TIDMRLM
RNS Number : 2814Q
Realm Therapeutics PLC
18 February 2019
The 'Update on Strategic Review' announcement for Realm
Therapeutics released on Friday 15 February 2019 at 6.20pm under
RNS No 2805Q has been re-released in the interests of market
clarity.
The announcement text is unchanged and is reproduced in full
below.
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER
THE EU MARKET ABUSE REGULATION (596/2014). UPON THE PUBLICATION OF
THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
Realm Therapeutics plc
("Realm Therapeutics", "Realm" or the "Company")
Update on Strategic Review
Proposed Assets Disposal
Proposed Adoption of Investing Policy
Proposed AIM Delisting
and
Notice of General Meeting
Highlights
-- Proposed disposal of hypochlorous acid (HOCl) Assets to Urgo,
U.S. Inc., for $10 million (gross)
-- Proposed adoption of an Investing Policy and delisting of
Ordinary Shares from AIM; ADSs to remain listed for trading on
Nasdaq
-- Circular available on the websites of Realm and the U.S.
Securities and Exchange Commission and being posted to Shareholders
shortly, containing further information and notice of a general
meeting to be held on March 15, 2019
-- Discussions continue with a number of interested parties
(including potential offerors) regarding a potential strategic
transaction (which, for potential offerors, may involve a takeover
offer for the Company)
-- At December 31, 2018, Realm had $18.8 million in cash, cash
equivalents, and short-term investments
MALVERN, PA, February 15, 2019 - Realm Therapeutics plc (NASDAQ:
RLM / AIM: RLM), a biopharmaceutical company with a proprietary
technology platform of stabilized high concentration HOCl, today
provides an update on its previously announced strategic
review.
In line with the announcement of November 29, 2018, the Company
has now agreed to sell certain Assets, which comprise the Vashe(R)
wound care royalty stream, an FDA 510(k)-cleared anti-itch
hydrogel, which was formerly marketed as Aurstat(TM), HOCI related
equipment, intellectual property (including know-how, patents and
copyrights), program records, and certain assigned contracts and
intellectual property licenses. The Company's primary assets also
include its cash, cash equivalents, and short-term investments.
Realm further announces its intention to delist its Ordinary
Shares from admission to trading on AIM. The Assets Disposal and
AIM Delisting are each subject to approval by Shareholders, which
the Company is seeking pursuant to a Circular that details the
background to and reasons for the Assets Disposal and AIM
Delisting, and the proposed Investing Policy for adoption by the
Company, together with a Notice of General Meeting.
Assets Disposal
Realm has signed a conditional agreement for the sale of the
Assets to Urgo U.S., Inc., the U.S. subsidiary of privately-held
Laboratories URGO SAS, an international healthcare company
specialised in advanced wound care and consumer healthcare
solutions, for gross cash proceeds of $10 million, conditional
upon, inter alia, the approval of Realm's Shareholders. Urgo
Medical North America merged with SteadMed Medical, the partner
from whom Realm collects the Vashe(R) wound care product royalties
in 2018. Subject to Shareholder approval and customary contractual
conditions being met, the Assets Disposal is expected to close on
March 28, 2019.
A copy of the Assets Disposal Agreement will be put on display
pursuant to Rule 26.1 and the notes to Rule 21.1 of the Takeover
Code on the following website at
http://ir.realmtx.com/investor-relations by no later than 12 noon
on the Business Day following the date of this announcement.
Realm received cash of $0.9 million and $1.1 million in 2017 and
2018, respectively, under the royalty agreement for the Vashe(R)
wound care product, with minimal offsetting operating costs. Realm
did not recognize royalty revenue during the year ended December
31, 2018 (2017: $1.1 m) as the Company adopted IFRS 15, Revenue
from Contracts with Customers, effective January 1, 2018, upon
which future minimum payments were recognized as an adjustment to
equity rather than as revenue over future periods. Equipment
included in the Assets have a value of approximately $0.3
million.
At December 31, 2018, Realm had $18.8 million in cash, cash
equivalents, and short-term investments. The Assets Disposal is
expected to generate approximately $9.6 million in net cash
proceeds, after deducting transaction costs. The net proceeds of
the Assets Disposal will be retained by the Company to augment its
current cash resources, which may be deployed in a potential
strategic transaction (which, for potential offerors, may involve a
takeover offer for the Company). If the Company executes a
strategic transaction (which, for potential offerors, may involve a
takeover offer for the Company), it will incur deal-related costs
including legal, tax advisory, accounting and banker fees and
employee separation costs.
Investing Policy
In connection with the Assets Disposal, the Company proposes to
adopt an Investing Policy that requires the Directors to examine
potential strategic opportunities. The Investing Policy will
require the Company to seek to invest in, partner with, acquire
and/or be acquired by companies with meaningful development
potential in the life sciences sector or with good overall business
prospects; or, if a suitable transaction is not identified, the
Company will consider winding down and distributing the remaining
assets to Shareholders, following satisfaction of applicable
obligations.
AIM Delisting and Nasdaq Listing
Upon Completion of the Assets Disposal, if the AIM Delisting has
not occurred, the Company would immediately become an AIM Rule 15
cash shell given that the proposed Assets Disposal represents a
fundamental change to the business of the Company, which would
cease to conduct substantially all of its existing trading
business.
As an AIM Rule 15 cash shell, the Company would be required to
make an acquisition or acquisitions constituting a reverse takeover
under AIM Rule 14 of the AIM Rules for Companies on or before the
date falling six months from Completion. However, the Board is
seeking Shareholder approval for an AIM Delisting to take place
immediately preceding Completion. If approved, Realm expects the
AIM Delisting to take effect from 7:00 a.m. on March 27, 2019 with
the last day of trading of the Ordinary Shares on AIM being March
26, 2019.
The Company does not intend to delist the ADSs representing its
Ordinary Shares from Nasdaq. However, following the Assets
Disposal, the Company may be deemed to be a "public shell" under
Nasdaq rules, which would require it to sign a definitive agreement
to combine with an operating company within a time frame to be
determined by Nasdaq in order for the ADSs to continue to be listed
for trading thereon. Whilst the Company aims to complete such a
strategic transaction (which, for potential offerors, may involve a
takeover offer for the Company), and the Company is in discussions
with a number of interested parties (including potential offerors)
in this regard, should such circumstances arise whereby a strategic
transaction (which, for potential offerors, may involve a takeover
offer for the Company) is not completed, the Company would in the
immediate term consider the most appropriate market for listing its
ADSs in the U.S. The Directors intend to adhere to the Investing
Policy, which includes considering winding down and distributing
the Company's remaining assets, after satisfaction of liabilities
and obligations, to Shareholders in certain circumstances.
General Meeting and Circular
A General Meeting will be held at the offices of Cooley (UK)
LLP, Dashwood, 69 Old Broad Street, London EC2M 1QS at 2:00 p.m. on
March 15, 2019, for Shareholders to consider the proposed Assets
Disposal and the proposed AIM Delisting, and to vote on the related
Resolutions. A Resolution will also be put to Shareholders to cover
the requirement for an AIM Rule 15 cash shell to have an Investing
Policy whilst its Ordinary Shares are admitted to trading on AIM,
or until it has otherwise become an operating company by completing
a reverse takeover or another strategic transaction (which, for
potential offerors, may involve a takeover offer for the
Company).
Realm continues to assess options available to maximize
shareholder value through the strategic review.
The Company remains in discussions regarding the Formal Sale
Process which may subsequently result in either a takeover offer
for the Company or an acquisition constituting a reverse takeover
under AIM Rule 14, or, if a suitable strategic transaction (which,
for potential offerors, may involve a takeover offer for the
Company) is not identified, a potential winding down of the Company
and distribution to Shareholders of the Company's remaining assets
following satisfaction of all applicable liabilities and
obligations. At the current time discussions are ongoing with a
number of interested parties (including potential offerors), some
of whom are interested in a reverse takeover transaction (which
would involve an acquisition of a business or corporate entity in
the life sciences sector, where the potential offeror would acquire
the benefit of the Company's Nasdaq listing and cash) and others,
who are potential offerors, are interested in making a takeover
offer for the Company (in order to access the Company's cash). The
Directors can confirm that none of the current interested parties
(including potential offerors) are interested in entering into a
strategic transaction with the Company (which, for potential
offerors, may involve a takeover offer for the Company) are seeking
to acquire the Assets which are the subject of the Assets
Disposal.
Any potential offeror considering a takeover offer for the
Company is entitled to the benefit of Rule 21.1 of the Takeover
Code in order to ensure that the Company does not otherwise dispose
of a material asset which might frustrate such a takeover offer
being made; interested parties considering a reverse takeover
transaction do not have the benefit of Rule 21.1 of the Takeover
Code as they are not potential offerors for the Company for the
purposes of the Takeover Code. In all cases, interested parties
(including potential offerors) have made it clear to the Company,
during the course of the ongoing discussions, that they have no
interest in the Assets which are the subject of the Assets
Disposal, but are primarily interested in the cash balances of the
Company. No currently interested party (including potential
offerors) chose to participate in the sale process relating to the
Assets, nor have they objected to the Assets Disposal on the
grounds of Rule 21.1 of the Takeover Code, or otherwise).
Should the AIM Delisting become effective, the Formal Sale
Process will cease to be governed by the Takeover Code; however the
Directors intend that the objectives of that sales process will
remain unaltered and anticipate providing an update on the process
in early Q2 2019.
A Circular is available on the Company's website, at
www.realmtx.com, and the website of the U.S. Securities and
Exchange Commission, and is being posted to Shareholders shortly.
Shareholders are advised to read the Circular carefully and in
full. The Expected Timetable of Principal Events and the full text
of the Letter from the Chairman set out within the Circular are
reproduced, without material adjustment, below. Terms used but not
defined above in this announcement shall have the meanings given to
them in the Circular; such definitions have been extracted and
included at the foot of this announcement.
Expected Timetable of Principal Events
Publication of the Circular and posting of February 15, 2019
the Form of Proxy to Shareholders
Latest time and date for receipt of Forms 2:00 p.m. on March
of Proxy 13, 2019
Record time and date for voting at General 6:30 p.m. on March
Meeting 13, 2019
General Meeting 2:00 p.m. on March
15, 2019
Last date for CREST Shareholders to submit 5:00 p.m. on March
"Notice to Brokers and SDRT Certification 18, 2019
Form" (Schedule 1) to the Depositary or certificated
Shareholders to submit Transfer Form request
(Schedule 2) to the Receiving Agent
Expected last day for dealings in Ordinary March 26, 2019
Shares on AIM
Expected time and date that admission of with effect from 7:00
Ordinary Shares to trading on AIM will be a.m. on March 27, 2019
cancelled
Expected date of issuance of ADSs to block circa March 27, 2019
transfer participants
Expected date of posting ADS balance statements circa March 28, 2019
to registered Shareholders by the Depositary/Transfer
Agent
Expected date of Completion of the Assets March 28, 2019
Disposal
Disclosure Requirements of the Takeover Code
Following the Company's announcement on September 17, 2018, the
Company is considered to be in an offer period as defined in the
Takeover Code, and the dealing disclosure requirements listed below
continue to apply.
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in 1% or more of any class of relevant securities of an
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes, interested in 1% or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
The person who arranged for the release of this announcement on
behalf of the Company was Marella Thorell, Chief Financial Officer
and Chief Operating Officer.
Contacts:
Realm Therapeutics plc
Alex Martin, Chief Executive Officer
Marella Thorell, Chief Financial Officer and Chief Operating
Officer
Outside U.S.: +44 (0) 20 3727 1000
U.S.: +1 212 600 1902
Argot Partners
Stephanie Marks / Claudia Styslinger
+1 212 600 1902
FTI Consulting
Simon Conway
+44 (0) 20 3727 1000
N+1 Singer (Nominated Adviser and Broker)
Aubrey Powell / Jen Boorer
+44 (0) 20 7496 3000
MTS Health Partners, L.P. (Strategic Advisor)
Mark Epstein, Partner
+1 (212) 887-2121
About Realm Therapeutics
For more information on Realm Therapeutics, please visit
www.realmtx.com.
Forward-Looking Statements
Certain statements contained herein constitute forward-looking
statements. The forward-looking statements contained herein include
statements about the expected effects or potential outcomes of the
Assets Disposal, the Investing Policy, the AIM Delisting and the
Formal Sale Process, the expected Completion of the Assets Disposal
and the timing thereof, the adoption of the Investing Policy, the
implementation of the AIM Delisting, the Formal Sale Process,
implications of the Assets Disposal on the trading of ADSs and
other statements other than in relation to historical facts.
Forward-looking statements including, without limitation,
statements typically containing words such as "intends",
"anticipates", "targets", "estimates", "believes", "should",
"plans", "will", "expects" and similar expressions or statements
that are not historical facts are intended to identify those
expressions or statements as forward-looking statements. The
statements are based on the current expectations of Realm and are
naturally subject to uncertainty and changes in circumstances. By
their nature, forward-looking statements involve risk and
uncertainty and the factors described in the context of such
forward-looking statements in this announcement could cause actual
results and developments to differ materially from those expressed
in or implied by such forward-looking statements. There are also a
number of other factors that could cause actual results or
developments to differ materially from those expressed or implied
by such forward-looking statements. These factors include, but are
not limited to, local and global political and economic conditions,
capital markets in the U.S. and the UK, conditions particular to
Realm and the Purchaser that affect their respective abilities to
close the Assets Disposal and legal or regulatory developments and
changes. Given these risks and uncertainties, investors should not
place undue reliance on forward-looking statements. These
forward-looking statements reflect the Company's judgement at the
date of this announcement and are not intended to give any
assurance as to future results. Except as required by the FCA, the
London Stock Exchange, the AIM Rules for Companies or applicable
law, the Company expressly disclaims any obligation or undertaking
to release publicly any updates or revisions to any forward-looking
statements contained in this announcement to reflect any changes in
the Company's expectations about them or any changes in events,
conditions or circumstances on which any such statement is
based.
LETTER FROM THE CHAIRMAN
REALM THERAPEUTICS PLC
(Incorporated in England and Wales under the Companies Act 2006
with registered number 05789798)
Directors: Registered office:
Charles Spicer (Non-Executive Chairman) c/o CMS Cameron McKenna
Alex Martin (Chief Executive Officer) Nabarro Olswang LLP
Marella Thorell (Chief Financial Officer and Cannon Place
Chief Operating Officer) 78 Cannon Street
Joseph William Birkett (Senior Independent London
Non-Executive Director) EC4N 6AF
Balkrishan (Simba) Gill (Independent Non-Executive
Director)
Ivan Gergel (Independent Non-Executive Director)
Sanford (Sandy) Zweifach (Independent Non-Executive
Director)
15 February 2019
To the holders of Ordinary Shares (and, for information purposes
only, to holders of options or warrants in respect of Ordinary
Shares)
Dear Shareholder,
Proposed Assets Disposal
Proposed Adoption of Investing Policy
Proposed AIM Delisting
and
Notice of General Meeting
Introduction
The purpose of this document is to set out details of the
proposed Assets Disposal, the proposed Investing Policy for
adoption by the Company following Completion, as the Company will
automatically become an AIM Rule 15 cash shell at such time, and
the subsequent proposed AIM Delisting of the Ordinary Shares, which
together comprise the Proposals.
This document provides Shareholders with the background to and
an explanation as to why the Directors consider that the Proposals
are in the best interests of the Company and its Shareholders as a
whole and why they recommend that Shareholders should vote in
favour of the Resolutions to be proposed at the General
Meeting.
For the avoidance of doubt the Company does not propose to
cancel the admission to trading of its American Depositary Shares
(each representing 25 Ordinary Shares) on Nasdaq. Following the
Assets Disposal, it is possible that after a certain period of time
and in the absence of a corporate transaction Nasdaq may subject
the ADSs to delisting proceedings as outlined further below. The
Directors intend to adhere to the Investing Policy following the
proposed AIM Delisting which includes the Company considering
winding down and distributing the remaining assets to Shareholders
in certain circumstances.
A notice convening a General Meeting to be held at the offices
of Cooley (UK) LLP, Dashwood, 69 Old Broad Street, London EC2M 1QS
at 2:00 p.m. on 15 March 2019, to consider the Resolutions, is set
out at the end of this document.
Background to and reasons for the Proposals
The Company was approved for listing on Nasdaq on 3 July 2018
thus expanding the trading platforms for its securities. On 14
August 2018, Realm announced top-line results of its Phase 2 trial
of PR022 in Atopic Dermatitis, a serious form of eczema and a
chronic, relapsing, inflammatory disease characterized by itchy,
inflamed skin. A further announcement on 17 September 2018 reported
that, having analysed the full data from the Atopic Dermatitis
trial and having considered the implications for the Company's
other pipeline programs, the Company concluded that the overall
study results did not meet its threshold for continued investment.
This resulted in the Company discontinuing its drug development
programs, which were all based on its proprietary hypochlorous acid
(HOCI) technology. At that time Realm also announced the engagement
of an adviser, MTS Health Partners, L.P., and the commencement of a
Takeover Code governed Formal Sale Process to explore all strategic
opportunities for the Company and to extract value for its
remaining assets. The Assets comprise the Vashe(R) wound care
royalty stream, an FDA 510(k)-cleared anti-itch hydrogel, which was
formerly marketed as Aurstat(TM), hypochlorous acid (HOCI) related
equipment, intellectual property (including know-how, patents and
copyrights), program records, and certain assigned contracts and
intellectual property licenses. As at the date of this document,
the Company's primary assets also include its cash,cash
equivalents, and short-term investments.
Realm received cash of $0.9 million and $1.1 million in 2017 and
2018, respectively, under the royalty agreement for the Vashe(R)
wound care product, with minimal offsetting operating costs. Realm
did not recognize royalty revenue during the year ended December
31, 2018 (2017: $1.1 million) as the Company adopted IFRS 15,
Revenue from Contracts with Customers, effective 1 January 2018,
upon which future minimum payments were recognized as an adjustment
to equity rather than as revenue over future periods. Equipment
included in the Assets have a value of approximately $0.3 million.
Since the inception of the strategic review process, the Company
has held a number of discussions with interested parties (including
potential offerors) regarding both the sale of the Assets (which
relate to the Company's proprietary technology and which are the
subject of the proposed Assets Disposal) and regarding its future
plans for the Company in the context of the Formal Sale Process.
Following the discontinuance of the Company's drug development
programs, the Company was not making significant investments in its
technology and did not anticipate leveraging the technology for
future commercial pursuits. Therefore the Company's aim was to seek
to monetize the Vashe(R) wound care product royalty stream and
realize value for its Assets to increase cash resources for a
potential strategic transaction (which, for potential offerors, may
involve a takeover offer for the Company).
At 31 December 2018, the Company had cash, cash equivalents and
short term investments of US$18.8 million. The Assets Disposal is
expected to generate approximately $9.6 million in net cash
proceeds, after deducting transaction costs. The net proceeds of
the Assets Disposal will be retained by the Company to augment its
current cash resources, which may be deployed in a potential
strategic transaction (which, for potential offerors, may involve a
takeover offer for the Company). If the Company executes a
strategic transaction (which, for potential offerors, may involve a
takeover offer for the Company), it will incur deal-related costs
including legal, tax advisory, accounting and banker fees and
employee separation costs.
The Company remains in discussions regarding the Formal Sale
Process which may subsequently result in either a takeover offer
for the Company or an acquisition constituting a reverse takeover
under AIM Rule 14, or, if a suitable strategic transaction (which,
for potential offerors, may involve a takeover offer for the
Company) is not identified, a potential winding down of the Company
and distribution to Shareholders of the Company's remaining assets
following satisfaction of all applicable liabilities and
obligations.
At the current time discussions are ongoing with a number of
interested parties (including potential offerors) some of whom are
interested in a reverse takeover transaction (to acquire the
benefit of the Company's Nasdaq listing and cash) and others, who
are potential offerors, are interested in making a takeover offer
for the Company in order to access its cash. The Directors can
confirm that none of the current interested parties (including
potential offerors) are interested in entering into a strategic
transaction with the Company (which, for potential offerors, may
involve a takeover offer for the Company) are seeking to acquire
the Assets which are the subject of the Assets Disposal.
Any potential offeror considering a takeover offer for the
Company is entitled to the benefit of Rule 21.1 of the Takeover
Code in order to ensure that the Company does not otherwise dispose
of a material asset which might frustrate such a takeover offer
being made; interested parties considering a reverse takeover
transaction do not have the benefit of Rule 21.1 of the Takeover
Code as they are not potential offerors for the Company for the
purposes of the Takeover Code. In all cases, interested parties
(including potential offerors) have made it clear to the Company,
during the course of the ongoing discussions, that they have no
interest in the Assets which are the subject of the Assets
Disposal, but are primarily interested in the cash balances of the
Company. No currently interested party (including potential
offerors) chose to participate in the sale process relating to the
Assets, nor have they objected to the Assets Disposal on the
grounds of Rule 21.1 of the Takeover Code, or otherwise).
In discussions with all of the interested parties (including all
potential offerors), the Company's advisers have made it clear that
it is the intention of the Company to move forward with the Assets
Disposal. All interested parties (including all potential offerors)
have confirmed in discussions that, if they were to proceed with a
strategic transaction (which, for potential offerors, may involve a
takeover offer for the Company) they see the Assets Disposal as a
positive step to increasing the net cash assets of the Company
(which would ultimately be deployed in developing the business so
acquired) and that their intention would primarily be driven by the
ability to access the net cash balances of Realm to finance their
existing business. No potential offeror has expressed any desire to
retain the income stream generated by the assets the subject of the
Assets Disposal and all have expressed a preference for net
immediately available cash to be maximised.
Shareholders should note that the current Formal Sale Process is
a process mandated and regulated by the Takeover Code, and is
accordingly conducted within the context of the protections
afforded by the Takeover Code. However, should the AIM Delisting be
approved by Shareholders and become effective, the current sale
process will continue to be conducted by the Board but will cease
to be a formal sale process within the rules of the Takeover
Code.
Accordingly the Directors are of the view that by effecting the
Assets Disposal they are making Realm more attractive as a
candidate for a strategic transaction (which, for potential
offerors, may involve a takeover offer for the Company) by
monetising the legacy assets for a substantial multiple of the
annualised income historically generated from those assets, and
thereby increasing the value of Realm for interested parties
(including potential offerors) whose assessment of Realm is
primarily based on net cash and, in some cases, the intrinsic value
of the Nasdaq listing. For these reasons the Directors do not
consider that the Assets Disposal would in any way reduce the
attractiveness of Realm to interested parties (including potential
offerors) and, based on discussions to date, consider that the
Assets Disposal potentially enhances the value of the Company to
interested parties (including potential offerors) based on the
factors which those interested parties (including potential
offerors) have stated would influence that value that they would
put on the Company.
As is explained in more detail below, should the AIM Delisting
become effective, the Formal Sale Process will cease to be governed
by the Takeover Code; however the Directors intend that the
objectives of that sales process will remain unaltered and
anticipate providing an update on the process in early Q2 2019.
(i) Proposed Assets Disposal
Summary of the principal terms of the Assets Disposal
Agreement
The Company has reached an agreement to sell the Assets to the
Purchaser for a consideration of US$10 million, payable in cash to
the Company in the amount of US$9.75 million on Completion,
targeted for 15 March 2019, and the remaining US$250,000 due within
six Business Days after Completion, following inspection of
relevant assets.
Under the terms of the Assets Disposal Agreement, the Purchaser
has agreed to purchase and the Company has agreed to sell the
Assets, conditional on, inter alia, the Shareholders approving the
Assets Disposal at the General Meeting.
Further key terms of the Assets Disposal Agreement include:
customary representations and warranties from Realm and the
Purchaser remaining correct in all material respects as of
Completion, and the parties' compliance with any covenants and
pre-conditions.
The Assets Disposal Agreement is governed by the laws of the
State of Delaware.
A copy of the Assets Disposal Agreement will be put on display
pursuant to Rule 26.1 and the notes to Rule 21.1 of the Takeover
Code on the following website at
http://ir.realmtx.com/investor-relations by no later than 12 noon
on the Business Day following the date of this document.
For the purposes of Rule 21.1(a) of the Takeover Code, the
Assets Disposal is a disposal of assets of a material amount (by
reference to the current market capitalisation of the Company) and
the Assets Disposal Agreement is a contract outside the ordinary
course of business. The Takeover Panel has agreed that the
restrictions imposed by Rule 21.1(a) may be relaxed provided that
the Assets Disposal is approved by ordinary resolution (that being
an approval by holders of shares carrying more than 50% of the
voting rights at a general meeting). The Takeover Code also
requires the Company to seek competent independent advice as to
whether the financial terms of the proposed transaction are fair
and reasonable; the Company has sought and obtained such advice
from N+1 Singer, which is referred to in the Recommendation in
paragraph 11, below. In providing this advice, N+1 Singer has
considered the competitive and open process which has been
undertaken by the Company in respect of the Assets Disposal, taken
into account the commercial assessments of the Directors, and
conducted an analysis of the Assets Disposal value relative to the
possible income available through the existing license agreement, a
renewed license or an alternate license.
Information regarding the Purchaser
The Purchaser is Urgo US, Inc, a State of Delaware-incorporated
subsidiary of the French family-owned Laboratories URGO SAS, an
international healthcare company that seeks to address an increased
need worldwide for the care of chronic wounds, but also give access
to consumer healthcare solutions and which lately developed a
pioneering role in neurotechnology. The Purchaser is the parent
company of SteadMed Medical, N.A. (which merged with Urgo Medical
North America in 2018), the partner from whom Realm collects the
Vashe(R) wound care product royalties.
Consequences of the proposed Assets Disposal
Following Completion of the Assets Disposal, if the AIM
Delisting has not occurred, the Company would immediately become an
AIM Rule 15 cash shell given that the proposed Assets Disposal
represents a fundamental change to the business of the Company,
which would cease to own, control or conduct all or substantially
all, of its current business activities and would be focused
exclusively on the strategic review process.
As an AIM Rule 15 cash shell, the Company will be required to
make an acquisition or acquisitions constituting a reverse takeover
under AIM Rule 14 (including seeking re-admission as an investing
company (as defined under the AIM Rules for Companies)) on or
before the date falling six months from Completion of the Assets
Disposal unless the Company delists from AIM prior to that date.
Shareholders should note, however, that the Board is seeking their
approval for the AIM Delisting immediately preceding Completion (as
detailed below), but should the AIM Delisting not proceed, failure
to complete a reverse takeover within such timeframe would result
in the suspension of the Ordinary Shares from trading on AIM and,
pursuant to AIM Rule 40, admission to trading on AIM would be
cancelled six months from the date of suspension should the reason
for the suspension not have been rectified.
The Assets Disposal will constitute a "Fundamental Transaction"
under the terms of the Company's warrants issued in October 2017,
whereupon the Company will be required to issue replacement
warrants equal to the value, if any, prescribed in the terms of
those warrants. If the outstanding warrants are deemed under their
terms not to have a value at the relevant date, they will be
cancelled in their entirety.
The Takeover Code currently applies to the Company by virtue of
the listing of the Ordinary Shares on AIM. Should the AIM Delisting
be approved by Shareholders, as Realm will remain a public limited
company incorporated in England and Wales but its securities will
not be admitted to trading in the UK, Channel Islands and the Isle
of Man, the Takeover Code will only apply to Realm if it is
considered by the Takeover Panel to have its place of central
management and control in the UK, Channel Islands and the Isle of
Man. This is known as the "residency test." Under the Takeover
Code, the Takeover Panel will look to where the Directors of Realm
are resident for the purposes of determining where Realm has its
place of central management and control. In the case of Realm only
two of the Directors are resident in the United Kingdom, with the
remaining five Directors being resident in the USA.
Accordingly the Takeover Panel has confirmed to Realm that, upon
the AIM Delisting becoming effective, the Takeover Code will cease
to apply to Realm, and Realm and the Shareholders will therefore
not have the benefit of the protections the Takeover Code affords,
including, but not limited to, the requirement that a person who
acquires an interest in Ordinary Shares carrying 30% or more of the
voting rights in Realm must make a cash offer to all other
Shareholders at the highest price paid in the 12 months before the
offer was announced, and in a reverse takeover will not require the
Takeover Panel's consent to a waiver of Rule 9 of the Takeover
Code, which would otherwise be subject to vote of independent
Shareholders.
In addition, Shareholders should be aware that were the Assets
Disposal not to be approved, but the AIM Delisting were to be
approved and become effective, Rule 21.1 of the Takeover Code would
no longer apply and, in that circumstance, despite Shareholders
having voted not to approve the Assets Disposal, the continuing
protections that would otherwise be provided by the Takeover Code
in this respect would also no longer apply, potentially allowing
the Directors to proceed with the Assets Disposal (without the
requirement for Shareholder approval under either the Takeover Code
or the AIM Rules for Companies).
The current Formal Sale Process is a process mandated and
regulated by the Takeover Code, and is accordingly conducted within
the context of the protections afforded by the Takeover Code.
Should the AIM Delisting be approved by Shareholders and become
effective, the current sale process will continue to be conducted
by the Board but will cease to be a formal sale process within the
rules of the Takeover Code.
The Company does not intend to delist the ADSs representing its
Ordinary Shares from Nasdaq. However, following the Assets
Disposal, the Company may be treated as a "public shell" under the
Nasdaq rules and the US Securities Act. Although Nasdaq evaluates
whether a listed company is a public shell company based on a facts
and circumstances determination, a Nasdaq-listed company with no or
nominal operations and either no or nominal assets, assets
consisting solely of cash and cash equivalents, or assets
consisting of any amount of cash and cash equivalents and nominal
other assets is generally considered to be a public shell. Listed
companies determined to be public shells by Nasdaq may be subject
to delisting proceedings or additional and more stringent listing
criteria. Nasdaq will generally except from the delisting process
for a limited period of time (in this case, expected to be at least
until early May 2019) a company that is in the process of
consummating a transaction that will cause it to become an
operating company, as the Investing Policy envisions. However, if,
absent such a transaction and after applicable notice periods
and
any hearing process, the ADSs would likely be delisted from
Nasdaq , the Company would expect that such securities would be
traded OTC in the United States, which is sometimes colloquially
referred to as the "Pink Sheets." Securities quoted on the OTC are
subject to different requirements than securities listed for
trading on a US national stock exchange, such as Nasdaq, including
reduced corporate governance and public reporting standards. Whilst
the Company aims to complete such a transaction, and the Company is
in discussions with a number of interested parties (including
potential offerors) in this regard, should such circumstances arise
whereby a transaction is not completed, the Company would in the
immediate term consider the most appropriate market for listing its
ADSs in the US. The Directors intend to adhere to the Investing
Policy, which as detailed below, includes considering winding down
and distributing the Company's remaining assets, after satisfaction
of liabilities and obligations, to Shareholders in certain
circumstances. Certain additional risks in connection with the
possible Nasdaq delisting of the Company's ADSs are summarised in
Part III of this document.
(ii) Proposed adoption of an Investing Policy
Subject to Shareholder approval of the Assets Disposal
(Resolutions 1 and 2 (which are inter-conditional)), the Company
would be required, as an AIM Rule 15 cash shell, to adopt an
Investing Policy, with the adoption of such policy subject to
Shareholder approval (Resolution 3). In addition, and as requested
by the Takeover Panel, Shareholder approval for the adoption of
Investing Policy is also sought for the purposes of Rule 21.1
(Resolution 4). The requirement for the Company to adopt an
Investing Policy (set out below) is therefore conditional upon the
approval by the Shareholders of the Assets Disposal.
Whilst the Directors do not believe that the adoption of the
Investing Policy will fetter or otherwise impact their current
discussions and stated strategy, nevertheless it is possible that
such action might be considered to a matter within the scope of
Rule 21.1(a) of the Takeover Code as potentially action which could
lead to a bona fide potential offer being frustrated or in
Shareholders being denied the opportunity to decide on the merits
of such an offer. Whilst the Directors have no reason to believe
that this would be the case, the Directors are seeking a separate
Shareholder approval for the adoption of the Investing Policy for
the purposes of Rule 21.1(a) of the Takeover Code by ordinary
resolution (that being an approval by holders of shares carrying
more than 50% of the voting rights at a general meeting).
Shareholder approval of the proposed AIM Delisting (Resolution
5) is not inter-conditional with Resolutions 1,2, 3 or 4. Should
Shareholders vote in favour of Resolution 5, during the period
between Completion and the AIM Delisting taking effect the Company
will be obliged pursuant to the AIM Rules for Companies to adhere
to the Investing Policy; this is entirely consistent with the
strategy currently being pursued by the Board and will have no
impact on the on-going strategic review or Formal Sale Process.
Should the AIM Delisting be approved and become effective, the
Company will no longer be an AIM Rule 15 cash shell and nor will
the Company be obliged to adhere to the Investing Policy or be
subject to the Takeover Code. Notwithstanding this, the Directors
confirm their intention to adhere to the Investing Policy following
the proposed AIM Delisting, as it will remain in keeping with the
evaluation of all available alternatives for maximising Shareholder
value as described at the initiation of the strategic review.
Investing Policy
Pursuant to the AIM Rules for Companies, the Company will be
required to adopt an Investing Policy that requires the Directors
to examine potential strategic opportunities. The Investing Policy
will require the Company to seek to invest in, partner with,
acquire and/or be acquired by companies with meaningful development
potential in the life sciences sector or with good overall business
prospects; or, if a suitable transaction is not identified, the
Company will consider winding down and distributing the remaining
assets to Shareholders, following satisfaction of applicable
obligations.
The Board intends to focus primarily on the US, UK and European
Economic Area where the Board believes that there are suitable
opportunities, although other countries may also be considered to
the extent that the Board considers that value opportunities exist
and attractive potential returns are possible. In selecting
transaction opportunities, the Board will focus on businesses that
have attractive valuations and hold opportunities to unlock
embedded value. The existence of a strong management team will be
an important factor in the Board's evaluation of a transaction
opportunity.
The Board will seek to invest in, partner with, acquire and/or
be acquired by businesses where it may, as appropriate, represent
Shareholders at a board level. These criteria are not intended to
be exhaustive; however, the Company may enter into a transaction
which does not fulfil all of the above investment criteria if the
Directors believe that it is in the interests of Shareholders as a
whole to proceed with such a transaction. Any transaction will, if
required by applicable law and regulation, be put to Shareholders
for their approval at the appropriate time. A transaction may be
made into a public or private company and may structure as a direct
acquisition, a reverse takeover or reverse merger or an acquisition
of the Company. The Company does not currently intend to fund any
investment with debt or other borrowings, but may do so if
appropriate. The Company's primary objective is that of achieving a
value enhancing proposition for Shareholders.
For the avoidance of doubt, the Company entered into an
investment policy at the time of announcing its entry into the
Formal Sale Process, which relates to cash management whilst
evaluating strategic transaction options (which, for potential
offerors, may involve a takeover offer for the Company) - the
investment policy and the Company's compliance with it will not be
impacted by the passing of any of the Resolutions.
(iii) Proposed AIM Delisting
The Directors have undertaken a review of the advantages and
disadvantages associated with the continued admission of the
Ordinary Shares to trading on AIM, considering both access to the
relevant equity capital markets and having a second public market
in the Company's securities versus the cost and management time
associated with maintaining a dual-quotation on AIM. Costs of the
AIM listing include fees payable to the London Stock Exchange,
nominated adviser and brokerage fees, shareholder communication
time and costs, professional advisory fees and expenses.
The Company also notes the costs, professional advisory fees and
expenses associated with the compliance with the Takeover Code in
the context of the Formal Sale Process, and reiterates the
confirmation of the Takeover Panel that, subject to the AIM
Delisting becoming effective, the Takeover Code will no longer
apply to the Company on the basis that the Company's place of
central management and control is outside of the UK, Channel
Islands and the Isle of Man.
The Board notes that approximately 40% of Ordinary Shares are,
as at the date of this document, held in the form of ADSs. The
Board believes the Company does not merit the ongoing costs and
regulatory complexities associated with a dual listing and that it
would be advantageous for all Shareholders to seek, to the extent
possible, to combine trading volumes of the Ordinary Shares on AIM
and the ADSs on the Nasdaq Capital Market onto a single trading
exchange (Nasdaq Capital Market, wherein trades will be made in the
form of ADSs).
The Directors have concluded that an AIM Delisting is in
Shareholders' best interests and are therefore seeking the AIM
Delisting which is conditional on the approval of not less than 75%
of votes cast by Shareholders (in person or by proxy) at the
General Meeting. The Directors also note that, subject to
Shareholder approval of the AIM Delisting, the Ordinary Shares will
continue to be a valid equity interest in capital of the Company
with the rights set out in the Articles, which include voting
rights and rights to future dividends (if any).
Under AIM Rule 41, cancellation requires the expiration of a
period of not less than 20 Business Days from the date on which
notice of the intended cancellation is given to the London Stock
Exchange. The Directors have notified the London Stock Exchange of
the proposed AIM Delisting and that, subject to Shareholder
approval, the AIM Delisting will take effect at 7:00 a.m. on 27
March 2019 and the last day of trading of the Ordinary Shares on
AIM will be 26 March 2019.
In addition to providing Shareholders with advance notice in
excess of the regulatory requirement for an AIM Delisting, the
Company is also providing clear guidance as to how to convert
Ordinary Shares into ADSs listed for trading on Nasdaq for those
Shareholders who wish to do so in order to continue to hold their
investment in the Company in a publicly tradeable form.
Shareholders should consider potential tax implications arising
based on the timing of any planned conversion, as noted below.
Consequences of AIM Delisting (subject to Shareholder
approval)
(a) Lack of trading venue for Ordinary Shares
Ordinary Shares will continue to be traded on AIM until the
close of business on 26 March 2019. After that date there will no
longer be a formal market mechanism enabling Shareholders to trade
their Ordinary Shares on AIM. However, the Shareholders will have
the option of converting their Ordinary Shares into ADSs. The
Company will not be offering any form of trading venue for the
Ordinary Shares in London or otherwise (including, for the
avoidance of doubt, any form of matched bargain facility for
continuing holders of the Company's securities in the form of
Ordinary Shares).
(b) Loss of the protections afforded by the Takeover Code
Shareholders should note the Takeover Panel has confirmed to
Realm that, if the AIM Delisting is approved and upon becoming
effective, the Takeover Code will no longer apply to Realm and
Shareholders will cease to have the protections afforded by the
Takeover Code in the event that there is a subsequent offer to
acquire their Ordinary Shares. Further details of these protections
that will be lost as a consequence of AIM Delisting are set out in
paragraph 5, below.
(b) Shareholder action and costs necessary to convert Ordinary Shares to ADSs
Realm is advised that conversion of Ordinary Shares admitted to
AIM into ADS form is not currently subject to UK stamp duty or
SDRT. Shareholders must note that conversion of Ordinary Shares
into ADSs after the AIM Delisting may incur UK stamp duty or SDRT
(currently 1.5% of the market value of the shares converted). If at
any point the conversion of Ordinary Shares into ADSs results in UK
stamp duty or SDRT, the Shareholder will be responsible for the
payment of any such UK stamp duty or SDRT and not, for the
avoidance of doubt, the Depositary, the Custodian, the Company or
any other party. The timescale for conversion of an Ordinary Share
via a broker into ADS form can vary based on many factors including
the form in which you hold your Ordinary Shares and the promptness
of your instruction to and action by your broker.
The Company has agreed to absorb the cost of Shareholders
converting their Ordinary Shares into ADSs so there will be no cost
to Shareholders to convert from the date of this Circular until the
date of the AIM Delisting. Thereafter, conversion fees will be
charged by the Depositary at a cost which is currently US$0.05 per
ADS. An annual holding fee, currently US$0.02 per ADS, is levied by
the Depositary in August each year. This is typically paid and
charged to an ADS holder's account by their broker on an annual
basis.
(c) Disapplication of AIM Rules for Companies
The Company will no longer be bound by the AIM Rules for
Companies or be required to have a nominated adviser and
Shareholders would no longer be required to vote on certain matter
prescribed by the AIM Rules for Companies. Furthermore the Company
will no longer be bound to "comply or explain" with the corporate
governance requirements for companies with shares admitted to
trading on AIM. Specifically the Company would no longer be subject
to the QCA Corporate Governance Code; though, Realm does not expect
there to be any material change in the corporate governance
procedures applied by Realm as a result of the AIM Delisting and
will continue to act in accordance with applicable law and
regulation. This will include:
- holding an annual general meeting and, when required, other
general meetings, in accordance with the applicable statutory
requirements and the Articles;
- making available to all Shareholders the Company's annual
report and financial statements and continuing to prepare
consolidated United Kingdom statutory accounts under IFRS and in
accordance with the applicable requirements of the Companies Act
2006;
- maintaining a Nasdaq-rule compliant "investors" section on the
Company's website providing information on significant events and
developments; and
- adhering to the Investing Policy.
(d) Disapplication of rules and regulations applicable to issuers listed in the UK
Following the AIM Delisting, Realm will no longer be required to
comply with the continuing obligations set out in the DTRs or the
MAR (as Nasdaq is not an in-scope exchange for the purposes of such
legislation). In addition, Realm will no longer be subject to the
provisions of the DTRs relating to the disclosure of changes in
significant shareholdings in Realm.
Accordingly, following the proposed AIM Delisting and for so
long as the Company's ADSs remain listed on Nasdaq, the Company's
ongoing market notification obligations will be solely governed by
the rules and regulations of the US Securities and Exchange
Commission (including the Exchange Act), and all other laws, rules
and regulations applicable to a company with shares listed on
Nasdaq.
In addition, Realm will continue to be subject to the Companies
Act 2006 and all other laws and regulations to the extent
applicable to a public company incorporated in England and Wales
with a Nasdaq-listing of ADSs.
The AIM Delisting process
The AIM Rules for Companies require that, unless the London
Stock Exchange otherwise agrees, the AIM Delisting must be
conditional upon the consent of not less than 75% of votes cast by
those Shareholders voting at the General Meeting.
Ordinary Shares will continue to be traded on AIM until the
close of business on 26 March 2019. Subject to Shareholder
approval, the AIM Delisting will take effect at 7:00 a.m. on 27
March 2019. Thereafter, Ordinary Shares will continue to be capable
of being held and transferred in certificated form but there will
be no public market in the UK on which Shareholders will be able to
trade Ordinary Shares. However, Nasdaq listing of ADSs will not be
affected by the proposed AIM Delisting and Shareholders will be
able to convert their Ordinary Shares in the Company into ADSs,
which are listed for trading on Nasdaq.
An explanation of the key steps in the process of converting
Ordinary Shares into ADSs and contact details are provided in the
Appendix to this document and the relevant supplementary
Schedule.
Shareholders should note that only CREST Shareholders should
submit the "Notice to Brokers and SDRT Certification Form"
(Schedule 1) to the Depositary, whereas only certificated
Shareholders should submit Transfer Form request (Schedule 2) to
the Receiving Agent.
Subject to Shareholder approval, Shareholders should consider
converting their Ordinary Shares into ADSs prior to the AIM
Delisting for the following reasons:
- Realm is advised that conversion of Ordinary Shares admitted
to AIM into ADS form is not currently subject to UK stamp duty or
SDRT. However, following AIM Delisting, the conversion process may
result in a liability to pay UK stamp duty or SDRT at the rate of
1.5% of the value of Ordinary Shares being converted to the UK
taxation authority, HMRC. If Ordinary Shares are converted after
AIM Delisting, your broker will have to manage the
dematerialisation of the Ordinary Shares with CREST and will need
to confirm to the Depositary that any UK stamp duty or SDRT,
payable in respect of the deposit of Ordinary Shares and the
issuance and delivery of ADSs, has been paid, prior to completion
of the conversion of Ordinary Shares into ADS form.
- Shareholders must note that conversion of Ordinary Shares into
ADSs after the AIM Delisting may incur UK stamp duty or SDRT
(currently 1.5% of the market value of the shares converted), at
which point the Shareholder will be responsible for the payment of
any such UK stamp duty or SDRT and not, for the avoidance of doubt,
the Depositary, the Custodian, the Company or any other party.
- conversion of Ordinary Shares into ADSs has to take place in
multiples of 25. It is not possible to receive a fraction of an
ADS, so in the event that this conversion is completed after AIM
Delisting has taken place, there is a risk that Shareholders will
be left with a small number of Ordinary Shares (maximum 24 Ordinary
Shares) which cannot be converted into ADSs. If converted before
AIM Delisting has taken effect any residual Ordinary Shares can be
sold on AIM. To the extent that any residual Ordinary Shares are
not sold on AIM, such Ordinary Shares will be delisted from
AIM.
- subject to the required paperwork being returned to the
Registrar by the required deadline (5:00 p.m. on 18 March 2019),
the Receiving Agent will arrange for the relevant Ordinary Shares
to be transferred to the Depositary, and the Depositary will
convert such Ordinary Shares into ADS form and transmitted to an
account held in the name of the relevant Shareholder with the
Company's Depositary, Citibank, N.A., or its Custodian.
- certificated Shareholders who do not elect to participate in
the conversion of Ordinary Shares into ADSs can utilise the
services of a broker to facilitate conversion at their convenience
after AIM Delisting has occurred. Details of the process to be
followed and the forms to be completed, are included on the
Company's website (and set out in the following pages). If you have
any questions about this process please contact your stockbroker or
an independent financial adviser.
Shareholders holding Ordinary Shares not in ADS form are
recommended to consult their stockbroker, solicitor, accountant or
other independent financial adviser who is authorised for the
purposes of FSMA, if you are resident in the United Kingdom, or, if
not, from an otherwise appropriately authorised independent
financial adviser, in relation to the action they should take in
relation to their Ordinary Shares.
Future Company status following the AIM Delisting
As a company incorporated in England and Wales, Realm will
continue to be subject to the requirements of the Companies Act
2006.
Subject to Shareholder approval, following the AIM Delisting
becoming effective, the Company will no longer be subject to the
AIM Rules for Companies. However, the Company does not propose to
cancel the admission to trading of ADSs on Nasdaq (although it is
possible that, due to the Assets Disposal, Nasdaq may subject the
ADSs to delisting proceedings or impose additional or more
stringent criteria thereon, in which case the Directors intend to
adhere to the Investing Policy, which includes the Directors
considering winding down and distributing the remaining assets to
Shareholders in certain circumstances).
Takeover Code implications of the Proposed AIM Delisting
Shareholders should note that, subject to their approval of the
AIM Delisting and the AIM Delisting becoming effective, the
Takeover Panel has confirmed to Realm that the Takeover Code will
no longer apply to Realm and Shareholders will cease to have the
protections afforded by the Takeover Code in the event that there
is a subsequent offer to acquire their Ordinary Shares.
Brief details of the Takeover Panel, the Takeover Code and the
protections given by the Takeover Code are described below.
In addition, Shareholders should be aware that were the Assets
Disposal not to be approved but the AIM Delisting were to be
approved and to become effective, Rule 21.1 of the Takeover Code
would no longer apply and despite Shareholders having voted not to
approve the Assets Disposal, the continuing protections that would
otherwise be provided by the Takeover Code in this respect would
also no longer apply, potentially allowing the Directors to proceed
with the Assets Disposal(without the requirement for Shareholder
approval under either the Takeover Code or the AIM Rules for
Companies).
Before giving your consent to the AIM Delisting, you may want to
take independent professional advice from an appropriate
independent financial adviser.
The Takeover Code
The Takeover Code is issued and administered by the Takeover
Panel. Realm is a company to which the Takeover Code currently
applies and its Shareholders are accordingly entitled to the
protections afforded by the Takeover Code.
The Takeover Code and the Takeover Panel operate principally to
ensure that shareholders are treated fairly and are not denied an
opportunity to decide on the merits of a takeover and that
shareholders of the same class are afforded equivalent treatment by
an offeror. The Takeover Code also provides an orderly framework
within which takeovers are conducted. In addition, it is designed
to promote, in conjunction with other regulatory regimes, the
integrity of the financial markets.
The General Principles and Rules of the Takeover Code
The Takeover Code is based upon a number of General Principles
which are essentially statements of standards of commercial
behaviour. For your information, these General Principles are set
out in Section 1 of Part III of this document. The General
Principles apply to all transactions with which the Takeover Code
is concerned. They are expressed in broad general terms and the
Takeover Code does not define the precise extent of, or the
limitations on, their application. They are applied by the Takeover
Panel in accordance with their spirit to achieve their underlying
purpose.
In addition to the General Principles, the Takeover Code
contains a series of Rules, of which some are effectively
expansions of the General Principles and examples of their
application and others are provisions governing specific aspects of
takeover procedure. Although most of the Rules are expressed in
more detailed language than the General Principles, they are not
framed in technical language and, like the General Principles, are
to be interpreted to achieve their underlying purpose. Therefore,
their spirit must be observed as well as their letter. The Takeover
Panel may derogate or grant a waiver to a person from the
application of a Rule in certain circumstances.
Giving up the protection of the Takeover Code
A summary of key points regarding the application of the
Takeover Code to takeovers generally is set out in Section 2 of
Part III of this document. You are encouraged to read this
information carefully as it outlines certain important protections
which you will be giving up if you agree to the AIM Delisting.
UK tax treatment
Many investors purchase AIM-quoted shares because they are
classed as unlisted/unquoted securities which may qualify for
relief from inheritance taxation and certain other preferential tax
benefits. Realm cannot and does not provide any form of taxation
advice to Shareholders and therefore Shareholders are strongly
advised to seek their own taxation advice to confirm the
consequences for them of continuing to hold unlisted Ordinary
Shares or converting Ordinary Shares into ADS form.
The Company's understanding of the current position under UK
taxation law is as follows (but it should be noted that the Company
has not taken steps to confirm the current position with HMRC and
therefore the following should not be relied upon by Shareholders
without taking further advice):
- following the AIM Delisting, Ordinary Shares should continue
to be accepted by HMRC as qualifying as unlisted/unquoted
securities for the purposes of certain specific UK tax rules
(notably, the UK inheritance tax business property relief rules).
Therefore, those Shareholders who elect to continue to hold
unlisted Ordinary Shares should continue to be regarded as holding
unlisted/unquoted securities under those same rules; and
- those Shareholders who elect to convert their holdings of
Ordinary Shares to Nasdaq-listed ADSs should similarly still be
regarded as holding unlisted/unquoted securities for the purposes
of the same specific UK tax rules as are referred to above. Each
ADS is a financial instrument which represents 25 Ordinary Shares
held on deposit with the Depositary's Custodian on behalf of the
ADS holder. As the ADS holder retains similar rights to a direct
holder of Ordinary Shares (rights to vote, rights to dividend,
etc.) subject in all instances to the terms and conditions of the
governing deposit agreement and it is the ADS rather than the
Ordinary Shares themselves that are listed, the Company understands
that the listing of ADSs on Nasdaq and the AIM Delisting should not
cause the Ordinary Shares to be treated by HMRC as listed/quoted
securities ceasing to qualify for relief under the specific UK tax
rules referred to above (in particular, under the UK inheritance
tax business property relief rules).
If you are in any doubt as to your tax position you should
consult an appropriate professional adviser immediately.
General Meeting
Set out at the end of this document you will find a notice
convening the General Meeting which is to be held at the offices of
Cooley (UK) LLP, Dashwood, 69 Old Broad Street, London EC2M 1QS at
2:00 p.m. on 15 March 2019, for the purpose of considering, and if
thought fit, passing the Resolutions.
For the avoidance of doubt, Shareholders should note that due to
regulatory reasons they are effectively being asked to vote on the
proposed Assets Disposal and the adoption of the proposed Investing
Policy twice, firstly for the purposes of the AIM Rules for
Companies and secondly for the purposes of the Takeover Code.
Details of the Resolutions which are to be proposed are set out
below:
Resolution 1: Approval of the Assets Disposal for the purposes
of AIM Rule 15
Resolution 1 will be proposed as an ordinary resolution and
seeks the approval by Shareholders of the Assets Disposal, which is
a transaction constituting a "disposal resulting in a fundamental
change of business" for the purposes of AIM Rule 15.
Resolution 2: Approval of the Assets Disposal for the purposes
of Rule 21.1(a) of the Takeover Code
Resolution 2 will be proposed as an ordinary resolution and
seeks the approval by Shareholders of the Assets Disposal for the
purposes of Rule 21.1(a) of the Takeover Code. Resolution 2 is
conditional on the passing of Resolution 1.
Resolution 3: Adoption of Investing Policy in accordance with
the AIM Rules for Companies
Resolution 3 is proposed as an ordinary resolution and seeks
approval by Shareholders for the Company to adopt the Investing
Policy, in accordance with the AIM Rules for Companies. Resolution
3 will be conditional on the passing of Resolutions 1 and 2.
Resolution 4: Approval of Investing Policy for the purposes of
Rule 21.1(a) of the Takeover Code
Resolution 4 is proposed as an ordinary resolution and seeks
approval by Shareholders for the Company for to adopt the Investing
Policy for the purposes of Rule 21.1(a) of the Takeover Code.
Resolution 4 will be conditional on the passing of Resolutions 1, 2
and 3.
Resolution 5: Approval of AIM Delisting
Resolution 5 will be proposed as a special resolution and seeks
the approval by Shareholders of the AIM Delisting. Resolution 5 is
not conditional on the passing of Resolutions 1, 2, 3 or 4.
Explanatory note
The Assets Disposal will not be implemented under the terms of
the Assets Disposal Agreement unless Resolutions 1 and 2 are both
passed and become unconditional in accordance with its terms. The
Company will not adopt the Investing Policy if Resolutions 1 and 2
are not both passed, as it will not become an AIM Rule 15 cash
shell in that circumstance. The AIM Delisting contemplated by
Resolution 5 is not inter-conditional with Resolutions 1, 2, 3 or
4.
Director Voting Support
The Directors have given commitments to the Company to vote in
favour of the Resolutions to be proposed at the General Meeting
(and, where relevant, to procure that such action is taken by the
relevant registered holders if that is not them) in respect of
their entire beneficial holdings totalling in 664,731 Ordinary
Shares, representing approximately 0.6% of the issued share capital
of Realm as at the date of this document.
Nominated adviser and broker
Subject to the passing of Resolution 5 and the AIM Delisting
taking effect, there will no longer be a requirement for the
Company to maintain the appointment of a nominated adviser and
broker. On behalf of the Board, I would like to take this
opportunity to thank N+1 Singer for its support since November
2014.
Action to be taken
A Form of Proxy is enclosed for use by Shareholders at the
General Meeting. Whether or not Shareholders intend to be present
at the General Meeting they are asked to complete, sign and return
the Form of Proxy to the Registrar/Receiving Agent, Equiniti
Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA,
as soon as possible but in any event so as to arrive no later than
2:00 p.m. on 13 March 2019. The completion and return of the Form
of Proxy will not preclude you from attending and voting in person
at the meeting should you so wish. Accordingly, whether or not
Shareholders intend to attend the General Meeting in person they
are urged to complete and submit a Form of Proxy as soon as
possible.
CREST members may use the CREST electronic appointment service
to submit their proxy appointments in respect of the General
Meeting. Those proxy appointments should be submitted to the
Registrar, Equiniti (ID RA19) using the procedures described in the
CREST Manual.
Holders of ADSs will receive ADR proxy materials which will
contain instructions on how to vote their ADSs. Questions may be
directed to Citibank Shareholder Services at P.O. Box 43077
Providence, Rhode Island 029040-3077 USA or at +1-877-248-4237
(toll free within the US) or at +1-781-575-4555 (for international
callers).
Further information about the process required to convert
Ordinary Shares into ADSs listed for trading on Nasdaq, together
with a set of Frequently Asked Questions (FAQs) can be found on in
the Appendix to this document and the relevant supplementary
Schedule. Shareholders should note that only CREST Shareholders
will be posted the "Notice to Brokers and SDRT Certification Form"
(Schedule 1), whereas only certificated Shareholders will be posted
the "Transfer Form" (Schedule 2).
Should you require further information or assistance, further
information can be found within the Investor Relations section of
the Realm website at www.realmtx.com and a Shareholder assistance
advice line is being operated by the Registrar/Receiving Agent,
Equiniti Limited, which can be accessed by all Shareholders on 0371
384 2050 (or, if calling from overseas, on +44 121 415 0259). Calls
are charged at the standard geographical rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate. The Helpline is open between 8:30
a.m. to 5:30 p.m., Monday to Friday excluding public holidays in
England and Wales. Different charges may apply to calls from mobile
telephones and calls may be recorded and randomly monitored for
security and training purposes.
Recommendation
The Board, having been so advised by N+1 Singer as to the
financial terms of the Assets Disposal, consider such terms to be
fair and reasonable. The Board further considers that the passing
of the Resolutions is in the best interests of the Company and the
Shareholders as a whole. Accordingly, the Directors unanimously
recommend Shareholders to vote in favour of the Resolutions to be
proposed at the General Meeting, as they have given their
commitments do so in respect of their own beneficial shareholdings
totalling 664,731 Ordinary Shares, representing 0.6% of the
Company's issued share capital as at the date of this document.
Yours faithfully,
Charles Spicer
Chairman
DEFINITIONS
ADS American Depositary Share, each representing
25 Ordinary Shares
Affiliate an affiliate of the issuer is a person
that directly, or indirectly through
one or more intermediaries, controls,
or is controlled by, or is under common
control with, such issuer. Factors the
SEC has indicated as relevant to the
determination of "control" include an
individual's status as a director, officer,
or 10% shareholder
AIM AIM, a market operated by the London
Stock Exchange
AIM Delisting proposed cancellation of the Company's
Ordinary Shares from admission to trading
on AIM, subject to the passing of the
appropriate resolution by the Shareholders
at the General Meeting
AIM Rules for Companies rules for companies whose securities
are traded on AIM issued by the London
Stock Exchange; references to specific
"AIM Rules" in this document shall be
construed accordingly
AIM Rules for Nominated rules for nominated advisers of issuers
Advisers whose securities are traded on AIM issued
by the London Stock Exchange
Assets Vashe(R) wound care royalty stream,
an FDA 510(k)-cleared anti-itch hydrogel,
which was formerly marketed as Aurstat(TM),
hypochlorous acid (HOCI) related equipment,
intellectual property (including know-how,
patents and copyrights), program records,
and certain assigned contracts and intellectual
property licenses
Assets Disposal the disposal of the Assets pursuant
to the terms of the Assets Disposal
Agreement
Assets Disposal Agreement acquisition agreement dated 14 February
2019 between Realm Therapeutics Inc.
(as the seller), the Company (as the
parent guarantor) and Urgo (as the purchaser)
in connection with the Assets Disposal
Articles articles of association of the Company
in effect as at the date of this document
Board board of directors of the Company, including
a duly constituted committee of such
directors
Circular or document this document
Company or Realm Realm Therapeutics plc, a company incorporated
in England and Wales with company number
05789798
Completion completion of the Assets Disposal in
accordance with the terms of the Assets
Disposal Agreement, a target date of
28 March 2019 for which is provided
for in the Assets Disposal Agreement
CREST computerised settlement system (as defined
in the CREST Regulations) in the UK
operated by Euroclear which facilitates
the holding of and transfer of title
to shares in uncertificated form
CREST Regulations Uncertificated Securities Regulations
2001 (SI 2001/3755) including any enactment
or subordinate legislation which amends
or supersedes those regulations and
any applicable rules made under those
regulations for the time being in force
Custodian Citibank, N.A., London, as custodian
of the Depositary
Depositary Citibank, N.A.
Directors directors of the Company, whose names
are set out on page 6 of this document
Dollar or US$ legal currency of the US
DTC Depository Trust Company
DTRs Disclosure Guidance and Transparency
Rules made by the FCA
Euroclear Euroclear UK & Ireland Limited, the
operator of CREST
General Principles has the meaning given to such term in
the Takeover Code
FCA UK Financial Conduct Authority
FDA US Food and Drug Administration
Form of Proxy form of proxy which is enclosed with
this document for use by Shareholders
in connection with the General Meeting
Formal Sale Process has the meaning given to such term in
the Takeover Code
FSMA UK Financial Services and Markets Act
2000
General Meeting general meeting of the Company to be
held at 2:00 p.m. on 15 March 2019
Group Company and its subsidiaries
HMRC Her Majesty's Revenue & Customs
IFRS International Financial Reporting Standards,
as adopted by the European Union
ISIN International Securities Identification
Number
Investing Policy the investing policy set out in the
paragraph headed "Investing Policy"
in this document
London Stock Exchange London Stock Exchange plc
MAR Regulation (EU) No 596/2014 of the European
Parliament and of the Council of 16
April 2014 on market abuse
N+1 Singer Nplus1 Singer Advisory LLP, acting as
the Company's nominated adviser and
broker
Nasdaq The Nasdaq Stock Market LLC
Notice of General Meeting notice of General Meeting set out on
pages 24 to 27 at the end of this document
Ordinary Shares ordinary shares of nominal value GBP0.10
each in the capital of the Company
OTC over-the-counter
Proposals Assets Disposal, adoption of Investing
Policy and AIM Delisting
Purchaser or Urgo Urgo US, Inc., a State of Delaware-incorporated
subsidiary of the French family-owned
Laboratories URGO SAS
QCA Guidelines Corporate Governance Guidelines for
Smaller Quoted Companies published by
the Quoted Companies Alliance
Recognised Investment an investment exchange in respect of
Exchange which a recognition order is in force
as defined in section 285 of FSMA
Registrar/Receiving Agent Equiniti Limited
Resolutions resolutions to be proposed at the General
Meeting and as set out in the Notice
of General Meeting
Rules has the meaning given to such term in
the Takeover Code
SDRT stamp duty reserve tax
SEC US Securities and Exchange Commission
Shareholders holders of Ordinary Shares
Sterling or GBP legal currency of the UK
Takeover Code City Code on Takeovers and Mergers issued
by the Takeover Panel
Takeover Panel UK Panel on Takeovers and Mergers
Transfer Agent Computershare, as transfer agent for
the Depositary
UK or United Kingdom United Kingdom of Great Britain and
Northern Ireland
US or United States United States of America, its territories
and possessions, any state of the United
States of America and the District of
Columbia
US Exchange Act US Securities Exchange Act of 1934
US Securities Act US Securities Act of 1933
References to a "company" in this announcement shall be
construed so as to include any company, corporation or other body
corporate, wherever and however incorporated or established. All
references to legislation in this announcement are to the
legislation of England and Wales unless the contrary is indicated.
Any reference to any provision of any regulation, legislation,
rule, code, statute or guideline shall include any amendment,
modification, re-enactment or extension thereof. Words importing
the singular shall include the plural and vice versa, and words
importing the masculine gender shall include the feminine or
neutral gender. For the purpose of this announcement, "subsidiary"
and "subsidiary undertaking" have the meanings given by the
Companies Act 2006.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDBIGDDUDBBGCU
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February 18, 2019 02:00 ET (07:00 GMT)
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