AlliancePharma Inc.
TSX VENTURE : APA

AlliancePharma Inc.

October 20, 2016 15:00 ET

AlliancePharma Announces Closing of Previously Announced Private Placement with Persistence Capital Partners

THETFORD MINES, QUEBEC--(Marketwired - Oct. 20, 2016) - AlliancePharma Inc. (TSX VENTURE:APA) ("AlliancePharma" or the "Corporation") is pleased to announce that it has issued an aggregate of 40 000 Series A Preferred Shares to Persistence Capital Partners in connection with the $4,000,000 private placement previously announced on July 4, 2016 (the "Private Placement").

On September 28, 2016, the shareholders of the Corporation approved the creation of preferred shares of the Corporation issuable in series. Pursuant to the terms of the Private Placement, the Corporation issued 38,744 Series A Preferred Shares to Persistence Capital Partners II, L.P. ("PCP II") and 1,256 Series A Preferred Shares to Persistence Capital Partners II (International), L.P. (collectively with PCP II, "PCP") on October 20, 2016. PCP is a Montreal-based private equity fund that targets investment opportunities with strong growth potential in the healthcare sector.

The Series A Preferred Shares issued to PCP are convertible into Class A Shares (the "Common Shares") of the Corporation anytime up to their expiration date at a conversion price of $0.35 per share. Assuming full conversion of the Series A Preferred Shares, a total of 11,428,571 Common Shares will be issued to PCP, representing 21.97% of the total number of issued and outstanding Common Shares of the Corporation (based on the total number of issued and outstanding Common Shares reported in the Corporation's management information circular dated August 29, 2016 (the "Circular"), but assuming the conversion of all of the Preferred Shares). Immediately before the closing of the Private Placement, PCP owned no voting or equity securities in the capital of the Corporation.

Furthermore, the Series A Preferred Shares will be entitled to vote as a separate class of shares and will also be entitled to vote on an "as converted" basis at any special or general meeting of the shareholders of the Corporation. The Series A Preferred Shares shall not be entitled to any fixed dividend entitlement, but shall participate in all dividends declared on the Common Shares on an "as converted" basis.

In the event of a change of control of the Corporation, and any time after June 30, 2020, PCP may demand that the Corporation redeem its Series A Preferred Shares at a redemption price equal to the greater of (i) the subscription price of the Series A Preferred Shares plus a preferred return equal to 24%, compounded annually from June 30, 2016, less any amounts previously distributed as dividends and (ii) their fair market value. In the event of a liquidation, holders of Series A Preferred Shares will be entitled to receive, in priority to holders of other shares of the Corporation, an amount per Series A Preferred Share equal to the product of three times the subscription price less any amounts previously distributed as dividends.

As additional consideration pursuant to the Private Placement, PCP has received 11,428,571 warrants entitling it to purchase one Common Share per warrant, for a total of 11,428,571 Common Shares at an exercise price of $0.69 per Common Share, at any time in the five years following the investment closing date. The 11,428,571 Common Shares issuable upon exercise of the warrants would represent 21.97% of the total number of issued and outstanding Common Shares of the Corporation (based on the total number of issued and outstanding Common Shares reported in the Circular, but assuming the exercise of all of the warrants).

Assuming the conversion of all of the Series A Preferred Shares and the exercise of all of the warrants, PCP would hold a total of 22,857,142 Common Shares, which would represent 36.02% of the total number of issued and outstanding Common Shares of the Corporation (based on the total number of issued and outstanding Common Shares reported in the Circular, but assuming the conversion of all of the Preferred Shares into Common Shares and the exercise of all of the warrants).

The Series A Preferred Shares issued to PCP, the underlying Common Shares and the warrants are subject to a four-month hold period expiring on February 21, 2017.

On July 4, 2016, the Corporation also announced the acquisition of Pro-J-Pharma Inc. and on August 23, 2016 the Corporation announced the acquisitions of Pharmapar Inc. ("Pharmapar") and Agence L.I.V. Inc. ("liV"). The proceeds from the Private Placement have been used by the Corporation to partially finance the acquisitions of Pharmapar and liV. Pro forma financial information on these acquisitions will be filed with the Business Acquisition Report to be filed on the System for Electronic Document Analysis and Review ("SEDAR") by the Corporation under the applicable securities laws.

An early warning report with additional information in respect of the Private Placement will be filed and made available on SEDAR at www.sedar.com under the Corporation's issuer profile. In order to obtain a copy of the early warning report, you may also contact Marc Lemieux, at AlliancePharma, at telephone number: 418-755-0821. PCP's address is 500 Sherbrooke West, Suite 500, Montreal, Québec, H3A 3C6. The Corporation's address is 1197 Notre-Dame East, Suite 300, Thetford Mines, Québec, G6G 2V2.

A new stage in its corporate life

Founded in 2009, AlliancePharma is the result of the vision of Isabelle Bégin and Marc Lemieux. Having worked for years in the pharmaceutical industry and having noticed the enormous potential in pharmaceutical products and services, they saw an opportunity to better serve the needs of pharmacists and the healthcare industry, and thus AlliancePharma was born. The Corporation quickly became a major player in personnel placement for pharmacies.

In recent months the Corporation has undertaken to diversify through a series of acquisitions aimed at broadening its range of services to the healthcare industry. The Private Placement and the acquisitions previously announced mark a significant advance that gives shape to the vision of its two founders and positions AlliancePharma as a new strategic partner in the pharmaceutical industry.

About AlliancePharma

AlliancePharma is a leading solution and service provider to the pharmaceutical market. Today it is a respected name for quality and expertise among pharmacists. Its management team is guided by a vision of continuing to lead the way in Quebec while extending operations across Canada and internationally. Additional information on the Corporation is available at www.alliancepharmainc.ca and on SEDAR at www.sedar.com.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release from AlliancePharma contains forward-looking statements. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, strategy, target, and other similar expressions, or future or conditional verbs such as aim, anticipate, believe, predict, could, expect, intend, may, plan, seek, should, strive, and will. By their nature, forward-looking statements require us to make estimates and assumptions and express opinions based on current conditions and anticipated developments, as well as other factors that Management may deem appropriate under the circumstances. There is inherent uncertainty and significant risk in these estimates, assumptions, and opinions, particularly of a commercial, economic, and competitive nature, and they are therefore subject to change. AlliancePharma cannot guarantee that these estimates, assumptions, and opinions will prove to be accurate.

Readers are cautioned not to accord undue credibility to such forward-looking statements, which are based solely on AlliancePharma's expectations as of the date of this press release. AlliancePharma declines all responsibility to update or revise its forward-looking statements, whether to account for new information or future events or circumstances, unless legally obligated to do so.

This press release does not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, or in any jurisdiction in which such offer, solicitation, or sale would be unlawful. The securities described in this press release have not been and will not be registered under the United States Securities Act of 1933, as amended, nor under any State securities law, and may not be offered for sale or sold in the United States, unless registered in compliance with these laws or dispensed from such registration.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this Press Release.

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