Victoria Square Ventures Inc. Purchases Convertible Notes of Bellus Health Inc.



    MONTREAL, April 16 /CNW Telbec/ - Victoria Square Ventures Inc. ("VSVI")
announces that on April 16, 2009, VSVI entered into an agreement to purchase
(the "Purchase Agreement") $10,500,000 principal amount of senior convertible
notes (the "New Notes") of Bellus Health Inc. ("Bellus") due 5 years and one
day from the date of issuance (the "Maturity Date"). Pursuant to the Purchase
Agreement, VSVI acquired $5,000,000 of such New Notes on April 16, 2009 and,
subject to satisfaction of the conditions set out in the Purchase Agreement,
VSVI will acquire an additional $5,500,000 of such New Notes on or about June
3, 2009. Interest will be capitalized on the New Notes at the rate of 15% per
year. The principal and accrued interest on the New Notes is convertible at
the option of the holder of the New Notes into common shares of Bellus at a
conversion price of $0.20 per common share (subject to certain adjustments)
upon the Maturity Date or the occurrence of certain other events.
    Furthermore, pursuant to an agreement dated April 16, 2009, VSVI has
converted US$7,000,000 principal amount of 6% convertible senior notes due
2026 (the "Existing Notes") of Bellus into 21,672,000 Series A 6% Cumulative
Convertible Preferred Shares of Bellus (the "Preferred Shares"), at a rate of
3,096 Preferred Shares per US $1,000 principal amount of Existing Notes. The
Preferred Shares are convertible into common shares of Bellus, at the option
of the holder, at any time at a rate of 1 common share for 1 Preferred Share.
The Preferred Shares are entitled to 6% cumulative dividends payable in cash
or common shares of Bellus at the option of Bellus and will be automatically
converted into common shares of Bellus on the fifth anniversary of the date of
issuance.
    In the aggregate, the New Notes acquired by VSVI on April 16, 2009, the
capitalized interest payable on such New Notes, the Preferred Shares issued to
VSVI on April 16, 2009 and the dividends payable on such Preferred Shares are
convertible into 79,395,930 common shares of Bellus, which would represent
approximately 61.3% of the outstanding common shares of Bellus. The foregoing
assumes that the New Notes remain outstanding until the Maturity Date, that
all interest thereon is paid by the issuance of Bellus common shares at $0.20
per share, that the Preferred Shares remain outstanding until maturity, that
the Preferred Shares are converted in full on the basis of 1 common share for
each Preferred Share, that all dividends payable in respect of the Preferred
Shares are paid by the issuance of common shares at an assumed market price of
$0.35 per share, but excluding any common shares of Bellus issuable upon
conversion or exercise of all other outstanding convertible securities of
Bellus (collectively, the "Conversion Assumptions").
    After completion of the transactions described above, VSVI currently owns
1,172,704 common shares of Bellus, 21,672,000 Preferred Shares and $5,000,000
principal amount of New Notes.
    On December 18, 2008, Picchio Pharma Inc. ("Picchio") entered into
various agreements with its shareholders, VSVI and 1324286 Alberta Ltd.
("1324286"), a wholly owned subsidiary of the FMRC Family Trust (of which Dr.
Francesco Bellini, the Chairman, President and Chief Executive Officer of
Bellus is a beneficiary), under which all of the 11,450,429 shares of Bellus
held, directly or indirectly, by Picchio will be transferred to VSVI and
1324286. Pursuant to such agreements, the parties have agreed to cause
5,725,214 common shares of Bellus to be transferred by Picchio to VSVI and
5,725,215 common shares of Bellus to be transferred by Picchio to 1324286 by
no later than April 30, 2009 (collectively, the "Picchio Transfers"). Until
the common shares of Bellus are transferred by Picchio to VSVI, VSVI shall
have no ownership of and no rights to vote or receive dividends on such common
shares.
    Assuming the Conversion Assumptions and conversion of the Preferred
Shares held by VSVI, the $5,000,000 principal amount of New Notes and the
dividends and interest payable thereon, VSVI and its joint actor, Picchio,
would currently own an aggregate of 92,019,063 common shares of Bellus,
representing approximately 71.1% of the outstanding common shares of Bellus
(86,293,848 common shares of Bellus, representing approximately 66.7% of the
outstanding common shares of Bellus after the Picchio Transfers).
    If VSVI purchases the second tranche of New Notes, in a principal amount
of $5,500,000 and the set up fee contemplated in the Purchase Agreement is
paid by Bellus to VSVI in New Notes, then assuming the Conversion Assumptions
and conversion of all such New Notes, the Preferred Shares held by VSVI and
the interest and dividends payable thereon, VSVI and its joint actor, Picchio,
would own an aggregate of 150,423,838 common shares of Bellus, representing
approximately 80.1% of the outstanding common shares of Bellus (144,698,623
common shares of Bellus, representing approximately 77.0% of the outstanding
common shares of Bellus after the Picchio Transfers).
    If all of the senior convertible notes and Series A 6% Cumulative
Convertible Preferred Shares to be issued by Bellus, and the interest and
dividends payable thereon, are converted on the same basis as above, VSVI and
its joint actor, Picchio, would own approximately 30% of the outstanding
common shares of Bellus or 29% after the Picchio Transfers.
    The transactions described in this press release were carried out
pursuant to private agreements.
    VSVI holds the Bellus common shares, the Preferred Shares and the New
Notes for investment purposes and, in accordance with applicable securities
laws, it may increase or decrease its investment in Bellus depending on market
conditions and other relevant factors. VSVI understands that Picchio and/or
P.P. Luxco Holdings II s.a.r.l. may, in accordance with applicable securities
laws, trade in or with respect to securities of Bellus depending on market
conditions and other relevant factors.




For further information:

For further information: Peter Kruyt, President and Chief Executive
Officer, Victoria Square Ventures Inc., (514) 286-7400

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VICTORIA SQUARE VENTURES INC.

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