Chelsea Acquisition Corporation
TSX VENTURE : CAV.P

November 29, 2013 16:32 ET

Chelsea Acquistion Corporation Announces Closing of Pediappharm Inc. Private Placement for Gross Proceeds of Approximately $6.4 Millon and Provides a Business Development Up-Date for Pediapharm

CALGARY, ALBERTA--(Marketwired - Nov. 29, 2013) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION IN UNITED STATES

Chelsea Acquisitions Corporation (TSX VENTURE:CAV.P) ("Chelsea") is pleased to announce that Pediapharm Inc. ("Pediapharm") has closed its previously announced brokered private placement (the "Pediapharm Offering") of subscription receipts ("Subscription Receipts") and as such has met one of the principal conditions to the completion of the business combination of Chelsea and Pediapharm (the "Business Combination). Pursuant to the Pediapharm Offering, Pediapharm issued 21,254,968 Subscription Receipts at a price of $0.30 per Subscription Receipt for gross proceeds of $6,376,490.40 (the "Subscription Proceeds").

Richardson GMP Limited and Laurentian Bank Securities Inc. (collectively, the "Agents") acted as agents of Pediapharm pursuant to the Pediapharm Offering. The Agents are entitled to a cash commission equal to 8% of the gross proceeds raised directly by the Agents and 3% of the gross proceeds raised by Pediapharm, for aggregate commissions of $410,119.23 (the "Agent's Commissions"). The Agent's Commissions are payable to the Agents' at the time of closing of the Business Combination. In addition, the Agents were paid a corporate finance fee by Pediapharm of $30,000 and granted agent's options ("Agent's Options") to purchase 1,700,396 common shares ("Amalco Share") of the new corporation ("Amalco") formed pursuant to the amalgamation (the "Amalgamation") of Chelsea and Pediapharm at a price of $0.30 per Amalco Share for a period of 24 months from the date the Amalco Shares are listed on the TSX Venture.

Each Subscription Receipt entitles the holder to receive one Amalco Share without additional consideration or further action, for each Subscription Receipt held, upon the satisfaction of certain conditions, including the completion of the Business Combination (collectively, the "Escrow Release Conditions").

The Subscription Proceeds will be held by Computershare Trust Company of Canada, as subscription receipt agent (the "Subscription Receipt Agent"), and invested in short-term obligations of, or guaranteed by, the Government of Canada or invested on deposit in a trust account of the Subscription Receipt Agent pending satisfaction of the Escrow Release Conditions.

In the event that: (i) the Amalgamation is not completed within 90 days from the closing date of the Pediapharm Offering; or (ii) the amalgamation agreement entered into between Chelsea and Pediapharm in connection with the Amalgamation is terminated in accordance with its terms; or (iii) Pediapharm has advised the Agents or disclosed to the public that it and/or Chelsea do not intend to proceed with the Amalgamation, then the Subscription Receipt Agent will return to each holder of Subscription Receipts an amount equal to $0.30 in respect of each Subscription Receipt held, together with such holder's pro rata entitlement to the earned interest, and the Subscription Receipts will be cancelled and be void and of no value or effect.

Assuming completion of the Amalgamation, it is intended that the net proceeds from the Pediapharm Offering will be used by Amalco to: launch new products; acquire commercial product rights; pay expenses incurred in connection with the Business Combination and Pediapharm Offering; and for general working capital requirements.

Pediapharm, through Amalco, is also negotiating an additional private placement (the "QSSP Offering") of Amalco Shares with Quebec Stock Savings Plan Funds of up to $1,623,509. In the event that the Business Combination and QSSP Offering are completed, the total gross proceeds of the Pediapharm Offering will be $8,000,000.

The Business Combination is subject to the approval of TSX Venture, shareholder approval, and all other necessary regulatory approvals.

Pediapharm Business Development Up-Date

Chelsea wishes to provide a business development update to Pediapharm's prospective investors in light of on-going business activities that have recently occurred with respect to Pediapharm.

On November 21, 2013, Pediapharm received a first office action from Health Canada regarding one of its product filings. In the correspondence, Health Canada highlighted certain deficiencies in the filed submission.

After discussions with its regulatory consultants, Pediapharm is confident that it has the necessary data available to respond to Health Canada and meet its requests, although Pediapharm expects this will delay the launch of the product. This delay is expected to reduce Pediapharm's expenses in 2014, as well as reduce the amount of forecasted revenues that would have been associated with the sale of the product. Pediapharm estimates the impact of the delay to be minimal on its long-term financial projections.

Pediapharm is also pleased to announce that there have been significant advancements in the negotiation of several transactions in the past weeks. In the event these negotiations are successful, Pediapharm hopes to be in a position to announce completed transactions in the first quarter of 2014.

About Pediapharm

Pediapharm is the only private Canadian specialty pharmaceutical company, dedicated to serving the needs of the pediatric community. Its mission is to bring to the Canadian market the latest innovative pediatric products with the objective to improve the health and the well-being of children in Canada. Since its debut in 2008, Pediapharm has entered into numerous commercial agreements with partners from Canada and other countries around the world.

As indicated above, completion of the Business Combination is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. The Business Combination cannot close until the required shareholder approval is obtained. There can be no assurance that the Business Combination will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the information circular of Chelsea prepared in connection with the Business Combination, any information released or received with respect to the Business Combination may not be accurate or complete and should not be relied upon. Trading in the securities of Chelsea or Pediapharm should be considered highly speculative.

The TSX Venture has in no way passed upon the merits of the Business Combination and has neither approved nor disapproved the contents of this press release. Neither TSX Venture nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture) accepts responsibility for the adequacy or accuracy of this press release.

This press release contains forward-looking statements. More particularly, this press release contains statements concerning: the receipt of TSX Venture and shareholder approval of the Business Combination, the completion of the Business Combination, the completion of the QSSP Offering, the use of proceeds by Amalco of the Pediapharm Offering, and potential delays in product launch. The forward-looking statements are based on certain key expectations and assumptions made by Chelsea and Pediapharm including the timing of receipt of required shareholder and TSX Venture approvals and the satisfaction of other conditions to the completion of the Business Combination as set forth in the Amalgamation Agreement, and the timing of Health Canada's approval of the Pediapharm product currently under review.

Although Chelsea and Pediapharm believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because no assurance can be provided that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks that the required shareholder and TSX Venture approvals are not obtained on terms satisfactory to the parties or at all, risks that other conditions to the completion of the Business Combination are not satisfied on the timelines set forth in the Amalgamation Agreement or at all, and risks that Pediapharm product approval from Health Canada is delayed or not granted at all.

The forward-looking statements contained in this press release are made as of the date hereof and neither Chelsea nor Pediapharm undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Contact Information

  • Chelsea Acquisitions Corporation
    Douglas Stuve
    Director
    (403) 234-3337

    Pediapharm Inc.
    Sylvain Chretien
    Chief Executive Officer
    (514) 239-7966