MPM.L Regulatory News (MPM)

2 Mar 2007 07:30

Minster Pharmaceuticals PLC02 March 2007 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN THE UNITED STATES, CANADA,AUSTRALIA OR JAPAN For Immediate Release 2 March 2007 MINSTER PHARMACEUTICALS PLC ("Minster" or "the Company") Fundraising of £17 million and Share Consolidation Minster Pharmaceuticals plc (AIM: MPM), the drug development companyspecialising in neurological and psychiatric disorders, is pleased to announce afundraising by Nomura Code Securities Limited of approximately £17 million(gross) and the consolidation of the Company's ordinary share capital. Highlights: • Fundraising by way of a Subscription and a Placing of new ordinary shares to raise gross proceeds of approximately £17 million at 65p per share, equivalent to 1.3p per share prior to the proposed share consolidation • Funds to be used to accelerate the development and commercialisation of tonabersat for the preventive treatment of migraine and to further develop sabcomeline in the treatment of schizophrenia • Care Capital and Rho Capital (the "Consortium") have conditionally agreed, subject to shareholder approval, to subscribe for 16,923,076 ordinary shares (the "Subscription"), representing 28.99 per cent. of the Enlarged Issued Share Capital of the Company • Dr Jerry Karabelas, a director of Care Capital, to join the Company's Board as a Non-Executive Director • In addition to the Subscription, Nomura Code is underwriting a placing of 9,230,770 new Ordinary Shares with new and existing institutional investors at the issue price of 65p per share (the "Placing") • A Warrant to subscribe for one ordinary share will be issued to subscribers and placees on the basis of one Warrant for every four new shares • A proposed share consolidation of one new Ordinary Share of 5p each for every fifty Existing Ordinary Shares of 0.1p to improve the potential liquidity by reducing the bid/offer spread in the Existing Ordinary Shares, which the Board believes currently hinders trading Paul Sharpe, Minster Pharmaceuticals' Chief Executive, said: "I am delighted bythe success of this fundraising, which will allow us to accelerate thedevelopment of tonabersat in the preventive treatment of migraine, and I amparticularly pleased to have won the support and endorsement of two specialistUS investors in Care Capital and Rho Capital. I would like to take thisopportunity to welcome Jerry Karabelas to Minster's Board and to welcome all newinvestors to the Company, which is now entering the most exciting period in itsdevelopment." - ENDS - For further information: Minster Pharmaceuticals plc Tel: +44 (0) 1799 506623Paul Sharpe, Chief Executive OfficerRobert Aubrey, Chief Financial Officer Buchanan Communications Tel: +44 (0) 20 7466 5000Mark Court/ Rebecca Skye Dietrich Nomura Code Securities Limited Tel: +44 (0) 20 7776 1200Chris CollinsRichard Potts Minster Pharmaceuticals plc (the "Company") Proposed Subscription for and Placing of New Ordinary Shares Proposed Issue of Warrants Proposed Share Consolidation Approval of Rule 9 Waiver Proposed Grant of New Share Options Introduction The Board of Minster today announced that the Company is raising a total of£17.0 million, before expenses, by way of a conditional placing and aconditional subscription of, in aggregate, 26,153,846 New Ordinary Shares at anissue price of 65 pence per New Ordinary Share (equivalent to a price of 1.3pper share prior to the Share Consolidation). A Warrant to subscribe for oneOrdinary Share will be issued to Subscribers or Placees for every four newOrdinary Shares subscribed pursuant to the Subscription or the Placing (subjectto rounding down for fractional entitlements). Care Capital and Rho Capital have conditionally agreed, subject to (inter alia)Shareholders' approval, to subscribe for, in aggregate, 16,923,076 New OrdinaryShares at the Issue Price and the Subscription Warrants to subscribe for4,230,768 Ordinary Shares. The Subscription will give the Consortium ashareholding of 28.99 per cent. of the Enlarged Issued Share Capital (or 33.79per cent. assuming exercise in full of the Warrants to be issued to theConsortium). The Subscription will raise £11.0 million (gross) for the Company.The Subscription Warrants issued to the Consortium include a provision that theycannot be exercised to the extent such exercise would result in the holders ofthe Subscription Warrants (or any of them) and/or persons acting in concert withthem being required to make a mandatory offer for the Company under theprovisions of the City Code. In addition to the Subscription, Nomura Code, as agent for the Company, isplacing, subject to Shareholders' approval, 9,230,770 Placing Shares and thePlacing Warrants to subscribe for 2,307,689 Ordinary Shares with new andexisting institutional investors at the Issue Price. The Placing will raise £6.0million (gross) for the Company. Nomura Code has underwritten the Placing. In addition, in order, inter alia, to reduce the bid/offer spread in theExisting Ordinary Shares, which the Board believes currently hinders trading inthe Existing Ordinary Shares, it is proposed to consolidate the existing sharecapital on the basis of issuing one new ordinary share of 5p each for every 50existing ordinary shares of 0.1p each. Further details of the ShareConsolidation are set out below. Further, the approval of Shareholders is being sought for the grant of the NewShare Options to key company personnel and for the election of Dr Argeris ("Jerry") Karabelas, a director of Care Capital, as a Non-executive Director ofthe Company. It is also proposed that the Articles of Association of the Companybe amended. Further details are set out below. In addition, the approval of Independent Shareholders is being sought inrelation to certain waivers granted by the Panel under Rule 9 of the City Code.Further details are set out in the paragraph headed "City Code on Takeovers andMergers" below. Reasons for the Subscription and Placing On 9 January 2007, the Company announced the results of its Phase IIa clinicaltrial of tonabersat in the prevention of migraine. The results of this studyshowed tonabersat to increase the rate of response to trial medication asassessed by a reduction in frequency of migraine attacks compared with placeboafter three months' treatment while at the same time reducing the days on whichsubjects needed "rescue medication", Imigran, painkillers etc. Multiple otherendpoints showed numerical if not statistical differences in favour oftonabersat. These data compare favourably with an early pilot study withtopiramate (marketed as Topamax by Johnson & Johnson) which has generated anestimated US$560 million in its first year of sales for the prevention ofmigraine (CNS Outlook 2010; Business Insights Ltd) despite the need for dosetitration, twice daily dosing and significant tolerability issues and hasredefined the prophylaxis of migraine. In the Company's opinion, the data from its Phase IIa clinical trial provide asolid basis for progressing to a definitive development programme aimed atachieving marketing authorisations in the United States of America, Europeancountries and other significant markets. Such a programme would be expected toinclude efficacy studies in larger numbers of patients as well as evaluation oftonabersat given for periods of up to 12 months or longer. The Directors now consider it to be in the interests of the Company and theShareholders to raise funds to allow the Company to leverage further the valuethat they believe resides in its key assets: the therapeutic compoundstonabersat and sabcomeline. The Directors believe that the proceeds of thePlacing and the Subscription will enable the Company to accelerate significantlythe process of development and registration and proposed commercialisation oftonabersat for the prophylactic treatment of migraine with commercial launch asearly as Q4 2009/Q1 2010 in the US. The Directors believe, based on theestimated sales of Topamax in its first year, that tonabersat has potential forsales of over US$1 billion annually with an attractive profile compared withTopamax. The principal use of the funds to be raised by the Placing and the Subscriptionwill be to carry out and support clinical trials in relation to tonabersat thatare intended to be progressed during the first half of this year. A favourableoutcome in the clinical trials would lead to further clinical development andaccelerate the prospects for commercialisation of tonabersat and of a partneringor licensing transaction for the further development and exploitation oftonabersat. The Directors believe that sabcomeline is an important component in the newapproach to the management of schizophrenia coming from the US. The Company isin discussions with interested parties in the United States to establishsabcomeline as an addition to the available treatments for schizophrenia such asthe atypical antipsychotics which have overall sales of over US$10 billionannually. Part of the funds raised will therefore be utilised to prepare for anadjunct therapy study with sabcomeline. Capital Resources and Use of Funds As at 30 September 2006, the Group had available cash at bank and in hand of£790,517 which represented the balance of the funding raised in early 2005 atthe time of the acquisition of Minster Research, interest and the proceeds ofresearch and development tax credits received by the Company before 31 March2006. On 17 November 2006, the Company announced that it had raised £600,000through a placing for cash of ordinary shares with warrants. It is intended thatexisting cash resources be applied towards the costs of the clinical trials andother development activity conducted at present or which is contemplated by theCompany within its present development programme for the Compounds, and towardsthe other administrative and operational expenditure of the Group. Other thanthe Convertible Loan Notes, the Company has no external borrowings outstandingwith third parties. The Placing and the Subscription will raise approximately £16.1 million afterexpenses. The effect of the fundraising will be to increase the cash at bank andequity shareholders' funds by approximately £16.1 million. The proceeds of thePlacing and the Subscription will be applied in the priority specified below: 1. The Directors have estimated the expenditure to be incurred on amulti-national, dose ranging Phase II clinical trial for tonabersat including along term extension study (based on tenders that have been obtained from CROs)to be in the region of approximately £11.5 million. 2. The Directors have allocated to the additional development activityin respect of sabcomeline, an estimated amount of £500,000 from the proceeds ofthe Placing and Subscription. This amount is based on estimates prepared by theDirectors after consultation with the Company's scientific advisers. 3. The expected development activity of the Group, now planned tocontinue until September 2009, will lead to higher levels of operational andadministrative expenditure and, accordingly, the Directors have allocated theremainder of the proceeds of the Placing and Subscription as additional workingcapital (£3 million) and also to the contingency required should the budgetedexpenditure for the additional study on the Compound be exceeded (£1 million). Principal terms of the Subscription Agreement The funds raised by the Subscription, which will raise approximately £11.0million, before expenses, will be used for the purposes set out in "Reasons forthe Subscription and Placing" above and will be applied as set out in "CapitalResources and Use of Funds" above. Under the terms of the Subscription Agreement, Care Capital has conditionallyagreed to subscribe for 10,769,230 Subscription Shares at the Issue Price and totake up Subscription Warrants over 2,692,307 Ordinary Shares and Rho Capital hasconditionally agreed to subscribe for 6,153,846 Subscription Shares at the IssuePrice and to take up Subscription Warrants over 1,538,461 Ordinary Shares. The Subscription Agreement is conditional (inter alia) upon the relevantResolution which includes the appointment of Dr Karabelas as a Non-executiveDirector of the Company and the proposed amendments to the Company's Articles ofAssociation being passed by Shareholders at the EGM. Principal terms of the Placing Agreement Under the terms of the Placing Agreement, Nomura Code has conditionally agreed,as agent for the Company, to use reasonable endeavours to procure subscribersfor the Placing Shares at the Issue Price and for Placing Warrants over2,307,689 Ordinary Shares and, to the extent that it fails to procure suchsubscribers, to subscribe for such Ordinary Shares and Placing Warrants asprincipal upon the terms and subject to the conditions of the Placing Agreement. The Placing Agreement is conditional (inter alia) upon the relevant Resolutionbeing passed by Shareholders at the EGM and Admission having occurred. Terms of the Warrants Pursuant to the terms of the Warrant Instruments, the Company will issue theWarrants to the Subscribers and the Placees in accordance with the terms of theSubscription Agreement and the Placing Agreement. The Warrants are exercisablein whole or in part at any time up to and including 1 March 2012, subject to aminimum subscription of 15,500 Ordinary Shares, and an exercise price of 65pence per Ordinary Share is payable on exercise. The Warrants are transferablein certain limited circumstances. Share Consolidation The Company's middle market share price, as at the close of business on 1 March2007, being the latest practicable date before publication of this announcement,was 1.525 pence, with a bid/offer spread of 1.40-1.65 pence. In order, interalia, to reduce the bid/offer spread in the Existing Ordinary Shares, which theBoard believes currently hinders trading in the Existing Ordinary Shares, ashare consolidation is proposed. Subject to the relevant Resolution being passed by Shareholders at the EGM, theissued and unissued Existing Ordinary Shares of 0.1 pence each in the sharecapital of the Company will be consolidated into new Ordinary Shares of 5 penceeach, so that holders of Existing Ordinary Shares will then hold one OrdinaryShare of 5 pence each for every 50 Existing Ordinary Shares of 0.1 pence eachpreviously held. Fractions of issued Ordinary Shares created as a result of theShare Consolidation will be sold in the marketplace for the benefit of theCompany. The purpose of the Share Consolidation is to reduce the total number of ExistingOrdinary Shares in issue without affecting the rights of Shareholders. EachShareholder will have a smaller number of shares of a higher nominal valuerepresenting the same proportion of the issued share capital of the Company asthe Existing Ordinary Shares held before the Share Consolidation (subject to anyfractional entitlement to Ordinary Shares arising as a result of the ShareConsolidation). The rights of Shareholders as regards voting, distributions andother rights attaching to the Ordinary Shares when measured against the entireissued share capital will not be reduced. In the absence of any other factorsaffecting the Company's share price, the Share Consolidation is not expected toresult in a change in the Company's market capitalisation. So as to facilitate the Share Consolidation, Jeremy Gorman, the CompanySecretary, has agreed to subscribe for the Balancing Shares in order to ensurethat (immediately prior to the Share Consolidation) the number of ExistingOrdinary Shares in issue is exactly divisible by 50. On the assumption that nofurther Existing Ordinary Shares are issued between the date of thisannouncement and the close of business on 26 March 2007 (being the ConsolidationRecord Date), the number of Balancing Shares required to be issued is expectedto be 2. However, in the event that any further Existing Ordinary Shares areissued following the date of this announcement, this number is subject tochange. Any fractional entitlement to an Ordinary Share represented by theBalancing Shares will, following the Share Consolidation, be aggregated withother fractional entitlements to issued Ordinary Shares and sold in the marketfor the benefit of the Company. Effect of Share Consolidation on holders of existing ordinary shares The Share Consolidation will give rise to fractional entitlements to OrdinaryShares where Shareholders hold a number of Existing Ordinary Shares that is notexactly divisible by 50. Subject to the relevant Resolution being passed byShareholders at the EGM, Shareholders with a holding of Existing Ordinary Sharesthat is not exactly divisible by 50 will, pursuant to the Share Consolidation,have their holding rounded down to the nearest whole number of Ordinary Shares.As at 1 March 2007, the latest practicable date prior to the date of thisannouncement, a shareholding of 50 Existing Ordinary Shares was worth 76.25pence, and any fractional entitlements arising pursuant to the ShareConsolidation (as if carried out on that date) would therefore be worth lessthan this. In the view of the Board, aggregating such fractional entitlements, selling themand sending cheques to Shareholders in respect of their pro rata proportion ofthe proceeds is neither practical nor cost-efficient given the relatively smallsums of money attributable to each individual Shareholder concerned. Inaccordance with the relevant Resolution, any fractional entitlements arising onthe Share Consolidation will therefore be sold for the benefit of the Company. One effect of the Share Consolidation will be that any Shareholder holding fewerthan 50 Existing Ordinary Shares at the Consolidation Record Date will not holdany Ordinary Shares in the Company following the Share Consolidation becomingeffective. Grant of new share options It is proposed to grant the New Share Options to Robert Stubbs, Peter Blower,John Russell, Jennifer Lindop and Jane Mills in the proportions set out below.The New Share Options will be over an aggregate of 1,200,000 Ordinary Shares andwill be exercisable between the second anniversary and the fifth anniversary ofthe date of grant of the New Share Options. Name Number of Ordinary Shares under New Share Options Robert Stubbs 200,000Peter Blower 200,000John Russell 480,000Jennifer Lindop 160,000Jane Mills 160,000 As Peter Blower, John Russell and Jennifer Lindop are members of the ConcertParty (or are connected persons of members of the Concert Party) the proposedgrant of the New Share Options has certain implications under Rule 9 of the CityCode. Further details are set out in the paragraph headed "City Code onTakeovers and Mergers" below. Dealings and Settlement It is expected that, subject to the Placing and Subscription Agreements becomingunconditional in all respects, the New Ordinary Shares to be issued pursuant tothe Placing and Subscription Agreements will be registered in the names of thePlacees and the Subscribers and issued either: (a) in certificated form, withthe relevant share certificate expected to be despatched by post, at theapplicant's risk, by 30 March 2007; or (b) in CREST where an applicant who is a"system member" (as defined in the CREST Regulations) in relation to CREST hasso elected, in which case delivery (to the designated CREST account) of the newOrdinary Shares is expected to take place on 27 March 2007 unless the Companyexercises its right to issue such new Ordinary Shares in certificated form. Itis expected that the Warrants will be registered in the names of the Placees andSubscribers and warrant certificates despatched by post at the applicants' riskby 30 March 2007. No temporary documents of title will be issued. Pending the despatch ofdefinitive share certificates, instruments of transfer will be certified againstthe register of members. On exercise of the Warrants, application will be made for the resultant OrdinaryShares to be admitted to trading on AIM. Prior to that, the Warrants themselveswill not be admitted to trading on AIM. Board of Directors As part of the Proposals, it is intended that Dr Karabelas be appointed to theBoard with effect from Admission. Dr Karabelas (aged 53), has had a distinguished career at senior levels in theglobal pharmaceuticals industry: he was Chief Executive Officer of NovartisPharma and prior to that President of the North American operations ofSmithKline Beecham plc. He is currently a Partner of Care Capital LLC, aspecialist US healthcare venture capital investment fund, and is Director of anumber of pharmaceutical and healthcare companies. Subject to Admission and in accordance with the previously stated intention, DrPaul Sharpe will be stepping down as Chairman to concentrate on his role asChief Executive Officer of the Company. The Company is pleased that JohnRussell, currently a Non-executive Director of the Company, will accept the roleof Non-executive Chairman, subject to Admission. Lock-up Arrangements The Directors have entered into lock-in arrangements in respect of 1,538,461Ordinary Shares (representing 9.68 per cent. of their aggregate holding onAdmission). Under the terms of the lock-in arrangements, the Directors have conditionallyagreed not to sell, transfer or otherwise dispose of such Ordinary Shares (otherthan in certain limited circumstances) for a period of 12 months followingAdmission. City Code on Takeovers and Mergers As a UK public company, and as its place of central management and control is inthe UK, Minster is subject to the City Code. The City Code governs, amongstother things, transactions which result in a change of control of a publiccompany to which the City Code applies. Under Rule 9 of the City Code ("Rule 9") where (i) any person acquires, whetherby a series of transactions over a period of time or not, an interest in shareswhich (taken together with shares in which he is already interested and in whichpersons acting in concert with him are interested), carry 30 per cent. or moreof the voting rights of a company subject to the City Code; or (ii) any person,together with persons acting in concert with him, is interested in shares whichin the aggregate carry not less than 30 per cent. of the voting rights of thecompany subject to the City Code but does not hold shares carrying more than 50per cent. of such voting rights and such a person, or any person acting inconcert with him, acquires an interest in any other shares which increases thepercentage of shares carrying voting rights in which he is interested, thatperson is normally obliged to make a general offer to all shareholders topurchase in cash their shares at the highest price paid by him or any personacting in concert with him within the preceding 12 months. For the purposes of the City Code, persons acting in concert comprise personswho, pursuant to an agreement or understanding (whether formal or informal),co-operate to obtain or consolidate control of a company or to frustrate thesuccessful outcome of an offer for a company. Certain categories of person willbe deemed or presumed to be acting in concert for these purposes in accordancewith the definition set out in the City Code. Control means an interest orinterests in shares carrying in aggregate 30 per cent. or more of the votingrights of the company, irrespective of whether such interest or interests givede facto control. The Concert Party Pursuant to the terms of the Minster Research Acquisition Agreement, the Vendors(who include Dr Paul Sharpe, Robert Aubrey and Dr Peter Blower) received968,000,000 Existing Ordinary Shares (the "First Consideration Shares") and anentitlement to a further 645,000,000 Existing Ordinary Shares on the occurrenceof certain events (the "Deferred Consideration Shares", expected to be12,900,000 Ordinary Shares on a consolidated basis). In addition, members of theConcert Party were granted Existing Share Options over an aggregate of35,000,000 Existing Ordinary Shares following the completion of the MinsterResearch Acquisition Agreement. Following discussions with the Panel prior tothe acquisition, the Vendors (as the holders of all of the issued ordinaryshares of Minster Research Limited) were considered to be acting in concert forthe purposes of the City Code. The Panel agreed to waive the requirement underRule 9 of the City Code, resulting from the issue of the First ConsiderationShares, the issue of the Deferred Consideration Shares and the exercise of theExisting Share Options held by members of the Concert Party (as a result ofwhich the Concert Party could have come to hold up to 73.8 per cent. of the thenissued share capital of the Company), for a general offer to be made by theConcert Party for the balance of the ordinary shares in the capital of theCompany in issue, subject to the approval of the independent shareholders ofsuch waiver. A resolution to approve such waiver was passed by the then existingindependent Shareholders of the Company in general meeting on 21 February 2005. Variation of Minster Research Acquisition Agreement It is currently proposed to vary the Minster Research Acquisition Agreement (inaccordance with the terms of the Deed of Variation) to amend the circumstancesin which the Company would be obliged to issue the Deferred Consideration Sharesto the Vendors. The Panel has confirmed to the Company that these variations will require awaiver of the requirement under Rule 9 of the City Code, resulting from theissue of the Deferred Consideration Shares, for a general offer to be made bythe Concert Party for the issued ordinary share capital of the Company. ThePanel has agreed to waive such obligation subject to the approval of theIndependent Shareholders of such waiver. Under the Deed of Variation provision is also made for the number and/or nominalvalue of the Deferred Consideration Shares to be appropriately adjusted in theevent of any share capital reorganisation of the Company. The Panel hasconfirmed that this amendment will not require a waiver. This amendment istherefore unconditional and (as such) came into effect on 2 March 2007 (beingthe date of the Deed of Variation). Proposed grant of New Share Options It is also proposed that New Share Options be granted to (inter alia) PeterBlower, John Russell and Jennifer Lindop, all of whom are either members of theConcert Party or connected persons of members of the Concert Party. The Panel has agreed to waive the requirement under Rule 9 of the City Code,resulting from the issue of the Ordinary Shares to which such persons areentitled under the New Share Options, for a general offer to be made by theConcert Party for the issued ordinary share capital of the Company subject tothe approval of the Independent Shareholders of such waiver. Interests of Concert Party: As at 1 March 2007 (being the last practicable date prior to the publication ofthis announcement), the Concert Party held a total of 965,816,773 ExistingOrdinary Shares in the Company representing 59.94 per cent. of the currentissued share capital of the Company. The issue of New Ordinary Shares under thePlacing and Subscription will result in the proportion of the issued ordinaryshares of the Company held by the Concert Party being reduced. Assuming none ofthe members of the Concert Party purchase or sell shares, the maximum number ofOrdinary Shares held by the members of the Concert Party (assuming issue in fullof the Deferred Consideration Shares and of any Ordinary Shares issuable underExisting Share Options or New Share Options held by members of the ConcertParty) would amount to 33,816,321 Ordinary Shares representing 46.40 per cent.of the Enlarged Issued Share Capital of the Company. Set out below is a summary of the interests of the Directors who are members ofthe Concert Party and other significant shareholders who are members of theConcert Party. Name Number of Percentage Number of Percentage Number of Percentage Total Ordinary of Enlarged Deferred of Enlarged shares of Enlarged percentage Shares and/ Issued Consideration Issued under New Issued of Enlarged or shares Share Shares* Share Share Share Issued under Capital++++ CapitalY Options++ CapitalYY Share Existing Capital+ Share Options*NamePaul Christopher Sharpe** 14,033,182 23.73% 9,217,358 12.93% - - 31.90%Robert John Aubrey 1,737,020 2.94% 1,024,150 1.44% - - 3.79%Peter Robin Blower 456,007 0.77% 103,951 0.15% 200,000 0.34% 1.04%Edward Stephen Argent 1,443,414 2.44% 961,778 1.35% - - 3.30%Belcher+**Virginia Winsome 173,702 0.29% 102,415 0.14% 480,000 0.81% 1.04%Russell++Other Concert Party 2,233,003 3.78% 1,490,341 2.09% 160,000 0.27% 5.33%membersTotal 20,076,328 33.95% 12,899,993 18.10% 840,000 1.44% 46.40% * On a consolidated basis assuming that the Share Consolidation is approved byShareholders and rounding down to the nearest whole number ** Assuming that no disposal of shares is required to be made by Paul Sharpe toEdward Belcher pursuant to the terms of an option deed entered into between PaulSharpe and Edward Belcher and dated 27January 2005 + Including, for these purposes, the interests held by Hilary Belcher, KateBelcher and Abigail Belcher ++ Virginia Russell is the wife of John Russell. As such her interest includesExisting Share Options held by John Russell over 20,000 Ordinary Shares (on aconsolidated basis and rounding down to the nearest whole number) and New ShareOptions over 480,000 Ordinary Shares to be granted to John Russell ++ The New Share Options will be exercisable betweenthe second and fifthanniversaty of the date of grant of the New Share Options ++++ Assuming that those Existing Share Options which are held by members of theConcert Party have been exercised in full Y Assuming that the Deferred Consideration Shares have been issued in full YY Assuming that those New Share Options which are held by members of theConcert Party have been exercised in full + Assuming that those Existing Share Options and those New Share Options whichare held by members of the Concert Party have been exercised in full and thatthe Deferred Consideration Shares have been issued in full As the number of Ordinary Shares in which members of the Concert Party areinterested, after the Placing and Subscription, will amount to more than 30 percent. of the voting rights of the Company, but the Concert Party will not holdmore than 50 per cent. of the voting rights of the Company, for so long as theConcert Party subsists, were any member of the Concert Party or persons actingin concert with him to acquire any further interests in Ordinary Shares, theConcert Party would normally be obliged to make a general offer in cash to allshareholders to purchase their Ordinary Shares at the highest price paid by him,or any person acting in concert with it, within the 12 months preceding theannouncement of the offer. However, as referred to above, the issue of the Deferred Consideration Sharesand the Ordinary Shares to be issued following the exercise of the New ShareOptions held by members of the Concert Party are the subject of rule 9 waivers.As such, notwithstanding that the Concert Party may be interested in shareswhich in aggregate carry not less than 30 per cent. of the Company's votingrights but does not hold more than 50 per cent. of the Company's voting rightsfollowing the Placing and Subscription providing that the rule 9 waivers areapproved at the EGM, the Concert Party will be able to receive the DeferredConsideration Shares and/or exercise the New Share Options which the are subjectof the respective waivers without incurring an obligation to make a generaloffer under rule 9 of the City Code, although acquisitions of any furtherinterests in Ordinary Shares would still be subject to rule 9, as set out above. Assuming, following the Placing and Subscription, that all the Existing ShareOptions held by members of the Concert Party are exercised and the DeferredConsideration Shares are issued (both adjusted to take account of theConsolidation) and all the New Share Options held by members of the ConcertParty are exercised the number of Ordinary Shares held by the Concert Party willincrease to 33,816,321 Ordinary Shares representing 46.40 per cent. of theEnlarged Issued Share Capital. Intentions of the Concert Party The Directors (other than Robert Stubbs who is not a member of the ConcertParty) are the majority members of the Concert Party. As such, their intentionsregarding the future business of the Company coincide with the strategy and useof proceeds outlined above. So far as the Directors are aware, the other membersof the Concert Party do not have any specific intentions in relation to thebusiness of the Company, any redeployment of its fixed assets or the continuedemployment of the employees and management of the Group. Related Party Transaction The entry into the Deed of Variation by the Company constitutes a related partytransaction under the AIM Rules. The Directors (other than the IndependentDirector) are related parties by virtue of their interest in the DeferredConsideration and the fact that they are signatories to the Deed of Variation.The Independent Director, having consulted with Nomura Code, considers that theterms of the Deed of Variation are fair and reasonable insofar as Shareholdersare concerned. The New Ordinary Shares that are the subject of the Placing and the Subscription(the "New Ordinary Shares") are not being offered or sold to any person in theUnited Kingdom, other than to qualified investors as defined in Section 86(7) ofthe Financial Services and Markets Act 2000 ("FSMA"), being persons fallingwithin Article 2.1(E)(I), (II) or (III) of Directive 2003/71/EC (the "ProspectusDirective"), which includes legal entities which are regulated by the FinancialServices Authority (the "FSA") or entities which are not so regulated whosecorporate purpose is solely to invest in securities. The information contained herein is not for publication or distribution into theUnited States. The material set forth herein is for informational purposes onlyand is not intended, and should not be construed, as an offer of securities forsale into the United States or any other jurisdiction. The securities of theCompany described herein have not been and will not be registered under the USSecurities Act of 1933, as amended (the "Securities Act"), or the laws of anystate of the United States, and may not be offered or sold within the UnitedStates, except pursuant to an exemption from, or in a transaction not subjectto, the registration requirements of the Securities Act and applicable statelaws. There is no intention to conduct a public offering of securities in theUnited States. This announcement does not constitute an offer to sell or issue or asolicitation of an offer to buy or subscribe for New Ordinary Shares in anyjurisdiction including, without limitation, Canada, Australia, Japan or anyother jurisdiction in which such offer or solicitation is or may be unlawful.This announcement and the information contained herein are not for publicationor distribution, directly or indirectly, to persons in Canada, Australia orJapan unless permitted pursuant to an exemption under the relevant local law orin any jurisdiction in which such publication or distribution is unlawful. The distribution of this announcement, the Placing and/or Subscription and/orissue of the New Ordinary Shares in certain jurisdictions may be restricted bylaw. No action has been taken by the Company or Nomura Code that would permit anoffer of the New Ordinary Shares or possession or distribution of thisannouncement or any other publicity material relating to such New OrdinaryShares in any jurisdiction where action for that purpose is required. Persons towhose attention this announcement has been drawn are required by the Company andNomura Code to inform themselves about and to observe any such restrictions. Nomura Code is authorised and regulated by the Financial Services Authority, isacting for the Company and for no one else in connection with the Placing andSubscription and will not be responsible to anyone other than the Company forproviding the protections afforded to the customers of Nomura Code or foraffording advice in relation to the Placing, the Subscription, or any othermatters referred to herein. Definitions "Admission" the admission of the New Ordinary Shares to trading on AIM "AIM" a market operated by the London Stock Exchange "AIM Rules" the rules governing the admission to and operation of AIM as published by the London Stock Exchange from time to time "Balancing Shares" the Existing Ordinary Shares to be issued (at a price of 0.1 pence per share) immediately prior to the Consolidation Record Date "Care Capital" Care Capital Investments III LP together with Care Capital Offshore Investments III LP "Circular" the circular sent by the Company to Shareholders dated 2 March 2007 including a notice of EGM "City Code" the City Code on Takeovers and Mergers in the UK "Company", "Minster" or " Minster Pharmaceuticals plcMinster Pharmaceuticals" "Compounds" tonabersat and sabcomeline, or either of them, as the context requires "Concert Party" the Vendors who, at the time of the acquisition of Minster Research Limited, were and continue to be deemed by the Panel to be acting in concert "Consolidation Record Date" close of business on 26 March 2007 "Consortium" Care Capital and Rho Capital "Convertible Loan Notes" the convertible loan notes 2011 issued by the Company on 6 April 2004 "Deed of Variation" the conditional deed of variation dated 2 March 2007 and entered into between the Company and the Vendors in relation to the Minster Research Acquisition Agreement further details of which are set out in the Circular "Deferred Consideration the 645,000,000 Existing Ordinary Shares issuable by the Company to the Vendors in certain circumstances under the Minster Research AcquisitionShares" Agreement "Directors" or "Board" the board of directors of Minster "Enlarged Issued Share the issued ordinary share capital of the Company as enlarged by the issue of the New Ordinary SharesCapital" "Existing Ordinary Shares" ordinary shares of 0.1p each in the capital of Minster "Existing Share Options" the options to subscribe for an aggregate of 30,000,000 Existing Ordinary Shares at an exercise price of 3.5 pence granted to Paul Sharpe, Robert Aubrey, Peter Blower and Robert Stubbs on 25 February 2005 and expiring on 24 February 2015; the options to subscribe for an aggregate of 20,000,000 Existing Ordinary Shares at an exercise price of 0.75 pence granted to Peter Blower and Robert Stubbs on 25 February 2005 and expiring on 24 February 2015; and the options to subscribe for an aggregate of 5,100,000 Existing Ordinary Shares at an exercise price of 1.4 pence granted to John Russell, Jane Mills, Jennifer Lindop and Michael Oshinsky on 11 May 2005 and expiring on 10 May 2015 "Extraordinary General the extraordinary general meeting of Minster convened for 10.00 a.m. on 26 March 2007 (or any adjournment of it)Meeting" or "EGM" "Independent Director" Robert Stubbs "Independent Shareholders" all Shareholders other than the members of the Concert Party "Issue Price" 65p per Ordinary Share (equivalent to 1.3p per share on a pre-consolidated basis) "London Stock Exchange" London Stock Exchange plc "Minster Research" Minster Research Limited, formerly called BioPartners Limited "Minster Research Acquisition the share sale agreement dated 27 January 2005 between the Company and the Vendors for the acquisition by the Company of all of the issued shares ofAgreement" Minster Research "New Ordinary Shares" the Subscription Shares and the Placing Shares "New Share Options" the options to subscribe for an aggregate of 1,200,000 New Ordinary Shares at an exercise price of 65 pence proposed to be granted by the Company to Robert Stubbs, Peter Blower, John Russell, Jennifer Lindop and Jane Mills "Nomura Code" Nomura Code Securities Limited "Ordinary Shares" ordinary shares of 5p each in the capital of Minster following the Share Consolidation "Panel" the Panel on Takeovers and Mergers in the UK "Placees" the institutional investors procured by Nomura Code to subscribe for the Placing Shares and take up the Placing Warrants "Placing" the placing of the Placing Shares and of the Placing Warrants pursuant to the Placing Agreement "Placing Agreement" the conditional agreement dated 2 March 2007 and made between Nomura Code and the Company in relation to the Placing "Placing Shares" The 9,230,770 Ordinary Shares to be issued pursuant to the Placing Agreement "Placing Warrants" the warrants to subscribe for Ordinary Shares (at an exercise price of 65 pence per Ordinary Share) to be granted by the Company pursuant to the Placing Agreement on the basis of one warrant for every four Placing Shares subscribed subject to rounding down for any fractional entitlements) "Proposals" the Placing, Subscription, Share Consolidation, variation of the Minster Research Acquisition Agreement and other proposals described in the Circular (including the Rule 9 waivers described in the Circular) "Resolutions" the resolutions set out in the notice of the EGM contained in the Circular and "Resolution" shall mean any of them "Rho Capital" Rho Ventures V, LP together with Rho Ventures V Affiliates, LLC "Share Consolidation" the proposed consolidation of Existing Ordinary Shares into Ordinary Shares of 5 pence each on the terms set out in Resolution 1 contained in the notice of the EGM "Shareholders" holders of Existing Ordinary Shares "Subscriber" a subscriber of Subscription Shares pursuant to the Subscription Agreement "Subscription" the proposed subscriptions by the Subscribers for the Subscription Shares at the Issue Price and for the Subscription Warrants pursuant to the terms of the Subscription Agreement "Subscription Agreement" the conditional agreement dated 2 March 2007 and made between the Company and the Consortium in relation to the Subscription "Subscription Shares" the 16,923,076 new Ordinary Shares to be issued pursuant to the Subscription Agreement "Subscription Warrants" the warrants to subscribe for Ordinary Shares (at an exercise price of 65 pence per Ordinary Share) to be granted by the Company pursuant to the Subscription Agreement on the basis of one warrant for every four Subscription Shares subscribed (subject to rounding down for any fractional entitlements) "Vendors" Dr Sharpe and other former shareholders of Minster Research Limited who disposed of their shareholding in Minster Research Limited to the Company pursuant to the terms of the Minster Research Acquisition Agreement "Warrant Instruments" the warrant instruments dated 2 March 2007 entered into by the Company pursuant to which the Placing Warrants and the Subscription Warrants will be issued "Warrants" the Subscription Warrants and the Placing Warrants This information is provided by RNS The company news service from the London Stock Exchange