Orbus Pharma Inc.
TSX : ORB

Orbus Pharma Inc.

June 09, 2005 17:16 ET

Orbus Pharma Inc. Update on Proposed Plan of Arrangement

TORONTO, ONTARIO--(CCNMatthews - June 9, 2005) - Orbus Pharma Inc. (TSX:ORB) ("Orbus") announced today that it has revised its proposed Plan of Arrangement.

Pursuant to the proposed Arrangement, the business, assets and capital of Orbus will be restructured in order for it to be utilized as an oil and gas exploration and development company under the name Chamaelo Exploration Ltd. ("Chamaelo"). A new corporation ("Newco") will acquire all of the assets and related liabilities of Orbus and have the same issued capital structure as Orbus. Newco will continue the existing business of generic drug development, manufacturing and pharmaceutical trading currently being operated by Orbus.

Chamaelo Energy Inc. has recently released information to Orbus as to the net asset value of Chamaelo. Based on such information and assumptions as to the number of issued common shares of Orbus as at the effective date of the Arrangement, the Plan of Arrangement will be revised to provide for the consolidation of the Orbus common shares on an approximate 52 Orbus common shares for one Orbus consolidated common share basis. As a result of such revision, subsequent to the effective date of the Arrangement and after the participation of Orbus in the arrangement with Chamaelo Energy Inc., current holders of Orbus common shares ("Shareholders") will hold approximately 3.7% of the Chamaelo common shares. Former holders of convertible debentures and warrants of Orbus will hold approximately 1.7% of the Chamaelo common shares (which will be non-voting shares). In addition, Shareholders will hold 100% of the common shares of Newco, which number is unchanged as a result of the revised Plan of Arrangement.

The Plan of Arrangement will also be revised in order to create a more tax efficient structure for Shareholders. Such revisions will not have any effect on the consideration which will ultimately be received by the Shareholders and other securityholders of Orbus under the revised Plan of Arrangement nor will the revised Plan of Arrangement otherwise materially affect the rights of Shareholders. However, the revised Plan of Arrangement will result in different tax treatment of Shareholders and will cause Shareholders to realize a gain or loss on the exchange of shares under the revised Plan of Arrangement. Pursuant to the revised Plan of Arrangement, the cost base to a Shareholder of the common shares of Chamaelo which are received will be equal to the Shareholder's adjusted cost base in his Orbus common shares immediately prior to the Arrangement multiplied by a fraction, the numerator of which is the fair market value of the common shares of Chamaelo (as calculated under the Plan of Arrangement) which are received and the denominator of which is the aggregate of the fair market values of the common shares of Newco and Chamaelo (as calculated under the Plan of Arrangement) which are received. The proceeds of disposition for the Orbus common shares is primarily dependent upon the trading prices of the Orbus common shares prior to the Meeting. The cost base to a Shareholder of the common shares of Newco which are received by it will be equal to their fair market value.

Orbus has secured an amended interim order from the Court of Queen's Bench of Alberta in relation to the revisions to the Plan of Arrangement.

The Board of Directors of Orbus has approved the revised Plan of Arrangement and recommends that Shareholders approve the Arrangement at the Special Meeting scheduled for June 20, 2005.

Details as to the revised Plan of Arrangement and further details in respect of the tax treatment of the Shareholders of Orbus will be available in a material change report of Orbus, which will be filed on www.sedar.com.

Orbus Pharma Inc., listed on the Toronto Stock Exchange under the symbol "ORB", pursues a strategy of generating revenue through the development of drug delivery systems and manufacture of off-patent pharmaceuticals, capitalizing on its ability to support the development and commercialization of a range of products at affordable costs.

Contact Information

  • Orbus Pharma Inc.
    Denis C. Arsenault, C.A.
    VP Finance & Chief Financial Officer
    (905) 943-9444
    or
    Orbus Pharma Inc.
    Jeffrey W. Renwick
    President & Chief Executive Officer
    (905) 943-9444