Lorus Therapeutics announces reorganization resulting in approximately $7,800,000 of non-dilutive financing
02 May 2007 - 12:59PM
PR Newswire (US)
TORONTO, May 1 /PRNewswire-FirstCall/ -- Lorus Therapeutics Inc.
("Lorus" or the "Company") (TSX: LOR; AMEX: LRP), a
biopharmaceutical company specializing in the research and
development of pharmaceutical products and technologies for the
management of cancer, today announced that it has signed an
agreement with 6707157 Canada Inc. ("Investor") and an affiliate
thereof to recapitalize and reorganize Lorus' business which, if
completed, will result in the addition of approximately $7.8
million in non-dilutive financing for the Company. If the
transaction is completed, the funds will be used to further advance
the Company's product pipeline without diluting the equity interest
of its shareholders. Under the terms of the agreement, Lorus will
transfer all of its assets and liabilities and all of the shares of
its subsidiaries held by it to a new company ("Newco"). Current
securityholders in Lorus will exchange their securities in Lorus
for equivalent securities in Newco (the "Exchange") and the board
of directors and management of Lorus will continue as the board of
directors and management of Newco. Newco will change its name to
Lorus Therapeutics Inc. and apply for a substitutional listing of
the common shares of Newco on both the Toronto Stock Exchange (TSX)
and the American Stock Exchange (AMEX). Following the transaction,
Newco will continue to carry on the business carried on by Lorus
but will have the benefit of the non-dilutive financing. In
connection with the transaction and after the Exchange, the share
capital of Lorus will be reorganized into voting common shares and
non-voting common shares and the Investor will acquire from Newco
and the Selling Shareholders (as defined below) approximately 41%
of the voting common shares and all of the non-voting common shares
by making a cash payment to Newco and the Selling Shareholders
equal to approximately $8.5 million on closing of the transaction
less an escrowed amount of $600,000, subject to certain
post-closing adjustments. In addition to the exchange of securities
described above, shareholders who are not residents of the United
States will receive voting common shares of Lorus and shareholders
who are residents of the United States will receive a nominal cash
payment instead of voting common shares. As well, as a condition of
the agreement, High Tech Beteilingungen GmbH & Co. KG and
certain other shareholders of Lorus (the "Selling Shareholders"),
representing approximately 24% of Lorus' issued and outstanding
share capital, have agreed to vote in favour of the transaction and
to sell to the Investor the voting common shares to be received
under the agreement at the same price per share as will be paid to
shareholders who are residents of the United States. The directors
and officers of Lorus who are security holders have expressed their
intention to vote in favour of the transaction. Current Lorus
shareholders, other than residents of the United States and the
Selling Shareholders, will receive approximately 59% of the Lorus
voting common shares representing, upon completion of the
transaction, an economic equity interest of approximately 0.5% of
Lorus in addition to their continued equity interest in Newco. The
restructuring will be completed by way of a plan of arrangement and
is subject to approval by the Ontario Superior Court of Justice and
Lorus' securityholders in accordance with applicable laws. The
transaction is also subject to regulatory approval, including
approval of the TSX and AMEX. Also as a condition of the
transaction, the holder of the secured convertible debentures has
agreed to vote in favour of the transaction. The Company has agreed
to repurchase such holder's outstanding three million common share
purchase warrants at a purchase price of $252,000. "We are
delighted to have entered into these arrangements," commented Dr.
Aiping Young, President and CEO of Lorus. "If approved by the
securityholders we believe this arrangement will provide Lorus with
a significant increase in liquidity without diluting existing
securityholders. The additional funds will lessen our dependence on
the capital markets and will allow us to accelerate the clinical
development of our lead compounds and enhance the development of
our drug pipelines. This transaction will not affect Lorus' current
shareholder equity interests, or our corporate focus except in a
positive way through the additional financing." About Lorus Lorus
is a biopharmaceutical company focused on the research and
development of novel therapeutics in cancer. Lorus' goal is to
capitalize on its research, preclinical, clinical and regulatory
expertise by developing new drug candidates that can be used,
either alone, or in combination with other drugs, to successfully
manage cancer. Through its own discovery efforts and an acquisition
and in-licensing program, Lorus is building a portfolio of
promising anticancer drugs. Lorus has several product candidates in
multiple Phase II clinical trials and has completed one Phase II
and one Phase III clinical trial. Lorus Therapeutics Inc. is listed
on the Toronto Stock Exchange under the symbol LOR, and on the
American Stock Exchange under the symbol LRP. Forward looking
statements This press release contains forward-looking statements
within the meaning of Canadian and U.S. securities laws. Such
statements include, but are not limited to, statements relating to:
financings and corporate reorganizations, the establishment of
corporate alliances, the Company's plans, objectives, expectations
and intentions and other statements including words such as
"continue", "expect", "intend", "will", "should", "would", "may",
and other similar expressions. Such statements reflect our current
views with respect to future events and are subject to risks and
uncertainties and are necessarily based upon a number of estimates
and assumptions that, while considered reasonable by us are
inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies. Many factors
could cause our actual results, performance, achievements or the
transactions described in this press release to be materially
different from any future results, performance, achievements
transactions described in this press release, if at all, that may
be expressed or implied by such forward-looking statements,
including, among others: the progress of negotiations; our ability
to obtain regulatory, securityholder and other approvals; our
ability to obtain the capital required for research and operations;
the inherent risks in early stage drug development including
demonstrating efficacy; development time/cost and the regulatory
approval process; the progress of our clinical trials; our ability
to find and enter into agreements with potential partners; our
ability to attract and retain key personnel; changing market
conditions; and other risks detailed from time-to-time in our
ongoing quarterly filings, annual information forms, annual reports
and annual filings with Canadian securities regulators and the
United States Securities and Exchange Commission. Should one or
more of these risks or uncertainties materialize, or should the
assumptions set out in the section entitled "Risk Factors" in our
filings with Canadian securities regulators and the United States
Securities and Exchange Commission underlying those forward-looking
statements prove incorrect, actual results may vary materially from
those described herein. These forward-looking statements are made
as of the date of this press release and we do not intend, and do
not assume any obligation, to update these forward-looking
statements, except as required by law. We cannot assure you that
such statements will prove to be accurate as actual results and
future events could differ materially from those anticipated in
such statements. Investors are cautioned that forward-looking
statements are not guarantees of future performance and accordingly
investors are cautioned not to put undue reliance on
forward-looking statements due to the inherent uncertainty therein.
Lorus Therapeutics Inc.'s recent press releases are available
through the Company's website at http://www.lorusthera.com/.
DATASOURCE: Lorus Therapeutics Inc. CONTACT: Lorus Therapeutics
Inc., Dr. Saeid Babaei, (416) 798-1200 ext. 490,
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