Plethora Solutions Holdings Plc Regulatory News (PLE)

Plethora Solutions Holdings PLC

("Plethora" or the "Company")

Placing to raise £2.124m

Introduction

The Company announces that it has secured £2.124 million, before expenses, through the Placing of 106,200,000 New Ordinary Shares at a price of 2p per share, which represents an 8 per cent. premium to the closing mid market price on 15 March 2012. The Company will use the proceeds of the Placing to provide working capital and complete the regulatory approval of PSD502 in Europe.

At the same time the Company has entered into agreements with its lenders in relation to a Debt Restructuring, further details of which are set out below.

This announcement follows those on 5 February 2013, when the Company announced that it was seeking urgent financing and was to conduct a strategic review of its subsidiary The Urology Co; and subsequently, on 25 February 2013, that the Company announced that it was appointing administrators to The Urology Co.

Ronald Openshaw, CEO Plethora, said:

"Following the strategic review in February the Company's full resources are focussed on PSD502 and our cost base has already been restructured accordingly. We are grateful to all our existing investors and lenders who again have supported the Company. Their support underpins our belief in the value of PSD502, which we hope will be approved in Europe by the end of 2013."

The Placing

Today, Plethora announces that it has conditionally agreed the terms of a Placing to raise approximately £2.124 million before expenses through the issue of 106,200,000 New Ordinary Shares at a placing price of 2p per share. Net proceeds of the Placing are expected to be approximately £1.9million.

Of these funds, an amount of £1.32 million has been committed by Jim Mellon, a Director of the Company, and investment funds with which he is a connected party. The remaining £804,000 has been committed by institutional investors in a placing arranged by Hybridan as broker to the Company.

The Placing is being conducted by way of a non pre-emptive share issue. The Directors believe that this is the most cost effective method to raise funds in the current circumstances. The Placing Shares will represent 30.7 per cent. of the Enlarged Share Capital.

Completion of the Placing and the issue of the Placing Shares are subject to, inter alia, the passing of the necessary resolutions at a General Meeting of the Company. A circular to shareholders is being sent today which will contain a notice of General Meeting for 4 April 2013 at which the resolutions will be put to shareholders. The Placing Shares will, on Admission, be credited as fully paid and will have the same rights in all respects as the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared. The Placing is to be effected on behalf of the Company by Hybridan, under the terms of the Placing Agreement.

PSD502 a treatment for premature ejaculation

Plethora was founded around the development programme PSD502, a treatment for premature ejaculation ("PE"). This product was developed by Plethora and has successfully completed Phase III clinical trials in Europe and the United States. In mid 2012, Plethora submitted a dossier to the European Medicines Agency (EMA) for approval and it is anticipated that the final approval decision by the EMA will be received later this year.

The Directors believe this programme has significant potential value based on the prevalence of premature ejaculation and the lack of a widely available effective treatment.

In the 27 member states of the European Union, the Company estimates that there are in excess of 150 million men aged between 20-69 years old. With the estimated prevalence of PE being 20-30 per cent, the implication is that the potential population of men in the European Union with the disorder is 30-45 million. A centralised approval of PSD502 by the EMA would permit the product to be marketed to this entire group.

In addition, Plethora is developing strategies for the launch of the product in territories outside Europe. If approved in Europe, the Directors believe that a number of other countries will use EMA approval as a reference document for approval in their jurisdiction. In particular, the Company believes there is significant value to be earned in South America, the Middle-East, Asia and Australasia.

The Company intends to enter into a new partnering agreement for PSD502 with a major pharmaceutical company with the sales and marketing resource to ensure the product is brought to market effectively. In addition, the Company has previously stated that it had started talks with a number of companies for the commercialisation of the product - these talks continue.

In 2007, Plethora entered into an agreement with Shionogi (formerly Sciele Pharma Inc) under which the parties agreed that they would co-promote PSD502 in the US. In two successive agreements in the first half of 2009, Shionogi then acquired global control of PSD502 in exchange for upfront payments and certain royalty agreements. Under the 2009 agreements, Plethora transferred to Shionogi full rights to the US market for a single payment. In September 2011, Plethora regained control in Europe and the Rest of the World (excluding North America, South America, Japan, Korea, Taiwan and China).

The Directors believe that the potential value of PSD502 is so great that it should receive the full priority of the Company's resources.

The Urology Co

The Urology Co was founded in 2009 to establish a revenue earning specialty pharmaceutical company. It was intended that this would cover a proportion of Group overheads, permitting the income that was eventually to arise from PSD502 to flow to shareholders.

Whilst over the course of 2012 revenues increased materially from prior years, the pace of this increase was not what had been hoped for at the time the business was established. In addition, in order to prosper, this business required further capital. In light of the Company's capital requirements the Directors concluded that it would conduct a strategic review of The Urology Co. During this review the Directors considered (i) a reduction in the cost base of the Urology Co to establish profitability; and (ii) selling that business to a third party. It was concluded that cost cutting would not achieve its objective. Further, and despite attempts to find a potential acquirer of the business, a buyer could not be secured in an acceptable timeframe. The Directors therefore concluded that the appropriate decision was to cease all funding and operations, and coupled with its capital structure, the directors of The Urology Co, placed it into administration on 25 February 2013.

The effect of the cessation of this business will be to reduce the Group's cash burn and will ensure that all resources are concentrated on the development and commercialisation of PSD502.

Debt Restructuring

The Company has over the course of the last few years financed its capital needs through the use of both equity and debt instruments. To facilitate the Placing the Company has agreed with these parties a restructuring of their terms as set out below.

1. Convertible Loan Notes: the Company has in issue £800,000 of Convertible Loan Notes which had a maturity date of 31 December 2012. It has been agreed as part of the Debt Restructuring that the holders will extend maturity to 31 December 2014. In addition, interest accrued on the Convertible Loan Notes to 28 February 2013, being £351,707 will be paid through the issue of 17,585,342 New Ordinary Shares at 2p per share. The interest rate from 1 March 2013 to maturity will be reset at 14 per cent. per annum and will accrue to maturity. Finally, the conversion price of the Convertible Loan Notes and the accrued interest at maturity has been reset to 2p per share. If this loan is repaid at maturity this will, with the accrued interest, give rise to a repayment of £1,005,589 and consequently if converted will give rise to the issue of 50,279,452, New Ordinary Shares.

2. Capital For Enterprise Loan: on 29 June 2010, the Company secured a £1 million facility from the Capital for Enterprise Fund, managed by Maven Capital Partners which was due for repayment on 30 June 2015. It has been agreed as part of the Debt Restructuring that maturity on this loan will now be 31 March 2015. In addition, the interest accrued on the loan notes to 28 February 2013, being £128,384 will be paid through the issue of 6,419,190 New Ordinary Shares at 2p per share. The interest rate from 1 March 2013 to maturity will be reset at 14 per cent. per annum and will accrue to maturity. The Capital for Enterprise loan carries a redemption premium which at maturity will be 25 per cent. It has been agreed that the loan and the accrued interest are convertible into New Ordinary Shares at 2p per share at the option of the Lender. If this loan is repaid at maturity this will, with the accrued interest and the redemption premium, give rise to a repayment of £1,541,507 and consequently if converted will give rise to the issue of 77,075,342 New Ordinary Shares. As part of the arrangements regarding the Capital for Enterprise Loan, Capital for Enterprise was granted a warrant to subscribe, at a price of 1p per Ordinary Share, for Ordinary Shares representing up to 3 per cent. of the fully diluted ordinary share capital of the Company. This warrant was subject to certain restrictions which have been modified as part of the Debt Restructuring. The warrant was subject to a cap (Ordinary Shares having a market value at the date of subscription of £500,000) - this cap has been removed; the expiry date of the warrant has been extended to 31 March 2023; and the warrant is now exercisable at any time at the discretion of Capital For Enterprise having previously only been exercisable by reference to an Exit Event.

3. Galloway Loan: on 17 October 2011, the Company secured a £850,000 facility from Galloway Limited, a company in which Jim Mellon has an interest. It has been agreed as part of the Debt Restructuring that maturity on this loan will be 31 March 2015. In addition, the interest accrued on the loan to 28 February 2013, being £78,014 will be paid through the issue of 3,900,685 New Ordinary Shares at 2p per share. The interest rate from 1 March 2013 to maturity will be reset at 14 per cent. per annum and will accrue to maturity. The Galloway Loan carries a redemption premium of 25 per cent. It has been agreed that the Galloway Loan and the accrued interest are convertible into New Ordinary Shares at 2p per share at the option of the Lender. If the Galloway Loan is repaid at maturity this will, with the accrued interest and the redemption premium, give rise to a repayment of £1,310,281 and consequently if converted will give rise to the issue of 65,514,041 New Ordinary Shares. As part of the arrangements regarding the Galloway Loan, Galloway was granted a warrant to subscribe, at a price of 1.25p per Ordinary Share, for Ordinary Shares representing up to 3 per cent. of the fully diluted ordinary share capital of the Company. This warrant was subject to certain restrictions which have been modified as part of the Debt Restructuring. The warrant was subject to a cap (Ordinary Shares having a market value at the date of subscription of £1,500,000) - this cap has been removed; the expiry date of the warrant has been extended to 31 March 2023; and the warrant is now exercisable at any time at the discretion of Galloway having previously only been exercisable by reference to an Exit Event.

4. Mellon Bridge Loan 1: on 20 September 2012, the Company secured a £350,000 bridge loan from Jim Mellon. It has been agreed as part of the Debt Restructuring that maturity on this loan will become 31 March 2015. In addition, the interest accrued on the loan to 28 February 2013, being £15,342 will be paid through the issue of 767,123 New Ordinary Shares at 2p per share. The interest rate from 1 March 2013 to maturity will remain unchanged at 10 per cent. per annum and will accrue to maturity. The Galloway loan carries a redemption premium of 70 per cent. It has been agreed that the loan and the accrued interest are convertible into New Ordinary Shares at 2p per share at the option of the Lender. If this loan is repaid at maturity this will, with the accrued interest and the redemption premium, give rise to a repayment of £667,877 and consequently if converted will give rise to the issue of 33,393,836 New Ordinary Shares.

5. Mellon Bridge Loan 2: on 11 December 2012, the Company secured a £200,000 bridge loan from Jim Mellon. It has been agreed as part of the Debt Restructuring that this loan together with the interest accrued and the applicable 33% redemption premium on the loan will be rolled up to 31 March 2015 and may be payable, at the option of Jim Mellon, in New Ordinary Shares at 2p per share.

6. In addition, Jim Mellon has today made available to the Company a further £200,000 bridge loan which is repayable immediately upon the completion of the Placing (the "Further Mellon Bridge Loan").

As a result of the Debt Restructuring a total of 28,672,341 New Ordinary Shares, being 8.29 per cent. of the enlarged issued share capital are to be issued in relation to the payment of interest to 28 February 2013. A resolution will be put to shareholders at the forthcoming general meeting to permit the issue of shares to the lenders in respect of the maximum number of shares that could be issuable in due course in relation to the conversion of these loans.

Prior to the Debt Restructuring a number of technical breaches existed in relation to the financing provided by the Debt Providers. It has been agreed between the Debt Providers and the Company that these breaches will on Completion be waived and that the debt instruments will be restored to good standing in relation to their terms, conditions and covenants. There remains a technical breach in relation to a third party royalty arrangement; however, at no point have any monies become due under that arrangement. Although the Company is working to resolve the situation, that technical breach is likely to remain for a further period and it could constitute an ongoing breach. Consequently, the Company has agreed with the Debt Providers as part of their waiver arrangements that, provided the party to the royalty arrangement does not seek to enforce against this technical breach, then the Debt Providers will not take any enforcement action by reference to this matter. The Directors believe that the likelihood of any enforcement action under the royalty arrangement is remote as this would crystallise the rights of the Debt Providers which rank ahead of the third party. The Directors believe that the curing of historic and future technical breaches is important for the security of all stakeholders and believe that the steps taken are commercially appropriate and in the interests of shareholders.

The Debt Conversion as relates specifically to the Mellon Finance Arrangements, the Placing as relates specifically to Jim Mellon and investment funds with which he is a connected party, the Further Mellon Bridge Loan and the New Ordinary Shares to be issued to Jim Mellon in lieu of historic directors' salary fall to be treated as related party transactions pursuant to the AIM Rules (the "Related Party Transactions"). William Robinson, Ronald Openshaw, Michael Wyllie and Richard Horsman being the Independent Directors, (Jim Mellon being deemed conflicted owing to his interest in the Related Party Transactions) consider, having consulted with Daniel Stewart & Company (the Company's Nominated Adviser), that the terms of the Related Party Transactions are fair and reasonable insofar as the Shareholders are concerned.

Directors Remuneration

Certain Directors have agreed to receive amounts owing to them in relation to their historic salaries through the issue of New Ordinary Shares in the Company at the Placing Price as set out in the table below:

*Not including Jim Mellon's new Ordinary Shares issued pursuant to the Placing and Debt Conversion.

** Including all New Ordinary Shares issued to Jim Mellon and associates pursuant to the Placing and the Debt Conversion.

Application to trading on AIM

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM and it is expected that Admission will be effective and trading will commence at 8:00 am on 5 April 2013.

Following Admission, the Company will have 346,018,872 Ordinary Shares in issue. Since the Company holds no shares in Treasury, the total number of voting rights in the Company is therefore 346,018,872 and this figure may therefore be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FSA's Disclosure and Transparency Rules.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

If any details contained in the timetable above should change, the revised times and dates will be notified by means of an announcement through a Regulatory Information Service.

TRANSACTION STATISTICS

-Ends-

Enquiries:

About PSD502 & Premature Ejaculation:

PSD502 is a topical spray for the treatment of premature ejaculation containing lidocaine and prilocaine in a eutectic-like mixture.

The product completed all clinical testing in 2009 and has been submitted for approval in Europe with the EMA. The clinical trials studied over 600 patients with a total of approximately 26,000 doses delivered. The Company believes that the clinical studies conducted to date demonstrate that PSD502 is safe and highly effective in treating PE.

Premature ejaculation is possibly the most common form of sexual dysfunction in men. The incidence of PE has been studied and reported in peer reviewed academic journals on multiple occasions. While estimates vary, PE is reported to affect approximately 20-30% of sexually active men. Data shows that the incidence of PE is consistent across all age, socio-economic, geographic and ethnic groups. The Company estimates that the incidence of PE in the general population is larger than the incidence of erectile dysfunction.

The International Society of Sexual Medicine ("ISSM") defined PE as a male sexual dysfunction characterized by: ejaculation that always or nearly always occurs prior to or within about one minute of vaginal penetration; the inability to delay ejaculation on all or nearly all vaginal penetrations; and negative personal consequences such as distress, frustration and/or the avoidance of sexual intimacy.

There is currently no globally approved and effective pharmaceutical treatment for this condition. In the absence of any widely approved pharmaceutical therapy with good patient acceptance, the premature ejaculation market offers significant potential for development and growth. An effective drug therapy for premature ejaculation may have a comparable commercial potential to the erectile dysfunction drugs.

About Plethora:

Plethora is focussed on the development and marketing of products for the treatment of urological disorders. Its principal development programme is PSD502 for the treatment of premature ejaculation.

Plethora is headquartered in the UK and is listed on the London Stock Exchange (AIM: PLE.L). Further information is available at www.plethorasolutions.co.uk