September 1, 2009

Unilife Announces Proposed Redomiciliation of Unilife Group to US and Proposed Listing on NASDAQ

Unilife Medical Solutions Limited (Unilife Australia or the Company) has today entered into a Merger Implementation Agreement with Unilife Corporation (Unilife USA), a wholly owned subsidiary of Unilife Australia. The purpose of the Merger Implementation Agreement is to facilitate the proposed redomiciliation of the Unilife group to the United States of America (Proposed Transaction).

The Proposed Transaction will be implemented by the establishment of a new corporate structure under which Unilife USA, a company incorporated in Delaware, United States of America, will become the ultimate parent company of the Unilife group (Group). As a result, shareholders and optionholders of Unilife Australia (Security Holders) will exchange their existing interests in Unilife Australia for equivalent interests in Unilife USA. Attachment B provides a diagrammatic representation of the Proposed Transaction.

The Group's business, operations, management and employees will not materially change as a result of the Proposed Transaction. Upon implementation of the Proposed Transaction, the Board of Unilife USA will be restructured to reflect the Group's domicile in the US.

In connection with the Proposed Transaction, Unilife USA will replace Unilife Australia as the entity which is listed on the ASX. To achieve this, Unilife Australia shareholders will receive common stock or CHESS Depositary Interests (CDIs) in Unilife USA. The CDIs will trade on ASX. Each CDI will, in general terms, be equivalent to two existing ordinary shares in Unilife Australia and six CDI’s will, in general terms, be equivalent to one ordinary share in Unilife USA. Unilife USA will also seek a new listing on NASDAQ in conjunction with the Proposed Transaction and, if successful, the common stock of Unilife USA will be quoted on NASDAQ.

The United States represents the largest single target market of the Group. Given that Unilife Australia already has the majority of its operational base located in the United States, the Board believes that redomiciliation represents a natural evolution and opportunity for the Group.

The Proposed Transaction is subject to approval by the Australian Federal Court as well as approval of Unilife Australia Security Holders. It is designed to make Unilife Australia a more attractive investment for local and international shareholders by creating a structure which the Board believes will provide an increased opportunity to broaden the potential scope, liquidity and depth of the Company’s shareholder base, while maintaining strong ties with Australian investors.

The Proposed Transaction

In order to implement the Proposed Transaction, Unilife Australia proposes to enter into two schemes of arrangement under section 411 of the Corporations Act 2001 between Unilife Australia and its shareholders and optionholders as follows:

  • Share Scheme - Under the proposed scheme of arrangement between Unilife Australia and its shareholders, Unilife USA will acquire all existing ordinary shares in Unilife Australia (Shares) from shareholders with the result that Unilife Australia will become a wholly-owned subsidiary of Unilife USA. As consideration for acquiring the existing ordinary shares in Unilife Australia, Unilife USA will issue to shareholders shares in Unilife USA.

    Unilife Australia shareholders will be entitled to elect to receive their Unilife USA shares either in the form of common stock or CDIs. The CDIs will be tradeable on ASX. However, unless and until common stock is quoted on NASDAQ, there will not be any public market for the common stock. Shareholders who receive CDIs can exchange them for common stock at any time (and vice versa).
  • Option Scheme - All existing options in Unilife Australia issued under its Employee Share Option Plan (Options) will be cancelled and Unilife USA will issue replacement options under the proposed option scheme of arrangement between Unilife Australia and its option holders.

In order to exceed minimum price requirements for the proposed NASDAQ listing and to satisfy expected investor requirements in the United States, the Proposed Transaction will be implemented so as to effectively consolidate or effect a reverse split of Unilife Australia's issued capital, adopting a ratio of 1:12. In simple terms, Unilife USA will issue to shareholders one share of common stock in Unilife USA for every 12 ordinary shares held in Unilife Australia or, subject to rounding, one CDI (listed on the ASX) for every 2 ordinary shares held in Unilife Australia. Each share of Unilife USA common stock is equivalent to six CDIs and CDIs will be able to be converted into shares of Unilife USA common stock and vice versa on a 6:1 basis at any time after the redomiciliation.

The same consolidation mechanism will also apply equally to all options in Unilife Australia.

In connection with the Share Scheme and the Option Scheme (collectively the Schemes), Unilife Australia and Unilife USA will replace the existing options that were issued in Unilife Australia outside its Employee Share Option Plan with new options in Unilife USA. To assist Security Holders, Unilife Australia and Unilife USA will be distributing an information memorandum setting out details of the Proposed Transaction including details of how to vote at the meetings at which approval of the Proposed Transaction will be proposed (Information Memorandum). The Information Memorandum will be circulated to Security Holders following the conclusion of the Australian Securities and Investments Commission's (ASIC) review of the documentation.

Benefits of the Proposed Transaction

The Board of Directors of Unilife Australia believe that some of the key potential benefits of the Proposed Transaction are to:

  • Enhance the ability of the Company to co-ordinate the implementation of its strategic business plan which is focused on the attainment of global leader status in the design, development and supply of innovative safety medical devices for use in key pharmaceutical and healthcare markets;
  • Increase demand for the Company's securities in the United States, particularly amongst institutional investment groups that have expressed a strong interest in the Company’s strategic business plan; and
  • Optimize the Company’s capacity to attract and retain employees with strong medical device and pharmaceutical industry experience.

Unilife Australia Chairman, Mr Jim Bosnjak OAM, commented:

“The US represents the world’s largest and most mature market for safety medical devices. Since Unilife completed the transition of key commercial and operational functions to our Central Pennsylvania facilities earlier this year, we have received significant interest from global pharmaceutical and healthcare companies as well as major USA-based investment groups. The proposed redomiciliation of Unilife to the USA and its listing on NASDAQ is a natural progression of our business expansion plan to establish our Company as a sustainable global business with the necessary expertise and operational capabilities to service the needs of our customer network.

“The completion of this proposed redomiciliation and NASDAQ listing will help us build relationships with US-based anchor institutions that have a firm understanding of global pharmaceutical and healthcare markets. Furthermore, we believe these proposed steps will better align our corporate structure to the strengths of our management team and operational capabilities. As a result, we hope to further harness the full commercial value of the significant business opportunities that we have generated as an emerging global medical device supplier.”

Merger Implementation Agreement

Unilife Australia and Unilife USA have entered into a Merger Implementation Agreement which governs the Proposed Transaction.

Implementation of the Proposed Transaction is conditional upon the satisfaction of certain conditions including, but not limited to:

  • approval by Security Holders of the Schemes;
  • approval of the Schemes by the Federal Court of Australia;
  • obtaining the appropriate regulatory approvals; and
  • an independent expert's report concluding that the Proposed Transaction is fair, reasonable and in the best interests of Security Holders.

A summary of the key terms of the Merger Implementation Agreement is included in Attachment A to this announcement.

Indicative timetable

It is expected that the Information Memorandum will be sent to Security Holders in late October 2009 and, assuming approval of the Schemes, the Group will be re-domiciled in the USA by the end of 2009 or early 2010. The Information Memorandum will outline the full details of the Proposed Transaction and the Scheme process, as well as the independent expert's conclusions.

About the Unilife Australia Group

Unilife Australia is an ASX listed company that trades under the symbol "UNI".

Unilife Australia is an ISO 13485 certified medical device company specializing in the design, development and supply of innovative safety medical devices for use in pharmaceutical and healthcare markets. The global headquarters and FDA-registered manufacturing facilities of the Group are located in Central Pennsylvania, and the Group employs approximately 85 staff worldwide. The Group's primary focus is the development, production and sale of a proprietary range of safety syringes to pharmaceutical customers such as sanofi-aventis, as well as healthcare facilities and patients that self-administer prescription medication.

Shareholder Information

Further information on the Proposed Transaction will be lodged with ASX and included on Unilife Australia's website at www.unilife.com.au.

Contacts

For further information please contact:

Jeff Carter
T +61 2 8346 6500 F +61 2 8346 6511

 Unilife Announces Proposed Redomiciliation of the Unilife Group to the United States and Proposed Listing on NASDAQ Unilife Announces Proposed Redomiciliation of the Unilife Group to the United States and Proposed Listing on NASDAQ 69.12 Kb

Attachments

  • A. Key terms of the Merger Implementation Agreement
  • B. Current and Proposed Unilife group structure

       

      Attachment A: Key Terms of the Merger Implementation Agreement

      Introduction

      Unilife Australia and Unilife USA, a wholly owned subsidiary of Unilife Australia, entered into a Merger Implementation Agreement (Agreement) on 1 September 2009 . The Agreement sets out the terms and the parties' respective obligations in connection with the implementation of the Schemes.

      A copy of the Agreement will be contained in the Information Memorandum to be provided by Unilife Australia to its Security Holders prior to the Scheme Meetings. An outline of the key terms of the Agreement is set out below.

      Conditions Precedent

      Conditions precedent to implementation of the Share Scheme

      • (No prohibitive orders) No prohibition or legal restraint being imposed which would prevent implementation of the Proposed Transaction.
      • (Regulatory consents) All necessary regulatory consents and approvals being obtained in relation to the Proposed Transaction.
      • (ASX listing) ASX approving:
        (a) Unilife USA for admission to the official list of ASX; and
        (b) the CDIs for official quotation by ASX.
      • (Shareholder approval) Shareholders approving the Share Scheme by the requisite majorities under the Corporations Act.
      • (Court approval of Share Scheme) The Court approving the Share Scheme in accordance with the Corporations Act either unconditionally or on conditions that are customary or usual.
      • (Depositary) Unilife USA appointing a depositary for the purposes of issuing CDIs and the depositary agreeing to the allotment to it of Unilife USA Shares under the Share Scheme.
      • (Nominee) Unilife USA appointing a Nominee and the Nominee agreeing to sell CDIs on behalf of Ineligible Overseas Shareholders.
      • (Ability to issue CDIs) Unilife USA having done everything necessary under the ASTC Settlement Rules to enable it to issue CDIs other than the allotment to a Depositary of Unilife USA Shares under the Share Scheme.
      • (Independent Expert) Unilife Australia receiving a report from the Independent Expert that the Proposed Transaction is fair, reasonable and in the best interests of Security Holders.

      Conditions precedent to implementation of the Option Scheme

      • (Approval of Share Scheme) All of the conditions precedent to the implementation of the Share Scheme being satisfied or waived.
      • (Optionholder Approval) Optionholders approving the Option Scheme by the requisite majorities under the Corporations Act.
      • (Court Approval of Option Scheme) The Court approving the Option Scheme in accordance with the Corporations Act either unconditionally or on conditions that are customary or usual.

      Replacement of options issued outside the Unilife Australia Employee Share Option Plan

      Unilife Australia will make an offer to each holder of options issued outside its Employee Share Option Plan (Standalone Options) to cancel the options held by that person and to replace them with equivalent options in Unilife USA.

      The offers will be conditional upon:

      • the Share Scheme becoming Effective; and
      • ASX granting a waiver on or before the Implementation Date of the requirement under Listing Rule 6.23 to obtain shareholder approval for the cancellation of the options.

      Conversion of Unilife Australia to a proprietary company

      Following implementation of the Share Scheme, Unilife USA will pass a special resolution to convert Unilife Australia from a public company to a proprietary company limited by shares and lodge all necessary documentation with ASIC to give effect to the conversion of Unilife Australia from a public company to a proprietary company.

      Termination

      Either Unilife Australia or Unilife USA may terminate the Agreement where:

      • there is a material breach of the Agreement; or
      • the board of Unilife Australia withdraws its recommendation of the Schemes.

      All of the obligations in the Agreement with respect to a Scheme will terminate automatically in the event that:

      • the Independent Expert opines that such Scheme is not fair and reasonable and in the best interests of the Shareholders or Optionholders (as applicable); or
      • Unilife Australia’s Shareholders or Optionholders (as applicable) fail to approve such Scheme by the necessary majorities at the relevant Scheme Meeting; or
      • the Court refuses to grant an order convening any required Scheme Meeting or approving such Scheme and either the parties agree not to conduct an appeal or the parties agree to conduct an appeal but the appeal is unsuccessful; or
      • the Scheme is not approved by the Court.

      Relevant Definitions

      ASIC means the Australian Securities and Investments Commission.

      ASTC means the ASX Settlement and Transfer Corporation Pty Limited ABN 49 008 504 532.

      ASTC Settlement Rules means the Settlement Rules of the ASTC.

      ASX means ASX Limited ACN 008 624 691 or the securities market which it operates, as the context requires.

      CDI means the CHESS Depositary Interest to be issued in connection with the Share Scheme representing an interest in one-sixth of a Unilife USA Share.

      CHESS Depositary Interest has the meaning given to that term in the ASTC Settlement Rules.

      Corporations Act means the Corporations Act 2001 (Cth).

      Court means the Federal Court of Australia or any other court of competent jurisdiction under the Corporations Act agreed in writing by Unilife Australia and Unilife USA.

      Depositary has the meaning given to it in the ASTC Settlement Rules.

      Effective means, when used in relation to a Scheme, the coming into effect, under section 411(10) of the Corporations Act, of the Court order made under section 411(4)(b) of the Corporations Act in relation to that Scheme.

      Implementation Date means the third Business Day following the Scheme Record Date.

      Independent Expert means the independent expert in respect of the Schemes appointed by Unilife Australia to consider whether the Schemes are in the best interests of Shareholders and Optionholders.

      Ineligible Overseas Shareholder means a Shareholder who is registered with an address outside Australia and its external territories, New Zealand, United Kingdom, Ireland, France, Malta, Hong Kong and the United States or any other country agreed to by the Company and Unilife Corporation.

      Information Memorandum means the document containing the information to be approved by the Court and to be despatched to Shareholders and Optionholders to assist them in deciding on how to vote on the Schemes.

      Nominee means the nominee selected by Unilife USA prior to the Implementation Date.

      Option Scheme means the proposed scheme of arrangement under Part 5.1 of the Corporations Act between Unilife Australia and Optionholders.

      Optionholder means a person registered in Unilife Australia's option register as a holder of Options.

      Options means options entitling holders to subscribe for Shares issued under the Unilife Medical Solutions Limited Employee Share Option Plan.

      Proposed Transaction means the reorganisation which is to be effected on the Implementation Date, under which:

      • Unilife USA will acquire all of the Shares under the Share Scheme;
      • Unilife Australia will cancel all of the Options under the Option Scheme;
      • Unilife Australia will cancel all of the Standalone Options; and
      • the existing security holders of Unilife Australia will receive Unilife USA Shares, Unilife USA Options or Unilife USA Standalone Options (as relevant).

      Scheme Record Date means 7.00 pm on the fifth Business Day after the Effective Date or any other date agreed with ASX to be the record date for the Schemes to determine entitlements to receive consideration pursuant to the Schemes.

      Schemes means the Share Scheme and the Option Scheme and Scheme means any one of them.

      Scheme Meetings means the Share Scheme Meeting and the Option Scheme Meeting.

      Security Holders means shareholders and optionholders in Unilife Australia.

      Shareholder means each person who is registered in the share register as a holder of Shares.

      Shares means fully paid ordinary shares in Unilife Australia.

      Share Scheme means the proposed scheme of arrangement under Part 5.1 of the Corporations Act between Unilife Australia and Scheme Shareholders.

      Standalone Optionholders means options in Unilife Australia issued outside the Employee Share Option Plan.

      Unilife USA Shares means fully paid shares of common stock in Unilife Corporation.

      Attachment B: Current and proposed Unilife group structure

      diagram

       

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