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Press release from CNW Group

PACEpartners Inc. Announces Letter of Intent for Qualifying Transaction with Vivione BioSciences, LLC

Tuesday, May 08, 2012

PACEpartners Inc. Announces Letter of Intent for Qualifying Transaction with Vivione BioSciences, LLC19:16 EDT Tuesday, May 08, 2012/NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/CALGARY, May 8, 2012 /CNW/ - PACEpartners Inc. (TSXV: PIA.P) (PACEpartners or the Corporation) is pleased to announce that it has entered into a non-binding letter of intent with Vivione BioSciences, LLC (Vivione) dated May 7, 2012 (the Letter of Intent) in respect of a transaction (the Proposed Transaction) pursuant to which the businesses of Vivione and PACEpartners would combine (the Qualifying Transaction). Upon completion of the Qualifying Transaction, the combined entity (the Resulting Issuer) will continue to carry out the business of Vivione as currently constituted.Vivione is a company that is engaged in life sciences/bio-pharmaceutical diagnostic testing for the rapid detection of bacterial pathogens applicable to food safety, clinical diagnostics, and other markets including agricultural, water testing, pharmaceutical, homeland security and defence.  PACEpartners is a "capital pool company" and intends for the Qualifying Transaction to constitute the "Qualifying Transaction" of the Corporation as such terms are defined in the policies of the TSX Venture Exchange (the Exchange). PACEpartners is a "reporting issuer" in the Provinces of Alberta, British Columbia and Saskatchewan.The Qualifying Transaction will be carried out by parties dealing at arm's length to one another and therefore will not be considered to be a "Non-Arm's Length Qualifying Transaction", as such term is defined under the policies of the Exchange.It is expected that upon completion of the Qualifying Transaction, the Resulting Issuer will meet Initial Listing Requirements for a Tier 2 issuer under the policies of the Exchange.The Qualifying TransactionSubject to any regulatory, shareholder, director or other approvals that may be required, the completion of satisfactory due diligence by PACEpartners and Vivione, the completion of the Financing (as defined below) and the satisfaction of other conditions contained in the Letter of Intent and the definitive agreement, it is currently contemplated that the Qualifying Transaction will occur via a business combination (which could involve an exchange of securities, a three corner amalgamation or a plan of arrangement) pursuant to which the shareholders of Vivione will receive class B common shares in the capital of PACEpartners (the PACE B Shares) in exchange for 100% of the preferred A units (the Vivione Preferred Units) and 100% of the common units (the Vivione Common Units) in the capital of Vivione (the Vivione Preferred Units and Vivione Common Units are collectively, the Vivione Units), based on an exchange ratio (the Exchange Ratio) which has been calculated, as of the date of the Letter of Intent, to be 2.4669 PACE B Shares for each Vivione Preferred Unit and 134.5945 PACE B Shares for each Vivione Common Unit.  The Proposed Transaction values 100% of the Vivione Units at U.S. $12,000,000 (approximately Cdn. $11,923,000) with approximately 29,806,259 PACE B Shares being issued at an implied value of Cdn. $0.40 per share.  The final Exchange Ratio will be calculated as of the business day immediately preceding the date of closing of the Qualifying Transaction using the published Bank of Canada Noon Rate for currency conversions.The PACE B Shares are non-voting securities, but carry the right to receive a proportionate share, on a per share basis, of the assets of PACEpartners available for distribution in the event of a liquidation, dissolution or winding-up of PACEpartners, and the right to receive any dividend if declared by PACEpartners.  In addition, each PACE B Shares is convertible at the option of the holder for no additional consideration into one class A common share (PACE A Share) in the capital of PACEpartners upon 75 days notice.  The PACE B Shares will not be listed on the Exchange.In order to assist Vivione to perform its obligations during due diligence and the period leading up to the closing of the Qualifying Transaction, subject to and in accordance with the policies of the Exchange, PACEpartners will loan (the Loan) up to Cdn. $100,000 to Vivione for legal fees and expenses, accounting fees and expenses, and other expenses related to the due diligence obligations of Vivione.  This Loan will be in the form of a secured promissory note of Vivione, bearing interest at an adjustable rate equal to LIBOR plus 5%, maturing on June 30, 2013, and having such other terms as are customary for a note of this nature.  In addition, PACEpartners will provide Vivione with a non-refundable cash deposit of Cdn. $25,000, in consideration of the standstill provision in the Letter of Intent.FinancingThe Corporation and Vivione have entered into an engagement letter with Macquarie Private Wealth Inc. (Macquarie) whereby Macquarie has agreed to act as agent and lead a commercially reasonable efforts financing (the Financing) in connection with the Qualifying Transaction, which Financing is expected to close concurrently with the completion of the Qualifying Transaction.  It is anticipated that the Financing will result in the issuance by the Corporation of a minimum of 12,500,000 PACE A Shares and a maximum of 15,000,000 PACE A Shares at Cdn. $0.40 per share for gross proceeds of approximately Cdn. $5,000,000 to $6,000,000. Closing of the Financing will be subject to, among other things, completion of satisfactory due diligence on the Corporation and Vivione by Macquarie, Exchange approval of the Financing and the Qualifying Transaction and each of the Corporation and Vivione entering into a formal agency agreement with Macquarie.Upon the successful completion of the Financing, Macquarie will receive a corporate finance fee, a cash commission equal to 8% of the gross proceeds of the Financing and Macquarie and its designated sub-agents, if any, will be issued options to purchase PACE A Shares equal to 8% of the PACE A Shares placed by Macquarie at a price of $0.40 per share, exercisable for a period of 24 months from the date of the closing of the Financing.The net proceeds of the Financing will be used to finance the growth and expansion of the Resulting Issuer and for other working capital purposes.Summary Information Relating to VivioneThe following information relating to Vivione has been provided to the Corporation by Vivione, which has not been independently confirmed by the Corporation.Industry Section and Nature of BusinessVivione is a privately-held life sciences/bio-pharmaceutical diagnostic testing company organized in the state of Arkansas and has carried on active business since November 2006.  Vivione provides a proprietary diagnostic system for the rapid detection of bacterial pathogens applicable to the food safety, clinical diagnostics and other markets including agricultural, water testing, pharmaceutical, homeland security and defence.  Vivione's business is centered on the commercialization of the new ultra high performance RAPID-BTM diagnostic system, an integrated system of hardware, software and wetware that tests bacteria in key environments. This technology has diverse applicability from food safety to clinical diagnostics, by rapidly identifying and quantifying microorganism levels.RAPID-BTM takes the place of outdated culture-based, immunology-based and molecular-based methods, and provides more accurate results for each of these fields in a significantly reduced time frame.  Vivione's system delivers results in minutes, instead of the days or weeks needed for other systems. Vivione's mission includes utilizing one compact, universal platform for all diagnostic testing that can be used for bacteria, viruses and toxins. Vivione is the exclusive licensee of these co-developed diagnostics technologies.The RAPID-BTM technology is the result of a multi-year collaboration between Vivione and several U.S. state and governmental agencies including the U.S. Food and Drug Administration and their National Center for Toxicological Research, the University of Arkansas Medical Sciences and the University of Arkansas Food Safety in Fayetteville. This research and development produced several patents and an innovative, rapid method to address unmet diagnostic needs within the global food industry's Process Control and Product Safety programs.Summary Financial Information for VivioneA summary of key financial information for Vivione will be contained in a subsequent news release.Controlling Interests in VivioneLitmus, LLC, a limited liability company organized in the State of Arkansas, currently has an approximately 22% interest in Vivione Preferred Units (which Vivione Preferred Units are not convertible into Vivione Common Units) and an approximately 48% interest in Vivione Common Units, and Ted Moskal, an individual resident in Jonesboro, Arkansas, currently has an approximately 11% interest in Vivione Common Units.Sponsorship of Qualifying TransactionSponsorship of the Qualifying Transaction is required by the Exchange unless an exemption from this requirement can be obtained accordance with the policies of the Exchange. The Corporation intends to apply for an exemption to the sponsorship requirement. There is no assurance that an exemption from this requirement will be obtained.The PACE A Shares are currently halted from trading, and the trading of PACE A Shares is expected to remain halted pending completion of the Qualifying Transaction.Board of Directors and ManagementUpon completion of the Qualifying Transaction, the directors and officers of the Resulting Issuer are expected to be as follows:Jerry B. Adams - Director - Mr. Adams is currently a Director at Vivione and serves as President and CEO of the Arkansas Research Alliance. Before joining Arkansas Research Alliance, Adams enjoyed 34 years at Acxiom Corporation, a database management and marketing company, working in a number of different leadership capacities.  Adams served as the chair of Accelerate Arkansas, a statewide group of leaders focused on building a knowledge-based economy in Arkansas. Mr. Adams also serves on the Southern Technology Council, a council of the Southern Growth Policies Board. He currently serves on the Arkansas Department of Education's Accountability Council, the Board of Visitors at the University of Arkansas at Little Rock and the University of Central Arkansas's Advisory Board for the School of Mathematics and Natural Sciences. Mr. Adams also currently serves on both the state and county boards for the Arkansas Community Foundation.Ian E. Gallie - Director - Mr. Gallie is currently a director of PACEpartners.  Since 1988, Mr. Gallie has also been involved in the management of private and TSXV public oil and gas companies as well as a TSX mining company and a TSXV manufacturing company, including: Consulting Petroleum Geologist, Fano Energy Inc. (private oil company); Vice President Exploration and Director, Sojourn Energy Inc. (private oil company); President and Director, Ivory Energy Inc. (oil and gas company TSXV listed); President and Director, Catalina Energy Corp. (oil and gas company TSXV listed then NEX listed), Director, Bonanza Resource Corp. (oil and gas company TSXV listed); Executive VP and Director, Doreal Energy Corporation (oil and gas company formerly TSXV listed); Director, Amerigo Resources Ltd. (mining company TSXV listed then TSX listed); and President and Director, Arbroath Energy Ltd. (private consulting company).Dr. James K. Hendren - Director - Mr. Hendren, currently a Director at Vivione, is President of Synanomet, LLC, a company focused on the development of Nano-technology, materials, and applications and serves as a board member on a number of other companies. He served as Executive in Resident at the University of Arkansas Little Rock, as well as having served as a Commissioner for the Arkansas Economic Development Commission. Prior to its acquisition by EuroNet in 1998, he spent 21 years at Arksys, an international software design, development, and packaged software firm as a director and CEO, then as Chairman.Chester J. Jachimiec - Chief Financial Officer and Corporate Secretary - Mr. Jachimiec is currently Chief Financial Officer, Corporate Secretary and a director of PACEpartners. He has held the position of President at Crosscurrents, LLC, a business development and technology commercialization company actively engaged in several facets of the energy services industry in the United States and internationally, since 2010.  Mr. Jachimiec has also held the position of President at Energya Management, LLC, a company which provides corporate development and capital market services to the energy services and infrastructure markets in Mexico, since 2008.  Prior to this, Mr. Jachimiec served as a founding shareholder, director and executive vice president of Production Enhancement Group, Inc., an energy services company providing coiled tubing, pressure pumping and wireline services that engaged in an initial public offering on the TSX.Kevin Kuykendall - Director and Chief Executive Officer - Mr. Kuykendahl has served as a director and CEO of Vivione since November 2011. Mr. Kuykendall was a founding member and CEO of both Health2o Products (2008-2012) and White Energy (2005-2008).  Over the past 10 years, Mr. Kuykendall has raised and/or participated in raising early stage funding for various ventures.  Mr. Kuykendall was instrumental in White Energy raising funding, creating a ethanol operation that was the fourth largest producer in the world at that time.  At Health2o, Mr. Kuykendall's fundraising experience helped to create and operate a company in the nutraceutical beverage industry. Health2o launched its first product in late 2009 and its new patented formula underwent double blind human clinical studies and is expected to be launched as a nutraceutical energy product in the fourth quarter of 2012.Ted Moskal - Director and President and Chief Science Officer -  As one of the founding members of Vivone, and a primary inventor/patent holder for the Rapid-B platform, Mr. Moskal is a seasoned senior executive with over 20 years of engineering, marketing, product development and operations experience. Prior to joining Vivione, Mr. Moskal spent 12 years with Federal Express in Strategy and Technology Business Development. He worked with FedEx in the deployment of its aircraft hush kit program to the airline industry. He has led teams in the development, deployment and assessment of communications, sensor and detection, materials and high technology products in the aerospace and transportation industries.Lal Narang - Director - Mr. Narang is currently a director of PACEpartners and has worked in the oil and gas industry for over 40 years with a focus on natural gas marketing, transportation rates and tariffs.  He has held the position of President of Capital Leasing Investment Corp. and Capri Capital Corp., privately owned investment companies involved in commercial lands and owning and operating strip malls.  For 12 years, he was the President and Chair of Canex Energy Inc., a company which engaged in the exploration and development of natural gas reserves in Alberta and Saskatchewan.  Mr. Narang also served for two years as Chair of Canext Energy Ltd., a company which engaged in oil and gas exploration and development.Philip A. Tuttle - Director - Mr. Tuttle is currently President, Chief Executive Officer and a director of PACEpartners.  He has held the position of Managing Partner of Davis, Tuttle Venture Partners, LP, a private investment partnership, since 2000.  He currently serves on the Board of Directors of three private companies:  Global Shale & Storage LLC, Bluenergy Solarwind, Inc. and eCORP, LLC.  He is Chairman and CEO of Global Shale & Storage, LLC, a private company. In addition, Mr. Tuttle has served as a member of the National Association of Small Business Investment Companies' Board of Governors, and is a founder and past president of the Houston Private Equity Association.Description of Significant Conditions to ClosingCompletion of the Qualifying Transaction is subject to a number of conditions including, but not limited to, the closing of the Financing, the satisfaction of the Corporation and of Vivione in respect of the due diligence investigations to be undertaken by each party, the completion of a definitive agreement in respect of the Qualifying Transaction, closing conditions customary to transactions of the nature of the Qualifying Transaction, approvals of all regulatory bodies having jurisdiction in connection with the Qualifying Transaction, Exchange acceptance and, if required by the policies of the Exchange, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approvals are obtained and there can be no assurance that the Qualifying Transaction will be completed as proposed or at all.Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this news release.Cautionary StatementsThis news release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposal to complete the Qualifying Transaction and associated transactions, including statements regarding the terms and conditions of the Qualifying Transaction, the Financing, and the use of proceeds of the Financing. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Qualifying Transaction, the Financing and associated transactions, that the ultimate terms of the Qualifying Transaction, the Financing and associated transactions will differ from those that currently are contemplated, and that the Qualifying Transaction, the Financing and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this press release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Corporation, Vivione, their securities, or their respective financial or operating results or (as applicable).The securities mentioned herein have not been and will not be registered under the United States Securities Act of 1933, as amended, or the securities laws of any state, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.  This press release does not constitute an offer to sell or the solicitation of any offer to buy these securities in any jurisdiction.NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICE PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE. For further information: PACEpartners Inc.       Chester Jachimiec Vice-Presient and Chief Financial Officer  Tel:  (281) 488-6508    Vivione BioSciences, LLC  Kevin Kuykendall Chief Executive Officer Tel: (214) 886-5733