TORONTO, March 30 /CNW/ - Fralex Therapeutics Inc. (TSX:FXI) ("Fralex" or
the "Company"), a medical technology company, today announced that Fralex,
2201761 Ontario Inc., a newly incorporated wholly-owned subsidiary of Fralex
("Newco"), and Baylis Medical Company Inc. ("Baylis"), a privately-owned
developer and supplier of medical devices, have entered into an arrangement
agreement and certain other agreements, pursuant to which Baylis has agreed to
acquire all of the issued and outstanding common shares of Fralex. The
proposed transactions (collectively, the "Arrangement") are conditional upon
the completion of a reorganization of Fralex's business and affairs and will
be structured as a plan of arrangement under the Business Corporations Act
(Ontario).
As part of the proposed reorganization of Fralex, Newco will acquire
certain assets of Fralex (the "Transferred Assets"), namely all cash on hand,
other current assets, short term investments and all "non-core" assets, on an
"as-is, where-is" basis, and assume all liabilities of Fralex. Fralex will
retain all "core" assets, being those assets related to its Complex Neural
Pulse (CNP) therapy, and related intellectual property. Each Fralex common
share will then be transferred to Newco in exchange for one (1) common share
of Newco and cash consideration of $0.001, with minimum consideration of $0.01
payable to each Fralex shareholder. Baylis will then acquire from Newco all of
the issued and outstanding common shares of Fralex. Following the completion
of the Arrangement, Fralex will become a wholly-owned subsidiary of Baylis;
Newco will become a reporting issuer and will pursue other business
opportunities as determined by its board of directors.A summary of the material terms of the Arrangement is as follows:
- Fralex will grant a licence to each of Dr. Alex Thomas and Dr. Frank
Prato, the founders of Fralex, to use the current patents and patent
applications of Fralex for research purposes. Fralex will also
provide $50,000 over a two-year period to assist Dr. Thomas and Dr.
Prato in continuing their academic research;
- Fralex will purchase and cancel a total of 3,200,000 Fralex common
shares from Dr. Thomas and Dr. Prato for the aggregate purchase price
of $50,000 cash;
- Newco will acquire the Transferred Assets and assume all liabilities
of Fralex in exchange for the issuance by Newco of a promissory note
("Newco Note") equal to the fair market value of the Transferred
Assets;
- Each Fralex shareholder who has not exercised rights of dissent under
the Arrangement will exchange each Fralex common share held by them
for one (1) Newco common share and cash consideration of $0.001, with
minimum consideration of $0.01 payable to each Fralex shareholder;
- Newco will redeem any Newco common shares held by Fralex and such
Newco common shares shall be cancelled;
- Baylis will acquire from Newco all of the issued and outstanding
Fralex common shares for consideration of approximately $900,000 cash
and the issuance by Baylis of a promissory note ("Baylis Note") in an
amount equal to the Newco Note. The Baylis Note will be set off
against the Newco Note.The Arrangement is expected to be completed on or before June 30, 2009.
Completion of the Arrangement is subject to satisfaction of a number of
customary conditions, including approval by the holders of at least two-thirds
of Fralex's issued and outstanding common shares, the approval of the Ontario
Superior Court of Justice, and other regulatory approvals. The Arrangement
will be submitted to Fralex shareholders for approval at a special meeting
expected to be held in June 2009. Additional details regarding the terms of
the Arrangement will be provided in the management information circular to be
mailed to Fralex shareholders in connection with such special meeting.
The Arrangement has been unanimously approved by Fralex's Board of
Directors, and support agreements in favour of the Arrangement have been
provided by directors, officers and other shareholders of Fralex representing
approximately 68% of the issued and outstanding common shares of Fralex. In
addition, in connection with the Arrangement, the holders of all Fralex stock
options have tendered such options for cancellation.
"This agreement with Baylis will allow Fralex's shareholders to realize
value from the assets of the Company," said Avi Grewal, President and CEO of
Fralex. "We wish Baylis well in their efforts to develop and commercialize the
CNP technology along with the founders of the Fralex."
"This transaction will build on our portfolio in the pain management
field", said Frank Baylis, President of Baylis. "We are very excited about the
opportunity to bring the Fralex technology into our company and enhance our
ability to be a leader in the high-technology medical device segment".
About FRALEX:
FRALEX is a medical technology company which was focused on developing
and commercializing Complex Neural Pulse or CNP(TM), a novel neuromodulation
therapeutic technology for chronic pain. For more information on FRALEX,
please visit www.fralex.com
About BAYLIS:
Baylis is a leading developer, manufacturer and supplier of
high-technology medical devices for chronic pain management, interventional
cardiology and radiology products. Founded in 1986 in Montreal, Quebec, Baylis
has grown to have offices across Canada as well as in the United Kingdom and
Asia. The company's research and development and manufacturing departments are
located in Mississauga, Ontario. In total, the company employs over 130 staff
in varied positions including sales, research and development and
manufacturing. Baylis products are marketed in over 60 countries. Baylis' goal
is to conceive, develop, manufacture, and sell state-of-the-art medical
products that will improve the lives of people around the world. As a result
of this, the company is heavily invested in research and development and
currently has 25 staff invested in the research and development of new and
existing products. In addition, Baylis is committed to developing and
enhancing the performance of employees for the future growth of the company.
This press release may contain forward-looking statements which reflect
Fralex' current expectations regarding future events, strategy, expected
performance and condition. Forward-looking statements include statements that
are predictive in nature, that depend upon or refer to future events or
conditions, or that include words such as "intends", "may", "expects,"
"anticipates," "plans," "believes," "estimates" or negative versions thereof
and similar expressions including the completion of the transactions described
herein, and the expected benefits of such transactions. In addition, any
statement that may be made concerning future performance, strategies or
prospects is also a forward-looking statement. Forward-looking statements are
based on current expectations and projections about future events and are
inherently subject to, among other things, risks, uncertainties and
assumptions about the parties and economic factors. Forward-looking statements
are not promises or guarantees of future performance, and actual events and
results could differ materially from those expressed or implied in any
forward-looking statements made about Fralex, Newco or Baylis. Any number of
important factors could contribute to these digressions, including, but not
limited to, general economic, political and market factors in North America
and internationally, interest and foreign exchange rates, global equity and
capital markets, business competition, technological change, changes in
government regulations, unexpected judicial or regulatory proceedings, and
catastrophic events, dependence on key personnel, additional financing
requirements and access to capital, and other factors identified from time to
time in Fralex's public filings. We stress that the above-mentioned list of
important factors is not exhaustive. We encourage you to consider these and
other factors carefully before making any investment decision and we urge you
to avoid placing undue reliance on forward-looking statements. Further, you
should be aware that Fralex and Newco disclaim any obligation to publicly
update or revise any such forward-looking statements whether as a result of
new information, future events or otherwise, except as required by law .
For further information: Avi Grewal, President and Chief Executive
Officer, Fralex Therapeutics Inc., (416) 213-8118 ext. 210,
agrewal@fralex.com
