- Takes Steps to Continue Protection of Holders of 65% of Shares
- Independent Patheon Remains the Superior Alternative for Shareholders
TORONTO, May 14 /CNW/ - The Special Committee of Independent Directors of
Patheon Inc. ("Patheon") (TSX:PTI) today provided shareholders with an update
on developments since the holders of 65% of the Company's restricted voting
shares ("Shares") rejected the US$2.00 per share offer (the Offer") by JLL
Patheon Holdings LLC ("JLL") for any and all of those Shares.
Substantial Majority of Shareholders Reject JLL's Bid
Because 65% of Patheon's Shares were not tendered to the offer by its
scheduled expiry on May 7, JLL has not acquired sufficient Shares to assure it
could take Patheon private in a subsequent acquisition or "squeeze-out"
transaction, which was its stated intention. The Offer has been extended until
May 19, but has not been enhanced in any way.
"Investors who own a substantial majority of Patheon Shares rejected
JLL's inadequate and coercive bid," said Paul Currie, Chairman of the Special
Committee. "Shareholders have chosen instead to express their support for our
recommended alternative which is an independent Patheon with an independent
Board of Directors committed to advancing the Company's business plan. We
believe successful execution of this plan can create greater value for
shareholders than the JLL bid over the long term."
"We can assure shareholders that the Special Committee is not intimidated
by the coercive tactics of JLL and will defend the interests of all Patheon
shareholders," Mr. Currie said.
Expansion of the Special Committee Membership and Mandate
G. Wesley Voorheis and Roy T. Graydon, who were elected as directors at
the recent Patheon Annual Meeting, have now joined the Special Committee. The
enlarged Committee now includes all members of the Board of Directors other
than the JLL nominees.
In light of recent events, the mandate of the Special Committee has been
clarified and broadened. It will now be responsible for the protection of
shareholders interests in all aspects of the JLL Offer and related matters,
- The extended Offer by JLL which now expires on May 19
- JLL's proposed squeeze-out transaction
- The related requisition for a special meeting from dissident
shareholders led by former director Joaquin B. Viso
- Litigation initiated by JLL in an attempt to overturn the results of
Patheon's April 29th Annual Meeting
- Pursuing legal actions, if appropriate, against JLL or other parties
Dissident Requisition by Joaquin Viso
On May 5, 2009, two days before the scheduled expiry of the Offer and
less than a week after shareholders voted to replace Mr. Viso as a Director at
Patheon's Annual meeting, he formally requisitioned a special meeting of
shareholders. As a Director, Mr. Viso led a shareholder group that entered
into a "side deal" with JLL that gave them treatment not provided to other
shareholders. That "side deal" was terminated after the Special Committee took
the matter to the Ontario Securities Commission ("OSC").
The Special Committee is concerned that Mr. Viso's stated intention of
replacing all the independent directors with nominees of his own choosing
would remove Directors duly elected by shareholders very recently and leave
the Company without a Special Committee prepared to defend shareholders
against JLL's hostile bid and possible squeeze out transaction and other
unfair and coercive conduct.
The Special Committee is also concerned that JLL is directly involved
with the dissident requisition, in contravention of the standstill agreement
it has with the Company. It will carefully evaluate and, if appropriate,
pursue any legal claims Patheon may have, including actions to enforce the
provisions of Patheon's Investor Agreement with JLL and to ensure that JLL and
Mr. Viso respect the undertakings they were required to make to the OSC.
JLL Seeks to Overturn Shareholder Vote
The Special Committee also announced that JLL has commenced legal
proceedings in the Ontario Superior Court to overturn the election of
Directors at the Company's Annual Meeting just two weeks ago. As part of these
proceedings, JLL is also asking the Court to enjoin the Special Committee from
giving effect to the extended mandate provided to it by the Board.
The Special Committee believes that JLL's claims are totally devoid of
merit, and are intended to disrupt and undermine the actions being properly
taken by the Special Committee to protect the interests of the holders of the
remaining 65% of the Shares not owned by JLL.
"This legal manoeuvre is nothing more than a continuation of JLL's
campaign of coercing shareholders to tender to its inadequate, opportunistic
bid by depriving them of the protections to which they are entitled," said Mr.
Currie. "We intend to vigorously defend these claims. We will also review
JLL's own conduct to determine if any claims should be pursued against them."
JLL's Bid Remains Inadequate and Coercive
The Special Committee notes that, instead of negotiating a fair price at
which Shareholders would agree to JLL gaining control of Patheon, JLL
continues to coerce shareholders to tender to the Offer at the US$2.00 per
Share that has already been rejected.
The Special Committee reminds shareholders that both it and Patheon's
Board of Directors as a whole have determined that the Offer is inadequate.
The independent valuation by BMO Capital Markets, which was required under
applicable securities laws, concluded that the value of the Shares as at
February 16, 2009 was in the range of US$4.20 to US$5.00 per share.
If JLL continues to pursue its Offer or a squeeze out transaction, the
Special Committee remains committed to taking all steps necessary to achieve
the best possible price and fair treatment for the holders of the 65% of
Shares who have rejected the Offer and to enforce all of Patheon's rights.
In addition, the Special Committee notes that JLL continues to attempt to
coerce and mislead shareholders with its statements regarding the preferred
shares it owns that are convertible into Restricted Voting Shares. These
shares cannot vote for the election of directors unless and until they are
converted at a value of US$4.77 per Share. While JLL states that it "continues
to assess whether or not to convert" its preferred shares it omits to state
that the shares are over US$100 million "out of the money".
Independent Patheon Remains the Superior Alternative
The Special Committee believes that it continues to be in the best
interests of Patheon shareholders, as a whole, to reject JLL's inadequate
Offer and for Patheon to remain an independent company.
The Special Committee remains optimistic about the prospects for the
Company and is encouraged by recent Patheon announcements of new agreements to
grow its business. These include agreements to commercialize two OROS
technology release products, a strategic alliance with Kemwell Pvt. Limited
and an agreement with Swiftwater Group. Further details are available at the
Company's website www.patheon.com.
Patheon shareholders can help maintain the independence of their company
simply by not tendering their shares to the JLL Offer. Any shares that have
been tendered since May 7, 2009 can be withdrawn until the expiry of the
extended Offer. For assistance, shareholders can call Kingsdale Shareholder
Services at 1-866-851-3212.
Patheon Inc. (TSX:PTI; www.patheon.com) is a leading global provider of
contract development and manufacturing services to the global pharmaceutical
industry. Patheon prides itself in providing the highest quality products and
services to more than 300 of the world's leading pharmaceutical and
biotechnology companies. Patheon's services range from preclinical development
through commercial manufacturing of a full array of dosage forms including
parenteral, solid, semi-solid and liquid forms. Patheon uses many innovative
technologies including single-use disposables, Liquid-Filled Hard Capsules and
a variety of modified release technologies.
Patheon's comprehensive range of fully integrated Pharmaceutical
Development Services includes pre-formulation, formulation, analytical
development, clinical manufacturing, scale-up and commercialization. Patheon
can take customers direct to clinic with global clinical packaging and
distribution services and Patheon's Quick to Clinic(TM) programs can
accelerate early phase development project to clinical trials while minimizing
the consumption of valuable API.
Patheon's integrated development and manufacturing network of 11
facilities, and 6 development centers across North America and Europe, strives
to ensure that customer products can be launched with confidence anywhere in
Caution Concerning Forward-Looking Statements
This news release may contain forward-looking statements which reflect
management's expectations regarding the Company's future growth of operations,
performance (both operational and financial) and business prospects and
opportunities. These statements are made in the context of the risks and
uncertainties that are outlined in the Company's public documents, which can
be accessed on our website at www.patheon.com or on SEDAR at www.sedar.com.
For further information:
For further information: Special Committee: Information Agent for the
Special Committee: Kingsdale Shareholder Services, 1-866-851-3212; Media: John
Lute: Lute & Company: (416) 929-5883, email firstname.lastname@example.org