ProMetic Life Sciences Inc.

ProMetic Life Sciences Inc.

March 25, 2010 17:33 ET

ProMetic Life Sciences Inc.: Corporate Update

 MONTREAL, CANADA-–(Marketwire - March 25, 2010) – ProMetic Life Sciences Inc. (TSX:PLI)

  • ProMetic to repay all amounts owed to Camofi Master LDC and to enter into an amended and restated loan agreement with Invhealth Holding Inc.
  • ProMetic to secure the amended and restated loan agreement with pledge agreements from Invhealth Holding Inc. and Pierre Laurin
  • ProMetic to seek disinterested shareholders approval

ProMetic Life Sciences Inc. (TSX:PLI) ("ProMetic"), as required by Toronto Stock Exchange ("TSX") announces that on December 5, 2008, ProMetic provided a guarantee to Camofi Master LDC ("Camofi") (the "Guarantee") for a loan granted by Camofi to Invhealth Holding Inc. ("Invhealth") on December 4, 2007, as amended and restated on December 5, 2008 (the "Loan"). Invhealth is a corporation wholly owned by Pierre Laurin, President, Chief Executive Officer, Chairman of the Board and director of ProMetic.

Invhealth contracted the Loan of $US 1,320,000 from Camofi on December 4, 2007 to, inter alia, finance the purchase of 1,724,138 shares of ProMetic issued by way of private placement (the "Private Placement"), as announced in a news release issued December 12, 2007. Invhealth pledged 9,500,000 ProMetic shares to Camofi as collateral to the Loan (the "Pledge").

The Guarantee provides that ProMetic must fulfill Invhealth's obligations to fully repay the capital and interest for the Loan if Invhealth cannot do so. Any such payment shall be made by ProMetic within two days of receipt of a notice of default from Camofi. Alternatively, Camofi can liquidate some or all of the shares of ProMetic that are held as collateral to cover the Loan. If called upon under the Guarantee, ProMetic may choose either to pay in cash or request that Invhealth instruct Camofi to liquidate up to 2,300,000 shares of ProMetic to repay the Loan. ProMetic has not required any consideration from Invhealth in exchange for this Guarantee. Concurrently with the Guarantee, ProMetic entered into a loan agreement with Invhealth providing that any payment made by ProMetic under the Guarantee shall immediately trigger an equivalent receivable from Invhealth (the "ProMetic Loan").

As of March 25, 2010, ProMetic has paid out $US 1,183,000 to Camofi under the Guarantee since Invhealth has not repaid the Loan. In the following days, ProMetic will pay Camofi a sum of US$ 800,000 to satisfy all outstanding obligations owed by Invhealth and guaranteed by ProMetic. This payment will be made pursuant to the terms and conditions of a Satisfaction Agreement entered into with Camofi on March 24, 2010 (the "Satisfaction Agreement"). The Satisfaction Agreement also provides that the ProMetic shares pledged to Camofi shall be redelivered to Invhealth in accordance with the instructions set forth therein and that the Pledge shall be deemed satisfied in full.

ProMetic disclosed the Guarantee in its annual financial statements for the years ended December 31, 2008 and 2007 (Note 13) which were filed on SEDAR on March 31, 2009, and in its annual information form for the year ended December 31, 2008 (Section 11. Interest of Management and Others in Material Transactions) filed on SEDAR on March 31, 2009.

TSX has advised ProMetic that the Guarantee has breached section 602 of the TSX Company Manual (the "Manual") as ProMetic failed to promptly notify TSX of this change to a material term of the Private Placement. ProMetic notes that this was an inadvertent breach of TSX rules. TSX considers the Guarantee to constitute financial assistance in the context of a private placement and, as such, the Guarantee constitutes a security-based compensation arrangement for Mr. Laurin which requires the approval of the shareholders of ProMetic (excluding Mr. Laurin) pursuant to section 613 of the Manual.

Simultaneously with the Satisfaction Agreement, Invhealth and ProMetic entered into an amended and restated loan agreement (the "Repayment Loan") to provide that the sums paid by ProMetic pursuant to the Guarantee and the Satisfaction Agreement will bear interest at a rate of 10% per annum and be repayable by Invhealth no later than March 31, 2013, provided however that if the ProMetic shares trade for a price per share equal to or higher than Cdn$ 0.90 for 15 consecutive trading days, ProMetic may request that Invhealth repay all outstanding amounts under the Repayment Loan within 30 days following such request.

The Repayment Loan is secured by (i) a pledge of 9,500,000 ProMetic shares owned by Invhealth and (ii) a pledge by Pierre Laurin of all of Mr. Laurin's present and future shares in the share capital of Invhealth, until Invhealth repays all principal and interest owed to ProMetic, as provided in separate pledge agreements.

ProMetic will seek disinterested shareholder approval at the next annual and special meeting of shareholders to ratify (i) the Guarantee it entered into with Camofi and (ii) the Repayment Loan agreement. If ProMetic does not obtain such shareholder approval, TSX has advised ProMetic that it may be subject to delisting review unless Invhealth fully repays the Repayment Loan within 30 days. To our knowledge, Invhealth does not have any other assets than the pledged 9,500,000 ProMetic shares and it would have to sell those shares in order to repay the Repayment Loan. The Board of Directors of ProMetic (other than Pierre Laurin who was required to abstain) unanimously recommends that the shareholders of ProMetic ratify the Guarantee and the Repayment Loan Agreement at the next annual and special meeting of shareholders.

About ProMetic Life Sciences Inc.

ProMetic Life Sciences Inc. ("ProMetic") ( is a biopharmaceutical company specialized in the research, development, manufacture and marketing of a variety of commercial applications derived from its proprietary Mimetic Ligand™ technology. This technology is used in large-scale purification of biologics and the elimination of pathogens. ProMetic is also active in therapeutic drug development with the mission to bring to market effective, innovative, lower cost, less toxic products for the treatment of hematology and cancer. Its drug discovery platform is focused on replacing complex, expensive proteins with synthetic "drug-like" protein mimetics. Headquartered in Montréal (Canada), ProMetic has R&D facilities in the U.K., the U.S. and Canada, manufacturing facilities in the U.K. and business development activities in the U.S., Europe, Asia and in the Middle-East.

Forward Looking Statements

This press release contains forward-looking statements about ProMetic's objectives, strategies and businesses that involve risks and uncertainties. These statements are "forwardlooking" because they are based on our current expectations about the markets we operate in and on various estimates and assumptions. Actual events or results may differ materially from those anticipated in these forward-looking statements if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. Such risks and assumptions include, but are not limited to, ProMetic's ability to develop, manufacture, and successfully commercialize value-added pharmaceutical products, the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of ProMetic to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process and general changes in economic conditions. You will find a more detailed assessment of the risks that could cause actual events or results to materially differ from our current expectations on page 25 of ProMetic's Annual Information Form for the year ended December 31, 2008, under the heading "Risk and Uncertainties related to ProMetic's business". As a result, we cannot guarantee that any forward-looking statement will materialize. We assume no obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason, unless required by applicable securities laws and regulations. All amounts are in Canadian dollars unless indicated otherwise.

Contact Information

  • ProMetic Life Sciences Inc.
    Pierre Laurin
    President and CEO
    ProMetic Life Sciences Inc.
    Patrick Sartore
    Senior Legal Counsel, IP & Corporate Secretary