Iconic Labs Regulatory News (ICON)

27 September 2018

WideCells Group PLC ('WideCells Group' or 'the Group')

Financing Agreement

WideCells Group PLC, the healthcare services company focused on providing stem cell services and insurance for stem cell treatment, announces it has obtained a flexible and staged £2.7 million financing agreement (the 'Agreement') with European High Growth Opportunities Securitization Fund (the 'Investor') represented by its management company, European High Growth Opportunities Manco SA.

Terms of the Agreement

WideCells Group has entered into an agreement with the Investor in relation to the issue by the Group (the 'Bond Issue') to the Investor (or its affiliates) of convertible bonds (the 'Bonds') with warrants attached for a principal amount of up to £2,700,000 (the 'Total Commitment'). Under the terms of the agreement, the Bonds will convert into ordinary shares of £0.0025 each in the Company ('Ordinary Shares'), and the warrants entitle ABO to subscribe for Ordinary Shares at a pre-determined price (the 'Warrants').

It is expected that the Bonds will be issued and subscribed for in sequential tranches as detailed below:

i. £635,000 to be subscribed for and paid to the Company immediately;

ii. £1,000,000 to be subscribed for and paid to the Company immediately on the later of either (a) 15 November 2018, or (b) once a prospectus has been validated and approved by the Financial Conduct Authority (further detail on which is included below);

iii. £265,000 to be subscribed for and paid to the Company immediately three calendar months after the second tranche if the Company elects to draw down that third tranche; and

iv. four subsequent tranches each of aggregate nominal value of £200,000 if the Company elects to draw down those tranches.

The directors of the Company have sufficient authority to issue shares and rights to subscribe for shares to issue the first tranche of the Bond Issue, but will be required to call a General Meeting to receive authority from shareholders to enable the balance of the Bond Issue, including the attached Warrants, to be implemented. Furthermore, at the current share price, the Bond Issue will result, on full conversion of the Bonds and the attached Warrants, in the issue of substantially more than 20% of the Group's issued share capital triggering a requirement to issue a prospectus (which would need to be approved by the Financial Conduct Authority) prior to the issue of the shares (the 'Prospectus Requirement'). 

The first two drawdowns of the Bonds (totalling £1,635,000 in aggregate) are mandatory, but the drawdown of the remainder of the Bonds is not mandatory, although the Investor does have the right to require the Company to draw down any two of the remaining tranches. The Bonds are to be freely transferable and have a maturity of 12 months, after which all the Bonds will be mandatorily converted into Ordinary Shares to the extent not previously converted. The conversion price for the Bonds will be 90% of the lowest closing volume-weighted average price of Ordinary Shares ('VWAP') in the 15 trading days prior to conversion.

In relation to the Warrants, all Warrants are exercisable for a period of five years from their date of issue and are to be freely transferable. There are to be two series of Warrants (i.e. Warrants A and Warrants B). The number of Warrants A to be issued on the drawdown of the second tranche would be equivalent to 15% of the Total Commitment divided by the exercise price of the Warrants A. The number of Warrants B to be issued on the drawdown of each tranche will be equivalent to 20% of the nominal value of the Bonds issued in such tranche divided by the exercise price of the Warrants B , although the Warrants B to be issued in respect of the first tranche will actually be issued on the drawdown of the second tranche. 

The exercise price of the Warrants A will be 120% of the lower of:

· the lowest closing VWAP of the 15 trading days immediately preceding the date of signing of the letter of intent signed by the Company and Alpha Blue Ocean Inc., ('ABO') on 13 September 2018 in relation to the Bond Issue (the 'LOI'); and

· the lowest closing VWAP of the 15 trading days immediately preceding the request to issue the first tranche.

The exercise price of the Warrants B will be 120% of the lowest closing VWAP of the 15 trading days immediately preceding the request to issue the relevant tranche (or, in respect of the first tranche only, the lowest closing VWAP of the 15 trading days immediately preceding the date of signing of the LOI in relation to the Bond Issue, if such figure is lower).

Use of proceeds

Proceeds from the Agreement will be used to support the roll out and growth of the Group's stem cell storage and processing (WideCells) and insurance (CellPlan) service offerings and for general working capital purposes. The Board's primary focus is on building the sales revenue of its two core stem cell service offerings by maximising current contract agreements. 

Within the storage and processing division (WideCells), the Group's offering is a package known as BabyCells, which comprises umbilical cord blood and umbilical cord tissue collection following the award of an HTA license and processing together with one year's storage. The Group launched this product in February 2018 and is now focussed on driving sales uptake within the UK and Europe. This strategy has been strengthened by a recent agreement with an experienced stem cell sales specialist in the UAE and Lebanon.

Alongside this, the Group's innovative stem cell insurance division is focussed on increasing the roll-out of CellPlan in a selection of targeted countries in which it currently has commercial agreements in place to facilitate product uptake: namely, the UK and Spain, in both of which it is currently operational, and Brazil, Thailand, India and Singapore, where product launch is targeted to commence on a phased basis in H1 2019.

WideCells' CEO, João Andrade, said, "This agreement with ABO provides WideCells Group with financial security so that we can move forward positively and centre our attention on our primary goal and responsibility of building revenues and long-term shareholder value. With a supported balance sheet, we are able to focus on the uptake and sales of our primary stem cell insurance and storage services, which we believe provide the business with strong growth prospects. We have a number of commercial agreements in place to facilitate this and are committed to delivering on our focussed sales strategy for the benefit of all stakeholders."

ABO's COO, Hugo Pingray, said "ABO is very pleased to enter into this financing agreement with WideCells which fits ideally into our portfolio. We believe that the Company has the potential to revolutionise the booming stem cell industry and ultimately, to make access to potentially lifesaving treatments much more affordable. We are confident that the management will effectively leverage the funds we provide, to create value for its shareholders in further consolidating and developing its current pipeline."

**ENDS**

For further information, please visit the Group's website www.widecellsgroup.com, follow us on Twitter @WideCells_Group or contact: