Ondine Biomedical Inc.

Ondine Biomedical Inc.

June 28, 2011 17:06 ET

Arrangement Agreement for Privatization of Ondine

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 28, 2011) - The Board of Directors of Ondine Biomedical Inc. (TSX:OBP)(AIM:OBP) (the "Company" or "Ondine") today announced that Ondine and 0902337 B.C. Ltd. ("Acquireco") have entered into a definitive arrangement agreement (the "Arrangement Agreement") pursuant to which Acquireco has agreed to acquire all of the issued and outstanding equity of Ondine. Acquireco is a private company whose sole shareholder is Carolyn Cross, Chairman, Chief Executive Officer and a shareholder of Ondine. The transaction will be implemented by way of a court-approved plan of arrangement under British Columbia law (the "Arrangement"). Under the Arrangement, holders of Ondine common shares (the "Common Shares") will receive Cdn.$0.33 in cash per Common Share (the "Acquisition Price") for an aggregate purchase price of approximately Cdn.$3.19 million. The Acquisition Price represents a premium of approximately 65% over the closing price of $0.20 per Common Share on the Toronto Stock Exchange ("TSX") on June 28, 2011 and also represents a premium of approximately 37.5% over the volume weighted average trading price of $0.24 per Common Share on the TSX for 20-trading days ending on June 28, 2011. Under the Arrangement, all outstanding options and warrants of Ondine will be cancelled, and the holders thereof will receive $0.001 for each share issuable thereunder.

In addition, Acquireco has entered into a lock-up and support agreement with certain shareholders of Ondine who collectively own approximately 25.5% of the issued and outstanding Common Shares (approximately 27% on a fully diluted basis), pursuant to which these shareholders have agreed, subject to certain conditions, to exercise the voting rights attached to their Ondine shares, options and warrants in favour of the Arrangement.

After due consideration, the board of directors (the "Board") of Ondine has unanimously approved the Arrangement Agreement (with Ms. Cross abstaining due to her interest in Acquireco), based on the report and the unanimous favourable recommendation of a special committee comprised of two independent members of the Board, Messrs. Colin Watt and Michael Crane (collectively, the "Special Committee"). In doing so, the Board found that the Arrangement is fair to Ondine's securityholders, other than Ms. Cross and persons and entities related to her (the "Interested Shareholders"), and is in the best interests of Ondine. Under the Arrangement Agreement, Ondine has agreed to submit the Arrangement to Ondine's securityholders for approval at an annual and special meeting of the Company which is expected to be held in August 2011 (the "Meeting"). The Board has also unanimously resolved (with Ms. Cross abstaining) to recommend that Ondine's securityholders vote in favour of the Arrangement.

In reaching their decisions with respect to the Arrangement, the Board and Special Committee have relied on, among other things, a valuation and a fairness opinion of Evans and Evans, Inc. ("Evans"), the independent financial advisor retained to prepare a formal valuation of the Company (the "Valuation Report") and a fairness opinion (the "Fairness Opinion") with respect to the Arrangement. The Fairness Opinion provided by Evans confirms that, as at June 28, 2011 and subject to the certain limitations, assumptions and qualifications, the consideration offered to shareholders under the Arrangement is fair, from a financial point of view, to Ondine's shareholders, other than the Interested Shareholders. A summary of the Valuation Report and the Fairness Opinion, the factors that were considered by the Board and the Special Committee in approving the Arrangement, and other material background information relating to the Arrangement, will be included in the Management Information Circular to be forwarded to Ondine's securityholders in connection with the Meeting.

Under the Arrangement Agreement, Ondine has provided Acquireco with certain other customary rights, including a non-solicitation covenant and a right to match any competing superior offer in the event such a proposal is made. There is no requirement in the Arrangement Agreement for either party to pay the other a termination fee, or to reimburse the other party's expenses, if the Arrangement does not close.

Under the Arrangement Agreement, Acquireco and Ondine have agreed, subject to regulatory approval, to enter into a loan agreement (the "Loan Agreement") under which Acquireco would advance to the Company a bridge loan of up to $750,000 (the "Bridge Loan"). The Bridge Loan will be due on demand or on termination of the Arrangement Agreement pursuant to its terms. The Bridge Loan will be interest free if paid in full on or before October 1, 2011 and thereafter will bear interest at 5% per annum payable at the end of each month commencing on October 31, 2011. In addition, under the Arrangement Agreement, and subject to required regulatory approval, the existing loans to the Company from Carolyn Cross (the "Cross Loans") will also become immediately due and payable on termination of the Arrangement Agreement in certain circumstances. As at June 24, 2011, the aggregate amount owing on the Cross Loans was approximately $2.51 million.

Completion of the Arrangement is subject to, among other things, i) the affirmative vote at the Meeting of at least two-thirds (66 2/3%) of the votes cast by all securityholders (which includes Ondine's shareholders, option holders and warrant holders), by at least two-thirds of the votes cast by Ondine's shareholders alone, and by at least a simple majority of the votes cast by Ondine's shareholders excluding the Interested Shareholders and certain other shareholders whose votes are excluded under Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions; ii) approval of the Supreme Court of British Columbia; iii) the holders of not more than 8% of the Common Shares exercising their right to dissent to the Arrangement; and iv) receipt of all required regulatory approvals, including acceptance of the transaction by the TSX and compliance with the rules (the "AIM Rules") of the AIM market of the London Stock Exchange. It is anticipated that the Arrangement will close before the end of August 2011.

The Arrangement Agreement entered into by the Company and Acquireco and the Loan Agreement to be entered into by Company and Acquireco constitute related party transactions for the purposes of the AIM Rules for Companies (the "Related Party Transactions"). Accordingly, the directors of the Company (excluding Ms. Cross), having consulted with its nominated adviser, consider the terms of the Related Party Transactions to be fair and reasonable insofar as the Company's shareholders are concerned.

A copy of the Arrangement Agreement, which includes the Loan Agreement as a schedule, will be filed with Canadian securities regulatory authorities and will be available on the SEDAR web site, at www.sedar.com. It is currently expected that the Management Information Circular to be prepared in connection with the Meeting, the Valuation Report and the Fairness Opinion will be mailed to Ondine's shareholders in the weeks to come. This circular, the report, and the opinion will also be part of Ondine's public documents available at www.sedar.com.

About Ondine Biomedical Inc.

Ondine is developing non-antibiotic therapies for the treatment of a broad spectrum of bacterial, fungal and viral infections. The Company is focused on developing leading edge products utilizing its patented light-activated technology, primarily for the healthcare-associated infection (HAI) market. Photodisinfection provides broad-spectrum antimicrobial efficacy without encouraging the formation and spread of antibiotic resistance. The Company is based in Vancouver, British Columbia, Canada, with a research and development laboratory in Bothell, Washington, USA. For additional information, please visit the Company's website at: www.ondinebio.com.

Forward-Looking Statements:

Certain statements contained in this release containing words like "believe", "intend", "may", "expect", "would" and other similar expressions, are forward-looking statements that involve a number of risks and uncertainties. This forward-looking information relates to, among other things, the timing and prospects for completion of the Arrangement, which is subject to a number of conditions precedents, such as the approval of the Arrangement by the court, by Ondine's securityholders and by regulatory authorities. Accordingly, there can be no assurances that the Arrangement will be consummated. The forward-looking statements contained in this release reflect the current views of Ondine with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by Ondine, are inherently subject to various risks and uncertainties. Many factors, both known and unknown, could cause actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking information contained in this news release and Ondine has made assumptions based on or related to many of these factors. Such factors that could cause actual results to differ materially from those projected in the Company's forward-looking statements include, without limitation, the following: litigation, fluctuations in economic and equity market conditions, market acceptance of our technologies and products; our ability to obtain financing; our financial and technical resources relative to those of our competitors; our ability to keep up with rapid technological change; government regulation of our technologies; our ability to enforce our intellectual property rights and protect our proprietary technologies; the ability to obtain and develop partnership opportunities; the timing of commercial product launches; the ability to achieve key technical milestones in key products and other risk factors identified from time to time in the Company's public filings. Investors are cautioned against attributing undue certainty or reliance on forward-looking information. Although Ondine has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Ondine does not intend, and does not assume any obligation, to update this forward-looking information to reflect changes in assumptions or changes in circumstances or any other events affecting such information, other than as required by applicable law.

The TSX Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Ondine Biomedical Inc.
    Carolyn Cross
    Chairman and CEO
    (604) 669-0555

    Canaccord Genuity Limited, Nominated Adviser
    Mark Williams/Bhavesh Patel
    +4420 7050 6500