proposals,
including a notice of general meeting, together with a letter
seeking Shareholder consent for the company to communicate with its
shareholders electronically once the de-listing has occurred, has
today been posted to shareholders, with a copy of each placed on
the Company's website, www.NetScientific.net. Unless otherwise
defined, terms used in this announcement shall have the same
meanings as those defined in the circular.
The General Meeting will be held at Ashurst LLP, Broadwalk
House, 5 Appold Street, London, EC2A 2AG commencing at 11 a.m. on 4
March 2019. If the Resolution is passed, the Cancellation is
expected to become effective at 7 a.m. on 18 March 2019.
For more information, please contact:
NetScientific Tel: +44 (0)20 3514 1800
François R. Martelet, M.D.,
CEO
Ian Postlethwaite, CFO
WHIreland (NOMAD, Financial Adviser Tel: +44 (0)20 7220 1666
and Broker)
Chris Fielding / Jessica Cave / Chris
Viggor
Consilium Strategic Communications Tel: +44 (0)20 3709 5700
Mary-Jane Elliott / Chris Welsh /
Laura Thornton
NetScientific@consilium-comms.com
About NetScientific
NetScientific is a transatlantic healthcare technology group
with an investment strategy focused on sourcing, funding and
commercialising technologies that significantly improve the health
and well-being of people with chronic diseases.
For more information, please visit the website at
http://www.NetScientific.net
Important notices
This announcement has been prepared by, and is the sole
responsibility of the Directors of NetScientific. WH Ireland
Limited, which is authorised and regulated in the United Kingdom by
the Financial Conduct Authority, is acting exclusively for
NetScientific and no one else in connection with the matters
referred to in this announcement and will not be responsible to
anyone other than NetScientific for providing the protections
afforded to clients of WH Ireland Limited., or for providing advice
in relation to the matters referred to in this announcement.
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities whether pursuant to this
announcement or otherwise.
The distribution of this announcement in jurisdictions outside
the United Kingdom may be restricted by law and therefore persons
into whose possession this announcement comes should inform
themselves about, and observe, such restrictions. Any failure to
comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
Cautionary note regarding forward-looking statements
This announcement may contain certain forward-looking
statements, beliefs or opinions, with respect to the financial
condition, results of operations, financial performance, business
strategy or plans for future operations the Company. These
forward-looking statements can be identified by the fact that they
do not relate only to historical or current facts. Forward-looking
statements often use words such as "anticipate", "target",
"expect", "estimate", "intend", "plan", "goal", "believe", "hope",
"aims", "continue", "will", "may", "should", "would", "could", or
other words of similar meaning. These statements are based on
assumptions and assessments made by the Company in light of their
experience and their perception of historical trends, current
conditions, future developments and other factors they believe
appropriate.
By their nature, forward-looking statements involve risk and
uncertainty, because they relate to events and depend on
circumstances that will occur in the future and the factors
described in the context of such forward-looking statements in this
announcement could cause actual results and developments to differ
materially from those expressed in or implied by such
forward-looking statements. Although it is believed that the
expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will
prove to have been correct and you are therefore cautioned not to
place undue reliance on these forward-looking statements which
speak only as at the date of this announcement.
The Company does not assume any obligation to, and does not
intend to, update or correct the information contained in this
announcement (whether as a result of new information, future events
or otherwise), except as required by applicable law. There are
several factors which could cause actual results to differ
materially from those expressed or implied in forward-looking
statements. Among the factors that could cause actual results to
differ materially from those described in the forward-looking
statements are changes in global, political, economic, business,
competitive, market and regulatory forces, future exchange and
interest rates, changes in tax rates and future business
combinations or disposals.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit http://www.rns.com.
END
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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