Vistin Pharma ASA (A public limited liability company organized under the laws of Norway)
Listing of the Shares in Vistin Pharma ASA on Oslo Axess in connection with the offering of 17,054,935 Offer Shares at a Subscription Price of NOK 10 per Offer Share.
This prospectus (the “Prospectus”) relates to, and has been issued by Vistin Pharma ASA (the “Company”), solely for use in connection with the offering (the "Offering") and listing on Oslo Axess, a regulated market operated by Oslo Børs ASA (the "Listing") of 17,054,935 new ordinary shares (the "Offer Shares") in the Company, each with a nominal value of NOK 1 and at a subscription price of NOK 10 per Offer Share (the “Subscription Price”).
The Offering consists of (i) 15,554,935 new shares at NOK 10 per new share (the “New Shares”) are directed towards the shareholders of Weifa ASA ("Weifa") as of 19 May 2015, registered as such in the Weifa's shareholder register in the Norwegian Central Securities Depository (the "VPS") on 21 May (the "Record Date"), (the “Rights Offering”), who are not resident in a jurisdiction where such offering would be unlawful or would (in jurisdictions other than Norway) require any prospectus filing, registration or similar action (the "Eligible Shareholders") and (ii) 1,500,000 new shares at NOK 10 per new share (the “Employee Offer Shares”) are directed towards the Board of Directors, Executive Management and employees of the Company (the “Employee Offering”). The Employee Offering will be divided into three sub-tranches; (i) 500,000 Employee Offer Shares offered to the Company’s Board of Directors, (ii) 500,000 Employee Offer Shares offered to the Company’s Executive Management, and (iii) 500,000 Employee Offer Shares offered to the Company’s full-time employees as of the date of the transferal of the Acquired Interests. The Subscription Price and Subscription Period are identical for the Employee Offering and the Rights Offering.
In the Rights Offering, each Eligible Shareholder will be granted one subscription right (the “Subscription Rights”) for every 102 Weifa ASA shares held as of the Record Date, rounded down to the nearest whole Subscription Right. One Subscription Right will, subject to applicable law, give the holder the right to subscribe for and be allocated one New Share in the Company in the Rights Offering. Over- subscription is permitted. Subscription without Subscription Rights is not permitted.
The Subscription Period in the Rights Offering will commence on 26 May 2015 at 09:00 CET and (subject to extensions) expire at 16:30 CET on 4 June 2015 (the “Subscription Period”). The Subscription Rights are fully tradable and transferable, and will be listed on Oslo Axess with ticker code “VISTIN T” and registered in VPS with ISIN NO 0010736952. Trading in the Subscription Rights on Oslo Axess may take place from and including 26 May 2015 at 09:00 CET and until 2 June at 16:30 CET.
Total gross proceeds from the Offering will amount to NOK 170,549,350. Following the completion of the Offering, the total number of issued Shares in the Company will be 17,054,935.
Subscription Rights that are not used to subscribe for Shares in the Rights Offering before the expiry of the Subscription Period will have no value and will lapse without compensation to the holder.
Prior to the Offering, the Shares have not been publicly traded. On 23 April 2015, the Company applied for the Shares to be listed on Oslo Axess, and the listing application will be reviewed by the board of directors of Oslo Børs on 26 May 2015. The Shares are expected to be delivered to the subscribers in the Offering on or about 10 June 2015 and be listed and tradable on Oslo Axess on or about 10 June 2015 under the ticker code “VISTIN”. The distribution of this Prospectus and the Offering of the Offer Shares may in certain jurisdictions be restricted by law. Accordingly, this Prospectus may not be distributed or published in any jurisdiction except under circumstances that are in compliance with any applicable laws and regulations. The Company and the Manager (as defined below) require persons in possession of this Prospectus, in possession of Subscription Rights and/or considering to subscribe for Offer Shares to inform themselves about, and to observe, any such restrictions. This Prospectus and the Offering shall be governed by, and construed in accordance with, Norwegian law. The courts of Norway, with Oslo City Court as legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of, or in connection with, the Offering or this Prospectus. Investing in the Company and the Shares involves material risks and uncertainties. See section 2 “Risk Factors” and section 4 “Cautionary Note Regarding Forward-Looking Statements”.
Manager:
22 May 2015 VISTIN PHARMA ASA
IMPORTANT INFORMATION Please refer to section 17 for definitions of terms used throughout this Prospectus, which also apply to the preceding page.
This Prospectus has been prepared in order to provide information about Vistin Pharma ASA and its business in relation to the Offering and Listing of the Shares, and to comply with the Norwegian Securities Trading Act of June 29, 2007 no. 75 (the “Norwegian Securities Trading Act”) and related secondary legislation, including the Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding information contained in prospectuses, as amended (the “Prospectus Directive”), and as implemented in Norway.
This Prospectus has been prepared solely in the English language.
The Company has furnished the information in this Prospectus. The Company has engaged Carnegie AS as manager (“Carnegie” or the "Manager") for the Offering and the Listing of the Shares. The Manager makes no representation or warranty, express or implied, as to the accuracy or completeness of the information in this Prospectus, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation by the Manager. Neither the Company nor the Manager has authorised any other person to provide investors with any other information related to the Listing or the Offering, and neither the Company nor the Manager will assume any responsibility for any information other persons may provide.
Unless otherwise indicated, the information contained herein is current as of the date hereof and the information is subject to change, completion and amendment without notice. In accordance with section 7-15 of the Norwegian Securities Trading Act, every significant new factor, material mistake or inaccuracy that is capable of affecting the assessment of the Shares arising after the time of approval of this Prospectus and before the date of Listing of the Shares on Oslo Axess, will be published and announced promptly as a supplement to this Prospectus. Neither the publication nor distribution of this Prospectus shall under any circumstances create any implication that there has been no change in the Company's affairs since the date hereof or that the information herein is correct as of any time since its date.
The distribution of this Prospectus may in certain jurisdictions be restricted by law. Accordingly, this Prospectus may not be distributed or published in any jurisdiction except under circumstances that are in compliance with any applicable laws and regulations. The Company and the Manager require persons in possession of this Prospectus to inform themselves about, and to observe, any such restrictions.
An investment in the Company involves inherent risks. Potential investors should carefully consider the risk factors set out in section 2 “Risk Factors” as well as the information regarding forward-looking statements in section 4 "Cautionary note regarding forward looking statements" and all other information contained herein before making an investment decision. An investment in the Company is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of their entire investment. The contents of this Prospectus are not to be construed as legal, business or tax advice. Each prospective investor should consult with its own legal adviser, business adviser and tax adviser as to legal, business and tax advice.
In the ordinary course of their respective businesses, the Manager and certain of its affiliates have engaged, and will continue to engage, in investment and commercial banking transactions with the Company.
Without limiting the manner in which the Company may choose to make any public announcements, and subject to the Company’s obligations under applicable law, announcements relating to the matters described in this Prospectus will be considered to have been made once they have been received by Oslo Børs and distributed through its information system.
The distribution of this Prospectus and the Offering and listing of the Shares on Oslo Axess, may be restricted by law in certain jurisdictions. The Company and the Manager require persons in possession of this Prospectus, in possession of Subscription Rights or considering to subscribe for Shares to inform themselves about, and to observe, any such restrictions. This Prospectus does not constitute an offer of, or an invitation to subscribe or purchase, any of the Shares in any jurisdiction in which such offer or subscription or purchase would be unlawful. No one has taken any action that would permit a public offering of the Shares to occur outside of Norway. In addition the Shares may in certain jurisdictions be
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subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware that they may be required to bear the financial risks of an investment in the Shares for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Furthermore, the restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations in relation to the Offering and/or the Prospectus that are not known or identified by the Company and the Manager at the date of this Prospectus may apply in various jurisdictions as they relate to the Prospectus.
For other selling and transfer restrictions, see section 16 of this Prospectus.
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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY ...... 6
2. RISK FACTORS ...... 16
3. STATEMENT OF RESPONSIBILITY ...... 21
4. CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS ...... 22
5. THE SALE AND THE LISTING ...... 23
6. THE OFFERING ...... 27
7. PRESENTATION OF VISTIN PHARMA ...... 39
8. MARKET OVERVIEW ...... 50
9. FINANCIAL INFORMATION ...... 55
10. BOARD OF DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES ...... 66
11. CORPORATE INFORMATION AND DESCRIPTION OF THE SHARE CAPITAL ...... 73
12. SHAREHOLDER MATTERS AND NORWEGIAN COMPANY AND SECURITIES LAW ...... 76
13. LEGAL MATTERS ...... 82
14. NORWEGIAN TAXATION ...... 83
15. ADDITIONAL INFORMATION ...... 87
16. SELLING AND TRANSFER RESTRICTIONS ...... 88
17. DEFINITIONS AND GLOSSARY OF TERMS ...... 94
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APPENDICES
Appendix A THE COMPANY’S ARTICLES OF ASSOCIATION ......
Appendix B AUDITED INTERIM FINANCIAL STATEMENTS FOR VISTIN PHARMA ASA FOR THE INTERIM PERIOD 6 MARCH 2015 TO 31 MARCH 2015 ......
Appendix C AUDITED SPECIAL PURPOSE CARVE-OUT FINANCIAL STATEMENTS FOR THE ACQUIRED INTERESTS FOR THE YEARS ENDED 31 DECEMBER 2014 AND 2013 ......
Appendix D SUBSCRIPTION FORM RIGHTS OFFERING ......
Appendix E SUBSCRIPTION FORM EMPLOYEE OFFERING ......
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1. EXECUTIVE SUMMARY Summaries are made up of disclosure requirements known as "Elements". These elements are numbered in Sections A – E (A.1 – E.7).
This summary contains all the Elements required to be included in a summary for this type of securities and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements.
Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable".
Section A – Introduction and warnings
A.1 Warnings This summary should be read as an introduction to the Prospectus.
Any decision to invest in the Shares should be based on consideration of the Prospectus as a whole by the investor.
Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation in its Member State, have to bear the costs of translating the Prospectus before the legal proceedings are initiated.
Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2 Resale and Not applicable. No resale will take place. No financial intermediaries will be used final for the final placement of the offer. placement by financial intermediates
Section B - Issuer
B.1 Name Vistin Pharma ASA B.2 Registered Vistin Pharma ASA is a public limited liability company pursuant to the office, legal Norwegian Public Limited Liability Companies Act, incorporated under the laws form and of Norway. The Company was incorporated on 6 March 2015 by Weifa ASA for country of the purpose of the Sale and the Listing and to be the holding company for Vistin incorporation Pharma AS going forward. The Company’s organisation number is 915157882, and its registered office is Østensjøveien 27, 0609 Oslo, Norway with telephone number: +47 35 98 42 00
B.3 Business Introduction description Vistin Pharma ASA was incorporated on 6 March 2015 as a wholly-owned subsidiary of Weifa ASA, a publicly listed company on the Oslo Stock Exchange, which operates in the pharmaceutical industry. The Company will be a holding company for Vistin Pharma AS, which will, subject to the success of the Offering, acquire the Acquired Interests from Weifa AS on or about 1 June 2015. The Acquired Interests will include all necessary operational assets and employees for Vistin Pharma AS to become an independent and fully operational company immediately following the completion of the Sale. Following the acquisition, the Company will have one business segment with three business areas; Metformin, Opioids and CMO tablet manufacturing.
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Brief history Up until the completion of the Sale, the Acquired Interests have been owned by Weifa AS (Weiders Farmasøytiske A/S), which was founded in 1940. The Company opened its first production facility in Kragerø in 1952 and moved the remaining manufacturing there in 1963.
Weifa AS started manufacturing of opioids in the 1950’s when codeine phosphate (API used in strong pain killers) based on poppy seeds was introduced, while pholcodine was added to the opioid product portfolio in the 1980’s. These products, including codeine tablets, will make up Vistin Pharma AS’ opioid offering following the Sale. The production of metformin was introduced in 1969, and has since then been developed to include the supply of metformin HCl (hydrochloride), metformin DC (direct compressible) and metformin tablets. These products will make up Vistin Pharma AS’ metformin offering following the Sale. Tablet manufacturing has been a core competence and business for Weifa AS, but has not existed as a separate business. It will therefore be established as a business area, CMO, upon completion of the Sale and will be further developed in the following years.
Metformin The Metformin business supplies metformin products in three different forms; bulk powder, granulated pre-tablet form (DC) and finished dose tablets. These products are sold to pharmaceutical companies worldwide and are used in the treatment of type 2 diabetes.
Opioids The Opioids business produces two types of opioid API products; codeine phosphate (“codeine”) and pholcodine. Both products are used as an API in cough medicine. In addition, codeine is used as an API in analgesics (pain killers). The Opioids business also produces finished dose codeine tablets.
CMO Tablet Manufacturing The new CMO tablet manufacturing business will produce finished products through agreements with external parties. The Company has entered into a five year agreement with Weifa AS for the production of Weifa AS’ key pain relief brands, which will be the only CMO Agreement allocated to the business area at the time of the Sale. The Company will seek to extend its customer portfolio going forward. B.4a Trend There have been no material changes in production, sales and inventory, and costs information and selling prices for the Acquired Interests since the end of 2014 and up until the date of this Prospectus.
The Company is not aware of any trends, uncertainties, demands, commitments or events that could have a material effect on the Group’s prospects for the current financial year. B.5 Organisation Prior to the completion of the Sale, Vistin Pharma ASA and Vistin Pharma AS are al structure wholly owned subsidiaries of Weifa ASA. Following the Sale, the Group will consist of the holding company, Vistin Pharma ASA, and its wholly owned subsidiary; Vistin Pharma AS. It is the subsidiary, Vistin Pharma AS, that will be responsible for all operational activities. B.6 Major As of the date of this Prospectus, the Company has one (1) shareholder, Weifa shareholders ASA, owning 100% of the outstanding shares. B.7 Summary The following financial information has been derived from the Acquired Interests’ financial audited special purpose carve-out financial statements for the years ended 31 information December 2014 and 2013.
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Statements of special purpose carve-out profit and loss and other comprehensive income The Acquired Interests’ special purpose carve-out statements of profit and loss and other comprehensive income for the two years ended 31 December 2014 and 2013 are set out below. These statements should be read in conjunction with the basis of preparation set out in section 9.
NOK 1,000 2014 2013
Revenue...... 361 461 347 253 Total revenue and income ...... 361 461 347 253
Cost of materials ...... 154 708 147 819 Payroll expenses ...... 108 594 106 872 Depreciation, amortisation and impairment ...... 110 093 16 272 Other operating expenses ...... 70 369 65 263 Operating profit/(loss) ...... -82 304 11 027
Finance income ...... - 1 365 Finance costs ...... 2 080 - Profit/(Loss) before tax from continuing operations ...... -84 383 12 393
Income tax expense ...... -22 784 4 008 Profit/(Loss) for the period ...... -61 600 8 385
Other comprehensive income Other comprehensive income not to be reclassified to profit or loss in subsequent periods Re-measurement of pension plans ...... -2 552 24 868 Income tax effect ...... -689 6 714 Total other comprehensive income not to be reclassified to profit or loss...... -1 863 18 154
Other comprehensive income for the year, net of tax ...... -1 863 18 154
Total comprehensive income for the year, net of tax ...... -63 463 26 539
Total comprehensive income for the year, net of tax attributable to Equity holders of the parent company ...... -63 463 26 539 Non-controlling interests ...... - - Total ...... -63 463 26 539
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Statements of special purpose carve-out financial position Set out below are the Acquired Interests’ special purpose carve-out statements of financial position for the two years ended 31 December 2014 and 2013. These statements should be read in conjunction with the basis of preparation set out in section 9.
NOK 1,000 31.12.2014 31.12.2013
ASSETS Non-current assets Property, plant and equipment ...... 28 278 129 574 Deferred tax assets* ...... 32 929 7 804 Total non-current assets ...... 61 207 137 379
Current assets Inventory ...... 92 075 88 328 Trade receivables ...... 47 660 45 128 Other receivables ...... 2 732 - Total current assets ...... 142 466 133 456 Total assets ...... 203 673 270 835
INVESTED CAPITAL AND LIABILITIES Invested capital Parent company investment ...... 127 977 199 777 Total invested capital ...... 127 977 199 777
Non-current liabilities Net employee defined benefit liability...... s 9 325 5 648 Total non-current liabilities ...... 9 325 5 648
Current liabilities Trade payables ...... 39 104 33 593 Other current liabilities ...... 27 267 31 816 Total current liabilities ...... 66 371 65 409
Total liabilities ...... 75 696 71 057 Total equity and liabilities ...... 203 673 270 835 *The deferred tax asset cannot be transferred as a part of the net asset transaction of the Acquired Interests and Vistin Pharma will therefore be in an immediate taxable position if it generates taxable income in its first year of operation. See section 9.4.1 for a further description.
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Special purpose carve-out cash flow statements The table below summarises the Acquired Interests’ special purpose carve-out statements of cash flow for the two years ended 31 December 2014 and 2013. These statements should be read in conjunction with the basis of preparation set out in section 9.
NOK 1,000 2014 2013
Cash flow from operating activities Net profit/(loss) before income tax ...... -84 383 12 393
Non-cash adjustment to reconcile profit before tax to cash flow: Difference between pension costs and in-/out payment in pension scheme ...... 1 153 1 153 -432 Depreciation, amortisation and impairment ...... 110 093 16 272 Unrealised foreign currency (gains)/losses ...... 245 - Changes in working capital: Changes in trade receivables and trade creditors ...... 2 735 -1 363 Changes in inventory ...... -3 746 -10 511 Changes in other accruals ...... -8 963 4 842 Net cash flow from operating activities ...... 17 133 21 200
Cash flow from investing activities Purchase of equipment ...... -8 797 -8 197 Net cash flow from investing activities ...... -8 797 -8 197
Cash flow from financing activities Net invested capital transferred** ...... -8 337 -13 002 Net cash flow from financing activities ...... -8 337 -13 002
Net change in cash and cash equivalents* ...... - - Cash and cash equivalents beginning period ...... - - Cash and cash equivalents end period ...... - - * No cash and cash equivalents are part of the Acquired Interests as the funding of the Company should be done through the Offering. ** Movement on invested capital is a net amount of change in invested capital considering all cash is left with Weifa AS.
B.8 Pro forma Not applicable. This Prospectus does not contain any pro forma financial financial information. information
B.9 Profit Not applicable. The Company has not provided a profit forecast in this Prospectus. forecast or estimate B.10 Qualifications Ernst & Young AS has audited the Acquired Interests’ special purpose carve-out in the audit annual accounts for the financial year 2014 and Nitschke AS has audited the report Acquired Interests’ special purpose carve-out annual accounts for the financial year 2013. The Auditor’s reports for the two years were issued without qualifications. B. 11 Working The Company is of the opinion that the working capital available to the Company capital is sufficient for the Company’s present requirements, for the period covering at least 12 months from the date of this Prospectus.
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Section C – Securities
C.1 Type of The Company’s tradable Shares will carry the securities number ISIN NO securities and 0010734122 ISIN number C.2 Currency NOK C.3 Number of The Company’s current share capital is NOK 1,000,000 divided into 1,000,000 shares and par ordinary shares, each with a nominal value of NOK 1.0. value C.4 Rights The Company has one class of shares. The Shares are equal in all respects, attached to the including the right to dividend; voting rights; rights to share in the issuer’s profit; securities rights to share in any surplus in the event of liquidation; redemption provisions; reserves or sinking fund provisions; liability to further capital calls by the issuer; and any provision discriminating against or favoring any existing or prospective holder of such securities as a result of such shareholder owning a substantial number of shares. Each Share carries one vote at the Company's general meeting. C.5 Restrictions on The Shares are freely transferable and, subject to the Articles of Association of free the Company and any applicable securities law, there are no restrictions in the transferability Company’s securities.
C.6 Listing and The first day of listing of Vistin Pharma ASA on the Oslo Stock Exchange is admission to expected to be on or about 10 June 2015 and trading in the shares will trading commence on the date of listing under the ticker symbol VISTIN. C.7 Dividend The Board shall, in cooperation with the Executive Management, issue the policy Company’s dividend policy and shall annually submit proposal for distribution of dividend to the General Meeting.
It is an objective of the Company to generate high and stable returns, which is at least on the same level as other investment possibilities with comparable risk. This will be achieved, first and foremost, through strong and profitable growth within the Company’s business areas. To support this growth the Company’s earnings will be reinvested in the Company and no dividend is therefore expected to be paid in the near future.
Section D – Risks
D.1 Risks related Business and industry-related risks to the Group - Changes in the political environment, laws and regulations that affect the pricing and regulatory status of the Company’s products - The ability to attract and retain competent personnel - New findings regarding adverse effects or other side-effects related to the Company’s products - Fluctuations in the price and availability of raw materials - Regulatory approvals affecting the Company’s authorisation to manufacture, market and sell its products - Historical underperformance in the Metformin and Opioids business areas - Changes in the competitive landscape or market price for the Metformin and Opioid APIs - CMO contract manufacturing as a new business area - Impact of cost overruns related to the CMO business area that operates on a fixed price contract with Weifa AS, based on estimated costs at the time of entering into the contract - High dependency on a single contract for the CMO business area that will also constitute a substantial share of total revenue - Environmental issues related to an ongoing investigation that could lead
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to a fine and the application for new emissions permits that could potentially impact the production process - No operating history outside the Weifa Group
Financial risks - Limited access to funds - Credit risk - Foreign exchange risk - Liquidity risk D.3 Risks related Risk factors related to the ownership of the shares to the - No prior market for the shares and an active market may not develop Company’s - Volatile market price shares - Future share issues may dilute existing shareholders - Issue of additional securities in relation to acquisitions, any share incentive or option plan may dilute existing shareholders - Sale of Shares may reduce the Share price and adversely affect the Company’s ability to raise additional capital - The Company does not expect to pay any cash dividends for the foreseeable future - Investors outside of Norway are subject to exchange rate risk - Holders of Shares that are registered in a nominee account may not be able to exercise voting rights and other shareholder rights - The transfer of Shares is subject to transfer restrictions
Section E – Offer
E.1 Net proceeds The Company will bear the fees and expenses related to the Offering. These are estimated to amount to approximately NOK 9 million, resulting in net proceeds of NOK 161.5 million.
E.2a Use of The Company intends to use NOK 120 million of the Offering to settle the proceeds purchase price for the Acquired Interests. The balance, net of transaction costs, (~NOK 41 million) will be used for working capital and to fund future business needs. E.3 Terms and The Offering consists of 17,054,935 shares divided into two tranches:
conditions of - 15,554,935 new shares at NOK 10 per new share are directed towards the offer the shareholders of Weifa ASA as of 19 May 2015 (the “Rights Offering”). - 1,500,000 new shares at NOK 10 per new share are directed towards the Board of Directors, Executive Management and employees of the Company (the “Employee Offering”).
The Subscription Period in all tranches is identical and will commence on 26 May 2015 at 09:00 CET and expire at 16:30 CET on 4 June 2015. The Subscription Period may be extended by the Board, but may not in any event end later than 25 June 2015.
The Rights Offering Each Eligible Shareholder will be granted one tradable Subscription Right for every 102 Weifa ASA shares owned as of the Record Date. One Subscription Right will, subject to applicable securities law, give the holder the right to subscribe for and be allocated one New Share in the Company in the Rights Offering.
The trading period for the Subscription Rights commence on 26 May 2015 at 09:00 CET and expire at 16:30 CET on 2 June 2015. The allocation of the New Shares will take place after the expiry of the Subscription Period on or about 5 June 2015.
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The Subscription Right may be used to subscribe for New Shares in the Rights Offering before expiry of the Subscription Period on 4 June 2015 at 16:30 CET or alternatively be sold before the end of trading in the Subscription Rights on Oslo Axess on 2 June 2015. Subscription Rights which are not sold before end of trading on Oslo Axess on 2 June 2015 or exercised before the end of the Subscription Period on 4 June 2015 will have no value and will lapse without compensation to the holder. Acquired Subscription Rights will give the same right to subscribe for and be allocated New Shares as Subscription Rights held by Eligible Shareholders on the basis of their holdings on the Record Date.
The Subscription Rights are fully tradable and transferable, and will be listed on Oslo Axess with ticker code “VISTIN T” and registered in VPS with ISIN NO 0010736952.
Over-subscription is permitted, but subscription without Subscription Rights is not permitted. Subscribers subscribing on the basis of Subscription Rights, who over-subscribe (i.e. subscribe for more New Shares than the number of Subscription Rights held by them), will have priority to the New Shares not subscribed for by holders of Subscription Rights. However, in each case there can be no assurance that New Shares will be allocated for such subscriptions.
The allocation of New Shares to the subscribers will be made on the basis of granted and acquired Subscription Rights that have been validly exercised during the subscription period. If not all subscription rights are validly exercised during the subscription period, the remaining shares will be allocated to over-subscribed investors on a pro rata basis. Any New Shares remaining after allocation to the investors, who have over-subscribed, will be allocated to the participants of the Underwriting Syndicate, who have not fulfilled their underwriting obligations based on and in accordance with their respective underwriting obligations.
The Employee Offering The share issue directed towards the Board of Directors, Executive Management and employees of the Company is split into three sub-tranches; (i) 500,000 Employee Offer Shares offered to the Company’s full-time employees as of the date of the transferal of the Acquired Interests, (ii) 500,000 Employee Offer Shares offered to the Company’s Executive Management and (iii) 500,000 Employee Offer Shares offered to the Company’s Board of Directors. The minimum subscription in each sub-tranche is 500 Employee Offer Shares.
Allocation of the Employee Offer Shares shall be made by the Board of Directors, and will take place on or about 5 June 2015. The following allocation criteria shall apply for the various sub-tranches:
Employees: The employees will receive full allocation of subscribed shares up to a maximum of 3,400 shares per subscriber. In the event that total subscription exceeds the 500,000 shares, and not all employees utilize their subscription rights, the employees who have over-subscribed will receive the same number of shares beyond the guaranteed allocation. In the event that the employee sub-tranche is not fully subscribed, the remaining shares may be allocated to the members of the Executive Management and the Board, who have not received full allocation in their respective sub-tranches.
Executive Management: Members of the Executive Management will receive full allocation of subscribed shares up to a maximum of 83,300 shares per subscriber. In the event that total subscription exceeds the 500,000 shares, and not all members of the Executive Management utilize their subscription rights, then those who have over-subscribed will receive the same number of shares beyond the guaranteed allocation. In the event that the Executive Management sub- tranche is not fully subscribed, the remaining shares may be allocated to employees and members of the Board, who have not received full allocation in
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their respective sub-tranches.
Board of Directors: The Company’s Board Members will receive full allocation of subscribed shares up to a maximum of 100,000 shares per subscriber. In the event that total subscription exceeds the 500,000 shares, and not all members of the Board of Directors utilize their subscription rights, then those who have over- subscribed will receive the same number of shares beyond the guaranteed allocation. In the event that the sub-tranche offered to the Board is not fully subscribed, the remaining shares may be allocated to employees and members of the Executive Management who have not received full allocation in their respective sub-tranches.
Any Employee Offer Shares not allocated based on the allocation principles set out above, will be allocated to over-subscribers in the Rights Offering on a pro rata basis. Any Employee Offer Shares not allocated following allocation to over- subscribers will be allocated to the Underwriters. E.4 Material The following members of the Board of Directors are part of the Underwriting interest in the Syndicate: offer - Strata Marine & Offshore AS, Ferncliff Listed DAI and AS Ferncliff, companies controlled by the Board member Øystein Stray Spetalen, have guaranteed NOK 25 million of the Offering - Ole Enger has guaranteed NOK 5 million of the Offering - Cipriano AS, a company controlled by Einar J. Greve, who will be appointed as a Board member following the Listing, has guaranteed NOK 5 million of the Offering.
The above mentioned Board members will thus be allocated the remaining Offer Shares not subscribed for in the event that the Offering is not fully subscribed, and, as such, have an interest in the Offering.
Further, in connection with the Rights Offering, the Underwriters, Board members and members of the Executive Management may receive Subscription Rights (if they are Eligible Shareholders) and may exercise their right to take up such Subscription Rights and subscribe for New Shares, and, in that capacity, may retain, purchase or sell Subscription Rights or New Shares and any other securities of the Company or other investments for their own account and may offer or sell such securities (or other investments) other than in connection with the Offering. Neither the Manager nor the Underwriters intend to disclose the extent of any such investments or transactions other than in accordance with any legal or regulatory obligation to do so.
Other than what is set out above, the Company is not aware of any other material interests to the Offering involving any Board members or Executive Management of the Company.
The Manager and its affiliates may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may receive customary fees and commissions. The Manager will receive a fixed fee in relation to the Offering.
Other than what is set out above, the Company is not aware of any interest, including conflicting ones, of any natural or legal persons involved in the Offering. E.5 Selling There are no selling shareholders in the Offering and no lock-up on the Offer shareholders Shares. and lock-up E.6 Dilution The number of Offer Shares to be issued is 17,054,935, all with a nominal value of NOK 1.00 per Share. The one (1) million Shares currently owned by Weifa ASA will be redeemed prior to the Listing. Thus, the Company’s share capital
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following the Offering and Listing will be NOK 17,054,935, consisting of 17,054,935 Shares, each with a par value of NOK 1.00. E.7 Estimated Not applicable. The Company will not charge the investors for the expenses expenses related to the Offering.
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2. RISK FACTORS An investment in the Shares involves a number of risks. If any of the following risks and uncertainties actually occurs, the Group's cash flows, business, results of operations and financial position could be adversely affected. In that case, the trading price of the Shares could decline and potential investors could lose all or part of their investment. An investment in the Shares is suitable only for investors who understand the risks associated with this type of investment and who can afford to lose all or part of their investment
The order in which the risks are presented does not necessarily reflect the likelihood of their occurrence or the magnitude of their potential impact on the Group's cash flows, business, results of operations and financial position. The risks could materialise individually or cumulatively.
2.1 BUSINESS AND INDUSTRY-RELATED RISKS
2.1.1 Changes in the political environment, laws and regulations may affect the pricing and regulatory status for Vistin Pharma’s products The products that will be produced by Vistin Pharma are subject to approvals and price regulations by the regulatory authorities. Changes in political regimens may lay the ground for increased regulations, or more liberal markets. New laws and regulations will likely be the tool to implement such changes. A change in regulations could make it difficult for the Company to operate in markets where it is currently present or prevent the Company from entering new markets. Such changes in political environment, laws and regulations may affect the Company’s business, financial condition and results of operation.
2.1.2 Access to key personnel and resources Vistin Pharma is in many of its operations dependent upon competent personnel, and the human capital is an important part of Vistin Pharma’s assets. Vistin Pharma is headquartered in Oslo, Norway, with manufacturing plants, laboratories and storage facilities in the small town of Kragerø in southern Norway. Vistin Pharma’s access to and ability to attract and retain competent personnel and consultants may in the short and/or long term influence the Company’s business, financial condition and results of operation.
2.1.3 New findings regarding adverse effects or other side-effects related to Vistin Pharma’s products may negatively impact the Company’s business, financial condition and results of operation Potential adverse effects or side-effects of marketed drugs are continuously monitored by every regulatory authority worldwide. Every pharmaceutical company with a marketing authorisation is required to monitor and record adverse events throughout the lifetime of the product. As was the case with the anti-inflammatory drug Vioxx(1), serious adverse effects were discovered long after the product was first launched. Although Vistin Pharma’s products are generally based on well-known active ingredients, new adverse effects may be discovered in the future. Such adverse effects may temporarily or permanently influence the Company’s business, financial condition and results of operation.
Note: (1) Vioxx was introduced as a superior painkiller by the American pharmaceutical company Merck in 1999 but was withdrawn in 2004 following a study indicating that the drug raised the risk of heart attack. Merck was later required to establish a USD 4.85 billion settlement fund to cover expenses related to thousands of lawsuits related to the drug.
2.1.4 The price and availability of raw materials may fluctuate over time and thus impact the profitability of each of the Company’s products made from such raw materials Vistin Pharma purchases raw materials from suppliers all around the world. Vistin Pharma has a strong logistics and supply chain organisation, which is specialised in optimising supply, reliability, quality and price. However, the price and availability of raw materials may fluctuate over time, and this may temporarily or permanently influence the Company’s business, financial condition and results of operation.
2.1.5 Regulatory approvals may affect Vistin Pharma’s authorisation to manufacture, market and sell APIs, semi-finished and finished products Vistin Pharma is dependent upon national and international regulatory approvals in order to manufacture, market and sell APIs, semi-finished and finished products. Such approvals include, amongst others, so-called good manufacturing practice (GMP) certificates for the manufacturing plants and marketing authorisations for finished products. Vistin Pharma will be regularly inspected by the relevant authorities to maintain such
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approvals, certificates and authorisations. In line with industry standards for the pharmaceutical industry, Vistin Pharma has established a rigid quality system internally to ensure compliance with international laws and regulations at all times for each product and manufacturing line/unit. Such systems include amongst others standard operating procedures (SOPs) and batch manufacturing records as well as rigid quality controls for the intermediates and finished products. If Vistin Pharma fails to comply with regulations and fails an inspection by a regulatory authority, this may temporarily or permanently influence the Company’s business, financial condition and results of operation.
2.1.6 The Metformin and Opioids business areas have historically shown periods of underperformance, and any underperformance in the future may affect the Company’s business, financial condition and results of operation Historically, the Metformin and Opioids business areas have not been profitable. These business areas sell active ingredients, semi-finished and finished products to other pharmaceutical companies. Their profitability is, amongst other things, dependent upon raw material costs, manufacturing costs, labour costs and sales prices. The profitability of the Metformin and Opioids business areas have over the last years systematically improved through inter alia negotiating lower prices for raw materials, increasing manufacturing volumes and yields (and thus reduced manufacturing cost), moving up the value-chain by providing semi-finished and finished products, and moving their business towards high-value customers willing to pay more for reliable and high-quality products. Although profitability has increased over the last years, external factors such as demand, competition and raw materials costs may negatively affect the profitability in the future, and this may temporarily or permanently influence the Company’s business, financial condition and results of operation.
2.1.7 Changes in the competitive landscape or market price for the metformin and opioid APIs, semi- finished and finished products may affect the Company’s business, financial condition and results of operation While the markets for metformin and opioids have been growing steadily over the last decades and only a few companies are allowed to manufacture opioids due to strong international control and regulations, both markets may be characterised as commodity markets. Future changes in the competitive landscape in each market may therefore affect the Company’s business, financial condition and results of operation.
2.1.8 Specific risks related to the Metformin business area Metformin has been established as the first-line treatment for type 2 diabetes in most countries worldwide. Although there are no indications that metformin will be replaced by another first-line treatment of diabetes 2, the future expiration of patents on existing products, as well as the introduction of new products may bring drugs that directly or indirectly compete with metformin. Lifestyle changes in the future may also lead to fewer people developing type 2 diabetes during their lifetime and thus the market may decrease in the future. Such decrease in the use of metformin or increased competition in the future may influence the Company’s business, financial condition and results of operation.
2.1.9 Specific risks related to the Opioid business area Opioids have been used as strong pain remedies and cough suppressants for decades. Although there are no indications that opioids will be replaced in the near term, the future may bring new products to market that directly or indirectly will compete with opioids from Vistin Pharma. Such decrease in the use of opioids or increased competition in the future may influence the Company’s business, financial condition and results of operation.
2.1.10 Specific risks related to the CMO tablet manufacturing business area Weifa AS has produced finished dose tablets for external customers for many years, and has been supplying products to recognized international pharmaceutical companies. The Company is in that respect an experienced CMO operator. However, the CMO tablet manufacturing business has never existed as a separate business area and it is therefore difficult to assess how it will perform, as such, going forward.
The Company has entered into a long-term CMO agreement with Weifa AS for the supply of certain products where the price is determined based on estimated production costs at the time of entering into the contract. In this contract, the Company carries all risk related to cost overruns relative to the estimated production costs, with the exception of cost overruns above said level that are directly caused by certain predetermined input factors in which Weifa AS takes all risk. If the Company is unable to meet the budgeted production costs in
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which the CMO agreement is based on, it would negatively influence the Company’s business, financial condition and results of operation.
The CMO agreement that Vistin Pharma AS has entered into with Weifa AS will constitute a substantial share (~NOKm 120) of the Company’s revenue. The agreement has an initial duration of five years with the option to extend it for another two years at the discretion of Weifa AS. In the event that Vistin Pharma fail at maintaining a competitive manufacturing process for the products it supplies to Weifa AS the contract might not be renewed. If the contract with Weifa AS is not extended it could negatively influence the Company’s business, financial condition and results of operation.
2.1.11 Risk factors related to environmental issues The two manufacturing plants in Kragerø (Gruveveien and Fikkjebakke) that will be transferred from Weifa AS to Vistin Pharma following the acquisition of the Acquired Interests have faced environmental issues concerning emissions and emission permits.
In 2013, unauthorized emissions were registered at the production site at the Gruveveien plant. The situation was investigated by the Climate and Pollution Agency, which resulted in further (ongoing as of date) investigations by the police.
The Climate and Pollution Agency required in 2014 reduction of emissions from both plants. All emissions from Gruveveien were immediately stopped and collected for disposal and the production has been running uninterrupted at full capacity. An application for a new permanent emission permit for Gruveveien will be submitted in June 2015, and is expected to be approved within 9 months (March 2016).
Weifa AS received a temporary emission permit for the Fikkjebakke plant in July 2014. An application for a permanent emission permit was submitted in December 2014 and the permanent emission permit for Fikkjebakke is expected to be received in October 2015.
Weifa AS has dedicated considerable resources to identify, analyse, control and reduce the emissions. The Company has engaged external consultants, strengthened its competence within HSE, employed a new Vice President of Operations and Quality and established a project group that is responsible for monitoring the Company’s progress towards specified emission goals. The initiatives have resulted in a ~85 percent reduction in the emission of solvents and pharmaceutical remnants, and the remaining emissions are currently being combusted. Following the Company’s initiatives, the risk for unwanted interruption or reduction of activity in the factories due to emission related issues is considered to be very low. However, in the event that the ongoing police investigations would lead to a charge against the Company or that the application for permanent emissions permits are declined it could negatively impact the Company’s business, financial condition and results of operation.
2.1.12 The Company does not have an operating history outside of the Weifa Group and investors may have difficulty assessing its historical performance and outlook for future revenues and other operating results. The Company was incorporated on 6 March 2015 and, consequently, does not have an operating history as a separate entity. Financial information upon which prospective investors can evaluate the Company's historical financial performance is available only from the special purpose carve-out financial information that the Company has included in this Prospectus and that reflect the activities of the Acquired Interests currently owned by Weifa AS. The financial information in this Prospectus may not necessarily reflect what the Acquired Interests’ results of operations, financial condition and cash flows would have been had they operated as a separate, stand-alone entity for the periods presented. Consequently, the financial statements and the other historical financial information included in this Prospectus do not necessarily reflect Vistin Pharma's future results of operations, financial condition, cash flows or costs and expenses.
2.2 FINANCIAL RISK
2.2.1 Limited access to funds The Company may be dependent on obtaining future financing and/or new equity to enable the contemplated future growth of the Group. No assurance can be given that it will be able to obtain future financing, or that it will be able to raise new equity capital.
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2.2.2 Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its treasury management, including deposits with banks and financial institutions.
2.2.3 Foreign exchange risk Vistin Pharma will offer products to the global pharmaceutical market and the Company is exposed to currency exchange fluctuations, as most sales within the metformin and opioid business are in EUR and USD. Some of these sales are partly covered by a natural hedge, as most of the raw material costs are denominated in USD, and the Group also enters into currency hedging contracts to reduce the foreign exchange risk. Currency exchange rates are determined by forces of supply and demand on the currency exchange markets, which again are affected by the international balance of payments, economic and financial conditions and expectations, government intervention, speculation and other factors. Changes to these foreign exchange rates in particular may affect the Company’s business, financial condition and results of operation.
2.2.4 Liquidity risk Liquidity risk is the potential loss arising from the Group's inability to meet its contractual obligations when due. The operation of the Group’s business requires significant capital, and there can be no assurance that it will be able to obtain the necessary liquidity to meet its financial liabilities as they fall due. The Group’s future liquidity needs depend on a number of factors, and is subject to uncertainty with respect to inter alia future earnings, outcome of legal claims and disputes, etc. A limited liquidity position may have an adverse effect on the Group’s business, financial condition, results of operation and liquidity, and as a worst case, force the Company to cease its operations.
2.3 RISK FACTORS RELATED TO THE OWNERSHIP OF THE SHARES
2.3.1 There is no existing market for the Shares, and an active trading market may not develop The Company’s Shares will subsequent to the Listing be traded on Oslo Axess. This, however, does not imply that there will be a liquid market for the Company’s Shares.
Prior to the Offering, there was no public market for the Shares, and there can be no assurances that an active trading market will develop, or be sustained or that the Offer Shares will be capable of being resold at or above the Subscription Price. The market value of the Shares could be substantially affected by the extent to which a secondary market develops for the Shares following the completion of this Offering. In the case of low liquidity of the Shares, or limited liquidity among the Company’s shareholders, the share price can be negatively affected and may not reflect the underlying value of the Company’s assets.
2.3.2 The market price of the Shares may be highly volatile The market price of the Shares could fluctuate significantly in response to a number of factors, including the following:
- actual or anticipated variations in operating results - changes in financial estimates or recommendations by stock market analysts regarding the Company - announcements by the Company of significant acquisitions, partnerships, joint ventures or capital commitments - sales or purchases of substantial blocks of Shares - additions or departures of key personnel - future equity or debt offerings by the Company and its announcements of these offerings - general market and economic conditions
Moreover, in recent years, the stock market in general has experienced large price and volume fluctuations and these broad market fluctuations may adversely affect the share price, regardless of its operating results.
2.3.3 Shareholders not participating in future offerings of Shares may be diluted Shareholders not participating in future offerings of Shares may be diluted. Unless otherwise resolved or authorised by the general meeting of the Company, shareholders in Norwegian public companies, such as the
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Company, have pre-emptive rights proportionate to the aggregate amount of the Shares they hold with respect to new Shares issued by the Company. However, shareholders that choose to not exercise such pre-emptive right may experience dilution of their shareholding. Furthermore, local selling and transfer restrictions may limit certain shareholders to exercise their pre-emptive rights.
If the Company, in an equity issue, resolves to deviate from the shareholders' pre-emptive rights, this may also result in a substantial dilution of the shareholding of shareholders not being invited to participate in such equity issue.
2.3.4 Future issuances of Shares or other securities could dilute the holdings of shareholders The Company may seek to issue additional equity or convertible equity securities to fund future acquisitions and other growth opportunities, or in connection with share incentives and option plans. Exercising options may also cause a dilution of existing shareholders. To the extent that the Company issues additional securities, the existing shareholders' ownership interest in the Company at that time may be diluted.
2.3.5 Future sales, or the possibility for future sales of substantial numbers of Shares could affect the Shares’ market price The Company cannot predict what effect, if any, future sales of the Shares, or the availability of Shares for future sales, will have on the market price of the Shares. Sales of substantial amounts of the Shares in the public market following the Offering, or the perception that such sales could occur, could adversely affect the market price of the Shares, making it more difficult for holders to sell their Shares and for the Company to sell equity securities in the future at a time and price that they deem appropriate.
2.3.6 The Company does not expect to pay any cash dividends for the foreseeable future The Company does not intend to pay any dividends for the foreseeable future. Instead, the Company plans to retain any earnings to maintain and expand its existing operations. In addition, any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on the Shares. Accordingly, investors must rely on sales of their Shares after price appreciation, which may never occur, as the only way to obtain return on their investment.
2.3.7 The Company's investors outside of Norway are subject to exchange rate risk The Shares are traded in NOK and any investor outside of Norway that wishes to invest in the Shares, or to sell Shares, will be subject to an exchange rate risk which may cause additional costs to the investor.
2.3.8 Holders of Shares that are registered in a nominee account may not be able to exercise voting rights and other shareholder rights as readily as shareholders whose Shares are registered in their own names with the VPS Beneficial owners of Shares that are registered in a nominee account (e.g., through brokers, dealers or other third parties) may not be able to vote such Shares unless their ownership is re-registered in their names with the VPS prior to the Company's general meetings. The Company cannot guarantee that such beneficial owners of Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a re- registration of their Shares or otherwise vote their Shares in the manner desired by such beneficial owners. Further, beneficial owners of Shares that are registered in a nominee account may not be able to exercise other shareholder rights under the Norwegian Public Limited Companies Act (such as e.g. the entitlement to participate in a rights offering) as readily as shareholders whose Shares are registered in their own names with the VPS.
2.3.9 The transfer of Shares is subject to transfer restrictions The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions. The Shares have not been registered under the U.S. Securities Act of 1933 or any U.S. state securities laws or any other jurisdiction outside Norway and are not expected to be registered in the future. As such, the Shares may not be offered or sold in the United States or to a U.S. person except pursuant to an exemption from the registration requirements of the US Securities Act and applicable securities laws.
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3. STATEMENT OF RESPONSIBILITY The Board of Directors of Vistin Pharma ASA accepts responsibility for the information contained in this Prospectus and hereby declares that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of their knowledge, in accordance with the facts and contains no omissions likely to affect its import.
Oslo, 22 May 2015
The Board of Directors of Vistin Pharma ASA
Ole Enger Chairman
Øystein Stray Spetalen Kathrine Gamborg Andreassen Board member Board member
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4. CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This Prospectus contains forward-looking statements relating to Vistin Pharma's business and the sectors in which it will operate. Forward-looking statements include all statements that are not historical facts, and can be identified by words such as “anticipates”, “believes”, “expects”, “intends”, “may”, “plans”, “projects”, “seeks”, “should”, “will”, or the negatives of these terms or similar expressions. These forward-looking statements, as a general matter, are all statements other than statements as to historic facts or present facts and circumstances. Forward-looking statements appear in the following sections of this Prospectus, section 5 “The sale and the listing”, section 7 “Presentation of Vistin Pharma”, section 8 “Market overview”, section 9 “Financial Information” and section 11 “Corporate information and description of the Share Capital”.
No forward-looking statements contained in this Prospectus should be relied upon as predictions of future events. These forward-looking statements are based on Vistin Pharma's present plans, estimates, projections and expectations. They are based on certain expectations, which, even though they seem to be adequate at present, may turn out to be incorrect. No assurance can be given that the expectations expressed in these forward-looking statements will prove to be correct. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations proves to be inaccurate or is unrealized. Factors that could cause actual results to differ materially from those in the forward-looking statements are included in section 2 “Risk Factors”.
Readers are cautioned not to place undue reliance on the forward-looking statements contained in this Prospectus, which represent the best judgment of Vistin Pharma as of the date of this Prospectus. Except as required by applicable law, Vistin Pharma does not undertake responsibility to update these forward-looking statements, whether as a result of new information, future events or otherwise. Readers are advised, however, to consult any further public disclosures made by the Company, such as filings made with Oslo Børs or the Company’s press releases.
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5. THE SALE AND THE LISTING
5.1 BACKGROUND On 13 March 2015 Weifa announced that the Board of Directors will propose to cause its subsidiary Weifa AS to sell its business-to-business and CMO tablet production operations (the "Acquired Interests") to Vistin Pharma AS, a wholly-owned subsidiary of Weifa ASA (the "Sale"). The purchase price payable by Vistin Pharma AS, as consideration for the Acquired Interests, is determined on arms-length terms, and amounts to NOK 120 million. In connection with the contemplated Sale, Weifa ASA established Vistin Pharma ASA on 6 March 2015 ("Vistin Pharma" or the “Company”), a public limited liability company incorporated under the laws of Norway, for the purpose of being the holding company for Vistin Pharma AS. Vistin Pharma applied for listing of its shares on Oslo Axess on 23 April 2015 (the "Listing").
On 17 April 2015 Vistin Pharma AS entered into a business transfer agreement (the "BTA") with Weifa AS regarding the acquisition of the Acquired Interests, and the Sale was approved by the shareholders of Weifa ASA at an extraordinary general meeting held 16 April 2015. The acquisition of the Acquired Interests from Weifa AS, is i.a. subject to completion (to be determined by the Company when such completion is unconditional) by Vistin Pharma of an offering of new shares in an amount of at least NOK 170 million. The Acquired Interests are, subject to comfort on a successful completion of the Offering, expected to be transferred to Vistin Pharma AS on or about 1 June 2015.
To finance the acquisition of the Acquired Interests, and secure working capital and funds for future business needs, Vistin Pharma will conduct an equity issue of approximately NOK 170 million (the "Offering"), as further described in section 6.
Initially, the Company has been set up with equity of NOK 1,000,000 with a par value of NOK 1 per share. The Company's share capital will be reduced by NOK 1,000,000 from NOK 1,000,000 to NOK 0 through redemption of the 1,000,000 shares in Vistin Pharma ASA that are owned by Weifa, against distribution of NOK 1,000,000 to Weifa. The share capital reduction will be conducted simultaneous with the share capital increase related to the Offering. Following the Offering, Weifa ASA will thus have no ownership in the Company and the investors will have contributed with approximately NOK 170 million of equity to the Company.
5.2 RATIONALE FOR THE SALE Before the transfer of the Acquired Interests to Vistin Pharma, Weifa AS consists of two separate business segments, Consumer Health and B2B. The Consumer Health segment produces (tablets only) and sells branded finished dose products to consumers in Norway through pharmacies, grocery stores and other OTC channels. The B2B segment, on the other hand, manufactures and supplies metformin and opioid APIs and tablets to the global pharmaceutical industry. The two business segments operate independent of each other, although opioid API produced by the B2B business is used in some of Weifa AS’ Consumer Health products. As such, the two business segments are exposed to different market characteristics and have only limited synergies.
The Sale will allow each business to pursue its own strategic agenda, create M&A opportunities for both companies, increase attention and create a more focused business scope for both companies. It therefore represents a logical step in creating two companies with distinct and independent investment stories;
- Weifa (Consumer Health) - a pure consumer brand player with leading category positions.
- Vistin Pharma (Acquired Interests) - a strong pharmaceutical investment case with key positions and growth potential in the international metformin and opioids market, and a strong fundament to create a highly efficient Contract Manufacturing Organisation (CMO).
Vistin Pharma will, from the start, be a producer of metformin APIs and tablets used in the treatment of diabetes and opiate APIs and tablets used for pain relief and cough medicine.
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5.3 TRANSFER OF THE ACQUIRED INTERESTS TO THE COMPANY The Acquired Interests will, subject to comfort on a successful completion of the Offering, be transferred to Vistin Pharma AS on or about 1 June 2015.
On 17 April 2015 Vistin Pharma AS entered into the BTA, pursuant to which Vistin Pharma AS shall acquire the Acquired Interests. The BTA defines the Acquired Interests, which includes the following:
i. All properties and buildings owned by Weifa AS, including, but not limited to the properties in Gruveveien and at Fikkjebakke in Kragerø
ii. the machinery, hardware, office supplies, inventory and other supplies and equipment related to the properties and the Acquired Interests
iii. all software, including ERP and financial systems, copyrights, domain names, inventions and other registered or unregistered intellectual property rights related to the Acquired Interests
iv. all products and their complete documentation as well as regulatory permits, including, but not limited to Drug Master Files and dossiers
v. all site-related documentation and authorisations, manufacturing licences and other regulatory approvals related to the Acquired Interests
vi. the employer rights related to the employment of the employees
vii. all right, title and interest in the contracts related to the Acquired Interests viii. books of accounts (copies), personnel records and other files that relate to the ownership or operation of the Acquired Interests
ix. all accounts receivables, inventory (excluding finished inventory purchased from third party contract manufacturers) and other current assets pertaining to the Acquired Interests
The Acquired Interests will include all necessary operational assets and employees for Vistin Pharma AS to become an independent and fully operational company immediately following the completion of the Sale.
The purchase price for the Acquired Interests shall be NOK 120,000,000, payable on completion of the Offering. The purchase price of the Acquired Interests has been determined by the Company, together with the Manager, based on several valuation techniques, among them a comparison of expected earnings multiples versus similar companies and a discounted cash flow analysis.
The completion of the BTA is subject to i.a. the completion (to be determined by the Company when such completion is unconditional) by Vistin Pharma of an offering of new shares in an amount of at least NOK 170 million, and is expected to be completed on or about 1 June 2015.
The BTA triggers a change of control clause in certain contracts between the Acquired Interests and its customers and suppliers giving them the opportunity to terminate their existing contract. The Company has been in continuous dialogue with both customers and suppliers regarding the transfer of existing contracts from Weifa AS to Vistin Pharma AS and has, as of 8 May 2015, received consent on eight out of 13 customer agreements, six out of eight supplier agreements and none out of the three distribution/agent agreements. In addition, the Company has received positive feedback from its dialogue with the remaining customers and suppliers, and Vistin Pharma expects that all relationships will be maintained. This statement is supported by the fact that the Acquired Interests will not be subject to any change that will materially impact its customers, suppliers and/or distribution agreements, and that it will take existing customers 12 - 18 months to establish a new supply agreement with another pharmaceutical company, which is particularly relevant for the customers who currently has Weifa AS as their sole supplier. Experience from Aqualis ASA’s acquisition of Weifa AS in August 2014 offers support to the Company’s assessment, as the transaction triggered the change of control clause in several of Weifa AS’ contracts but all customers remained with Weifa AS following the acquisition. In addition, the customer contracts relevant to the Acquired Interests do not generally include a guaranteed minimum volume, which allows its customers and suppliers to continuously evaluate alternative suppliers, irrespective of any
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change of control clause. It should also be noted that none of the current contracts, on a stand-alone basis, are business critical.
The current regulatory approval that is required for sale and import of any raw material necessary for producing medicinal products at the premises located at Fikkjebakke and Gruveveien are currently held by Weifa AS and cannot be directly transferred to Vistin Pharma. This includes a manufacturing license, including the right to sell and import medicinal products, a certificate of good manufacturing practice (GMP) and a certificate of good distribution practice (GDP). Vistin Pharma AS’ manufacturing license for the Acquired Interests has already been issued and will be valid from 1 June 2015 until 1 June 2020. The GMP and GDP certificates have not been renewed and will require renewal following the acquisition of the Acquired Interests. The Gruveveien facility was re-inspected by the Norwegian Medicines Agency (NoMA) in May 2015 and a new certificate issued to Vistin Pharma AS is expected shortly after the acquisition. The Company expects that the Fikkjebakke facility will be re-inspected in late 2015 or early 2016 and that a new license will be issued shortly after. The risk associated with the renewal of the certificates is considered to be minimal, as the manufacturing facilities will be unaffected by the transaction. In addition, the Company expects that it will be able to operate under the certificates issued to Weifa AS until new ones have been approved for Vistin Pharma AS. The transfer should therefore have a limited impact on the continuing operations of the Company.
5.4 APPLICATION FOR ADMISSION TO TRADING OF THE COMPANY’S SHARES Vistin Pharma ASA applied for admission to trading of its Shares on Oslo Axess on 23 April 2015. It is expected that the board of directors of the Oslo Stock Exchange approves the listing application of Vistin Pharma ASA on or about 26 May 2015, subject to certain conditions being met. Listing of the Company is expected to be conditional upon the following:
- Prior to the first day of listing, the requirement for the number of shareholders as stipulated in Oslo Axess Listing Rules, section 2.4.2, is fulfilled; - At least 25% of the shares to be listed are held by the general public as required by the Oslo Axess Listing Rules, section 2.4.1; - That the Company raises at least NOK 170 million in new equity through the contemplated Offering; and - Completes the Sale and Offering as planned
Vistin Pharma ASA currently expects commencement of trading in the Shares on Oslo Axess on or about 10 June 2015. The Shares will be listed under the ticker symbol "VISTIN".
5.5 VISTIN PHARMA’S RELATIONSHIP WITH WEIFA FOLLOWING THE SALE Weifa’s key brands within the consumer health pain segment Paracet, Ibux and Paralgin Forte, are currently being produced at the manufacturing facility at Gruveveien, Kragerø, Norway. The manufacturing facility at Gruveveien is a part of the Acquired Interests, and will thus be transferred to the Company in connection with the Sale.
On 17 April 2015 Vistin Pharma AS entered into a five year exclusive contract manufacturing agreement (the “CMO Agreement”) with Weifa AS for the production of all tablets currently produced internally by Weifa AS for the sale through its Consumer Health segment (i.e. Ibux, Paracet, Paralgin Forte, Metformin) and certain products to third parties in which Weifa AS has the exclusive right to sell within certain geographical areas (i.e. metformin, strong pain killers). The contract includes an option to extend the agreement for another two years. Neither party can fully or partially terminate the contract within the initial five year period, unless the other party commits a material breach, as defined in the agreement, or if certain defined events occur.
The CMO Agreement was negotiated between the two parties and an external lawyer and is considered to be on arms-length terms. It should, however, be noted that the contract was based on an “open-book” principle, as Weifa AS had insight into the production costs at the time of entering into the contract. In addition, it would have taken Weifa AS 12 to 18 months to establish a new supplier relationship with an external party due to strict testing requirements before a new supplier relationship is established and fully functional. Weifa AS therefore did not have the option to change to another supplier at the time of entering into the contract. The contract is still considered to be on competitive market based terms.
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Under the contract, Vistin Pharma AS shall, to the extent it is able to deliver on Weifa AS’ orders, be the exclusive supplier of said tablets to Weifa AS within the European Economic Area (respectively, the “Territory”). In return, Weifa AS shall order its entire requirement of said products to be sold within the Territory from Vistin Pharma AS. Considering that Weifa is a Norwegian brand with sales in Norway and that sales outside the Territory is highly unlikely, the agreement is, for all practical purposes, fully and mutually exclusive.
Pursuant to the CMO Agreement, Vistin Pharma AS shall not produce any products based on the APIs covered by the CMO Agreement to customers for sale in the Nordic countries, while for the APIs used in Paralgin Forte, this restriction extends to the Territory. In addition, Vistin Pharma AS shall not use any of Weifa AS’ know- how to supply products to any third party other than Weifa AS.
The price of the products that will be supplied by Vistin Pharma AS to Weifa AS is based on the estimated fully loaded production costs (including allocation of Vistin Pharma’s general overhead and administration expenses), excluding depreciation, at the time of entering into the contract, plus a mark-up of 8%. Under the CMO Agreement, Vistin Pharma AS carries all risks related to cost overruns, with the exception of cost overruns directly caused by certain predetermined input factors (e.g. raw materials) in which Weifa AS takes all risk. Any cost savings relative to the fixed cost level set at the time of entering into the contract shall be equally split between Vistin Pharma AS and Weifa AS.
The price setting methodology used in the CMO Agreement with Weifa AS is not materially different from the other CMO agreements that will be transferred to the Company following the Sale, as the quoted price typically is based on an estimated production cost plus a margin. However, the agreements typically do not explicitly state the cost base and margin. This was included in the CMO Agreement because it was entered into on an “open book” basis, as Weifa AS had knowledge of the actual production costs at the time of entering into the contract. The Company estimates that the other CMO agreements that will be transferred to the Company as a part of the Sale are based on a similar margin level. It should, however, be noted that the CMO agreements are not directly comparable, as the CMO Agreement with Weifa AS will be the only agreement where the APIs used in the tablets are sourced from an external party.
Effective as of the closing of the Sale, Vistin Pharma AS and Weifa AS shall also enter into an agreement regarding the provision of certain services by Vistin Pharma AS to Weifa AS (the "Transitional Services Agreement"). Under the agreement Vistin Pharma AS will be responsible for the bookkeeping for Weifa AS and Weifa ASA for the financial year 2015. Vistin Pharma AS will hire two temporary employees that will be responsible for the bookkeeping. The costs related to this service will be re-invoiced directly to Weifa ASA. In addition, Vistin Pharma will provide other minor administrative services, such as switchboard operations and potential laboratory tests for Weifa AS. Weifa AS will be charged for these services, but the amount is expected to be limited, as Weifa AS already will be paying a portion of this cost through the fully loaded production costs under the CMO Agreement described above. The form of the Transitional Services Agreement will be agreed between the parties on bona fide arms-length terms and covers the period from the Sale until 31 December, 2015.
Vistin Pharma’s headquarters is currently located in the same building as Weifa ASA and Vistin Pharma will rent the premises from Weifa ASA. The rental agreement is a standard subletting agreement entered into on arms-length terms where Vistin Pharma will be paying a price per square meter of office space occupied.
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6. THE OFFERING
6.1 OVERVIEW As described in section 5, the Company intends to conduct a share offering of approximately NOK 170 million (the “Offering”), where NOK 120 million will be used to settle the purchase price for the Acquired Interests, and the balance will be used for working capital and to fund future business needs.
The Offering consists of two tranches:
- 15,554,935 new shares at NOK 10 per new share (the “New Shares”) are directed towards the shareholders of Weifa as of 19 May 2015 (the “Rights Offering”), who are not resident in a jurisdiction where such offering would be unlawful or would (in jurisdictions other than Norway) require any prospectus filing, registration or similar action (the "Eligible Shareholders"); and
- 1,500,000 new shares at NOK 10 per new share (the “Employee Offer Shares”) are directed towards the Board of Directors, Executive Management and employees of the Company (the “Employee Offering”).
The New Shares and Employee Offer Shares are together referred to as the “Offer Shares”.
The Offering is fully guaranteed by primarily large existing shareholders of Weifa ASA.
The completion of the Offering is dependent upon approval of the Company’s listing application on the Oslo Stock Exchange board meeting to be held 26 May 2015.
6.1.1 Resolution regarding the Offering At the EGM held 16 April 2015 the following resolution regarding the fully underwritten Offering was proposed and approved:
1. The Company's share capital is reduced by NOK 1,000,000 from NOK 1,000,000 to NOK 0 through redemption of 1,000,000 shares in Vistin Pharma ASA that are owned by Weifa, against distribution of NOK 1,000,000 to Weifa ASA. The share capital reduction is conducted simultaneous with the share capital increase mentioned in sub-section 2 in these minutes in accordance with the Norwegian Public Limited Liability Companies Act section 12-5 (2).
2. The Company's share capital is increased from NOK 0 to NOK 17,054,935 by issuing 17,054,935 new shares, each with a nominal value of NOK 1.
3. The subscription price is NOK 10 per share. The total subscription amount for the new shares is NOK 170,549,350.
4. Of the new shares, 15,554,935 new shares (the "Weifa Offering") may be subscribed for by existing shareholders in Weifa ASA as of the end of 19 May 2015 (as registered in the shareholder register in the VPS as of the end of 21 May 2015), except for shareholders who are resident in a jurisdiction where such offer is unlawful or would (in other jurisdictions than Norway) require an application, registration or similar measures, on the terms and procedure that follows from a prospectus issued by the Company. The existing shareholders' pre-emptive right to subscribe for shares pursuant to the Norwegian Public Limited Liability Companies Act section 10-4 is therefore deviated from cf. section 10-5. It shall be issued transferable subscription rights. Holders of subscription rights may over-subscribe. Subscription without subscription rights is not allowed. Subscription may also be done by Carnegie ASA on behalf of the respective beneficial subscribers.
5. The remaining 1,500,000 shares may be subscribed for by employees and board members in Vistin Pharma ASA and subsidiaries (the "Employee Offering"). Existing shareholders' pre-emptive right to subscribe for shares pursuant to the Norwegian Public Limited Liability Companies Act section 10-4 is deviated from cf. section 10-5. Subscription may be done by Carnegie ASA on behalf of the respective beneficial subscribers.
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6. Allocation of shares is determined by the board, based on the following principles: The shares in the Weifa Offering that are not subscribed for by holders of subscription rights shall be allocated to over-subscribers of shares in the Weifa Offering. Shares in the Weifa Offering that are not allocated after this, shall be subscribed for an allocated to the underwriters based on the underwriters' respective underwriting obligations. The shares in the Employee Offering that are not subscribed for by eligible subscribers in the Employee Offering may be allocated to over-subscribers in the Weifa Offering. Shares in the Employee Offering that after this has not been allocated, shall be subscribed for and allocated to the underwriters based on the underwriters' respective underwriting obligation.
7. The share contribution shall be settled by cash payment to the Company's designated account for the share capital increase. Over-subscription is allowed.
8. The subscription amount shall be paid on the terms set out in the prospectus, and at the latest on 30 June 2015. The share contribution may be used by the Company prior to the registration of the share capital increase in the Register of Business Enterprises.
9. The new shares give shareholder rights in the Company (including the right to receive dividends) from the time that the share capital increase is registered in the Register of Business Enterprises.
10. The Company's articles of association shall be updated in accordance with the subscription made in accordance with this resolution.
11. The equity issue is fully underwritten by a syndicate primarily consisting of major shareholders in Weifa ASA. The underwriters will receive a fee of 2% of the underwritten amount, conditional upon the completion of the equity issue. In addition, there has been entered into a mandate agreement with Carnegie AS, whereby Carnegie AS shall be sole manager for the equity issue, and whereby Carnegie AS is entitled to a fee of NOK 4 million, conditional upon the completion of the restructuring.
6.1.2 Timetable The timetable below provides certain indicative key dates for the Offering.
Last day of trading in the Weifa share incl. the right to receive subscription rights in the Rights 19 May 2015 Offering ...... Weifa share trading excluding the right to receive subscription rights in the Rights Offering ...... 20 May 2015 Subscription period for the Offering commences ...... 26 May 2015 at 09:00 CET First day of trading of Subscription Rights ...... 26 May 2015 at 09:00 CET End of trading of Subscription Rights ...... 2 June 2015 at 16:30 CET Subscription period for the Offering ends ...... 4 June 2015 at 16:30 CET Allocation ...... 5 June 2015 Payment date ...... 9 June 2015 Registration of share capital increase ...... On or about 9 June 2015 Delivery of the Offer Shares ...... On or about 10 June 2015 Listing and commencement of trading on Oslo Axess ...... On or about 10 June 2015
6.1.3 The Underwriting and the Underwriting Syndicate The Offering is fully underwritten by the Underwriting Syndicate. The table below sets out the Underwriters, as well as the amount and the percentage of the total number of Offer Shares each Underwriter has agreed and undertaken to guarantee the subscription of. Each Underwriter’s obligation is subject to approval of the listing of the Company’s shares on Oslo Axess by the board of directors of Oslo Børs.
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Name of Underwriter Address Guaranteed Amount (NOK) Percentage 1177 Avenue Of America’s, 9th Floor c/o QVT QVT¹ 28,049,350 16.4% Financial LP. New York, N.Y., USA 10036 Strata Marine & Offshore AS² Sjølyst plass 2, 0278 Oslo 25,000,000 11.7% Famaday Trading Inc. 80 Broad Street, Monrovia, Liberia 15,000,000 8.8% Storebrand Asset Management AS Professor Kohts vei 9, 1366 Lysaker 15,000,000 8.8% MP Pensjon PK Lakkegata 23, 0187 Oslo 15,000,000 8.8% Verdipapirfondet Holberg Norden Lars Hilles gate 19, 5008 Bergen 10,500,000 6.2% Verdipapirfondet Holberg Norge Lars Hilles gate 19, 5008 Bergen 4,500,000 2.6% Gross Management AS Sjølyst plass 2, 0278 Oslo 12,500,000 7.3% Holta Invest AS Drammensveien 35, 0271 Oslo 12,500,000 7.3% Borgen Investment Group Norway AS Fridtjof Nansens plass 4, 0160 Oslo 12,500,000 7.3% Portia AS Kirkegata 1, 4610 Kristiansand 10,000,000 5.9% Ole Enger Riddervoldsgate 3, 0258 Oslo 5,000,000 2.9% Cipriano AS Munkedamsveien 45F, 0250 Oslo 5,000,000 2.9% Total: 170,549,350 100% ¹ QVT Fund IV LP, QVT Fund V LP, Quintessence Fund L.P. ² Including the associated companies Ferncliff Listed DAI (Sjølyst plass 2, 0278 Oslo) and AS Ferncliff (Sjølyst plass 2, 0278 Oslo)
The underwriting is regulated by underwriting agreements entered into between the Company and the respective Underwriters on or about 13 March 2015. According to the Underwriting Agreement, each of the Underwriters have, severally, and not jointly, and on a pro rata basis and up to the maximum amount undertaken by each of them, undertaken to subscribe for the Offer Shares not subscribed for during the Subscription Period. The underwriting obligation of each Underwriter does not include a guarantee for the payment by any subscriber or any other Underwriter of their subscription amount in the Offering. Each Underwriter’s obligation is subject to approval of the listing of the Company’s shares on Oslo Axess by the board of directors of Oslo Børs.
The Underwriters will receive a guarantee commission of 2% of their guaranteed amount, subject to completion of the Offering.
Each Underwriter’s obligation will be reduced on a share for share basis with the number of Offer Shares subscribed for in the Offering and allocated to it.
6.2 THE RIGHTS OFFERING
6.2.1 Record date Eligible Shareholders as of 19 May 2015, and being registered as such in the VPS on 21 May 2015 ("Record Date") will receive Subscription Rights.
Provided that the delivery of traded Weifa ASA shares were made with ordinary T+2 settlement in the VPS, Weifa ASA shares that were acquired until and including 19 May 2015 will give the right to receive Subscription Rights, whereas Weifa ASA shares that were acquired from and including 20 May 2015 will not give the right to receive Subscription Rights.
6.2.2 Subscription Period The Subscription Period in the Rights Offering will commence 09:00 CET on 26 May 2015 and expire at 16:30 CET on 4 June 2015. The Subscription Period may be extended by the Board, but may not in any event be later than 25 June 2015. An extension, if any, will be announced by a press release through www.newsweb.no and on Weifa’s webpage www.weifa.no. In case of an extension of the Subscription Period, all relevant deadlines will be extended accordingly. The Subscription Period may not be closed earlier than 16:30 CET on 4 June 2015.
6.2.3 Subscription Price The subscription price for one (1) New Share is NOK 10 (the “Subscription Price”). The Subscribers will not incur any costs related to the subscription for, or allotment of, the New Shares.
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6.2.4 Subscription Rights The Rights Offering comprises 15,554,935 tradable Subscription Rights. Each Eligible Shareholder will be granted one Subscription Right for every 102 Weifa ASA shares owned as of the Record Date. One Subscription Right will, subject to applicable securities law, give the holder the right to subscribe for and be allocated one New Share in the Company in the Rights Offering.
The Subscription Rights will be credited to and registered on each Eligible Shareholder’s VPS account on or about 26 May 2015 under ISIN NO0010736952. The Subscription Rights will be distributed free of charge, and the recipient of subscription rights will not be debited any cost.
The Subscription Rights may be used to subscribe for New Shares in the Rights Offering before the expiry of the Subscription Period on 4 June 2015 at 16:30 CET or alternatively be sold before end of trading on Oslo Axess on 2 June 2015. There is no difference between acquired Subscription Rights and Subscription Rights allocated to Eligible Shareholders of Weifa ASA as of the Record Date. The Subscription Rights, including acquired Subscription Rights, must be used to subscribe for New Shares before the end of the Subscription Period (i.e. 4 June 2015 at 16:30 CET). Subscription Rights which are not sold before end of trading on Oslo Axess on 2 June 2015 or exercised before the end of the Subscription Period will have no value and will lapse without compensation to the holder. Holders of Subscription Rights (whether granted or acquired) should note that subscriptions for New Shares must be made in accordance with the procedures set out in this Prospectus.
Over-subscription is permitted. Subscription without Subscription Rights is not permitted. Subscribers subscribing on the basis of Subscription Rights who over-subscribe (i.e. subscribe for more New Shares than the number of Subscription Rights held by them) will have priority to the New Shares not subscribed for by holders of Subscription Rights, see details in sections 6.2.6 and 6.2.8 below regarding subscription procedures and allocation mechanisms. However, in each case there can be no assurance that New Shares will be allocated for such subscriptions.
Subscription Rights of Eligible Shareholders resident in jurisdictions where this Prospectus may not be distributed and/or with legislation that, according to the Company’s assessment, prohibits or otherwise restricts subscription for New Shares (the “Ineligible Shareholders”) will initially be credited to such Ineligible Shareholders’ VPS accounts. Such credit specifically does not constitute an offer to Ineligible Shareholders to subscribe for New Shares. The Company will instruct the Manager to, as far as possible, withdraw the Subscription Rights from such Ineligible Shareholders’ VPS accounts, and sell them from and including 1 June 2015 until 2 June 2015 for the account and risk of such Ineligible Shareholders, unless the relevant Subscription Rights are held through a financial intermediary.
The Manager will use commercially reasonable efforts to procure that the Subscription Rights withdrawn from the VPS accounts of Ineligible Shareholders (and that are not held through financial intermediaries) are sold on behalf of, and for the benefit of, such Ineligible Shareholders during said period, provided that (i) the Manager is able to sell the Subscription Rights at a price at least equal to the anticipated costs related to the sale of such Subscription Rights, and (ii) the relevant Ineligible Shareholder has not by 29 May 2015 at 16:30 CET documented to the Company through the Manager a right to receive the Subscription Rights withdrawn from its VPS account, in which case the Manager shall re-credit the withdrawn Subscription Rights to the VPS account of the relevant Ineligible Shareholder. The proceeds from the sale of the Subscription Rights (if any), after deduction of customary sales expenses, will be credited to the Ineligible Shareholder’s bank account registered in the VPS for payment of dividends, provided that the net proceeds attributable to such Ineligible Shareholder amount to or exceed NOK 10. If an Ineligible Shareholder does not have a bank account registered in the VPS, the Ineligible Shareholder must contact the Manager to claim the proceeds. If the net proceeds attributable to an Ineligible Shareholder are less than NOK 10, such amount will be retained for the benefit of the Company. There can be no assurance that the Manager will be able to withdraw and/or sell the Subscription Rights at a profit or at all. Other than as explicitly stated above, neither the Company nor the Manager will conduct any sale of Subscription Rights not utilised before the end of the Subscription Period.
6.2.5 Trading in Subscription Rights The Subscription Rights are fully tradable and transferable, and will be listed on Oslo Axess with ticker code “VISTIN T” and registered in VPS with ISIN NO0010736952. Trading in the Subscription Rights on Oslo Axess may take place from and including 09:00 CET on 26 May 2015 and until 2 June at 16:30 CET.
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Persons intending to trade in Subscription Rights should be aware that the exercise of Subscription Rights by holders who are located in jurisdictions outside Norway may be restricted or prohibited by applicable securities laws. Please refer to section 16 “Selling and transfer restrictions” for a description of such restrictions and prohibitions. 6.2.6 Subscription procedures and subscription office Eligible Shareholders will receive a letter which includes information on shareholdings as of 19 May 2015 and certain other matters relating to the relevant shareholders. The Prospectus is available at www.weifa.no and www.carnegie.no, and at the offices of the Company (Østensjøveien 27, 0661 Oslo, Norway) and Carnegie (Grundingen 2, Aker Brygge, 0106 Oslo, Norway). Subscriptions for New Shares must be made on a Subscription Form, attached as Appendix D hereto, or through the VPS online subscription system which can be found by following the links on www.carnegie.no. The VPS online subscription system is only available for Norwegian citizens. In order to use the online subscription system, the subscriber must have, or obtain, a VPS account number. All online subscribers must verify that they are Norwegian citizens by entering their national identity number (Norwegian: “personnummer”).
Online subscriptions must be submitted by 16:30 CET on 4 June 2015, and accurately completed Subscription Forms must be received by the Manager by 16:30 CET on 4 June 2015. Neither the Company nor the Manager may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical problems that may result in subscriptions not being received in time or at all by the Manager. Subscription Forms received after the end of the Subscription Period and/or incomplete or incorrect Subscription Forms and any subscription that may be unlawful may be disregarded at the sole discretion of the Company and/or the Manager without notice to the subscriber.
Properly completed and signed Subscription Forms may be faxed, mailed or delivered to the Manager at the address set out below:
Carnegie AS Grundingen 2, Aker Brygge PO Box 684 Sentrum 0106 Oslo, Norway Fax: +47 22 00 99 60 Tel: +47 22 00 93 60 E-mail: [email protected]
Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified by the subscriber after having been received by the Manager. The subscriber is responsible for the correctness of the information entered into the Subscription Form. By signing and submitting a Subscription Form, the subscribers confirm and warrant that they have read this Prospectus and are eligible to subscribe for New Shares under the terms set forth herein.
There is no minimum subscription amount for which subscriptions in the Rights Offering must be made. Over- subscription (i.e. subscription for more New Shares than the number of Subscription Rights held by the subscriber entitles the subscriber to be allocated) is permitted. However, there can be no assurance that New Shares will be allocated for such subscriptions. See section 6.2.8 below for further details on applicable allocation principles.
Multiple subscriptions (i.e., subscriptions on more than one Subscription Form) are allowed. Please note, however, that two separate Subscription Forms submitted by the same subscriber with the same number of New Shares subscribed for on both Subscription Forms will only be counted once unless otherwise explicitly stated in one of the Subscription Forms. In the case of multiple subscriptions through the VPS online subscription system or subscriptions made both on a Subscription Form and through the VPS online subscription system, all subscriptions will be counted.
6.2.7 Financial Intermediaries All persons or entities holding Shares or Subscription Rights through financial intermediaries (i.e., brokers, custodians and nominees) should read this section 6.2.7. All questions concerning the timeliness, validity and form of instructions to a financial intermediary in relation to the exercise, sale or purchase of Subscription Rights should be determined by the financial intermediary in accordance with its usual customer relations procedure or as it otherwise notifies each beneficial shareholder.
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The Company is not liable for any action or failure to act by a financial intermediary through which Shares or Subscription Rights are held.
6.2.7.1. Subscription Rights If an Eligible Shareholder holds Shares registered through a financial intermediary on the Record Date, the financial intermediary will customarily give the Eligible Shareholder details of the aggregate number of Subscription Rights to which it will be entitled. The relevant financial intermediary will customarily supply each Eligible Shareholder with this information in accordance with its usual customer relations procedures. Eligible Shareholders holding Shares through a financial intermediary should contact the financial intermediary if they have received no information with respect to the Rights Offering.
Subject to applicable law, Eligible Shareholders holding Shares through a financial intermediary may instruct the financial intermediary to sell some or all of their Subscription Rights, or to purchase additional Subscription Rights on their behalf. Please refer to section 16 “Selling and transfer restrictions” for a description of certain restrictions and prohibitions applicable to the sale and purchase of Subscription Rights in certain jurisdictions outside Norway.
Eligible Shareholders who hold their Shares through a financial intermediary and who are Ineligible Shareholders will not be entitled to exercise their Subscription Rights but may, subject to applicable law, instruct their financial intermediaries to sell their Subscription Rights transferred to the financial intermediary. Neither the Company, nor the Manager will sell any Subscription Rights transferred to financial intermediaries.
6.2.7.2. Subscription Period and Period for Trading in Subscription Rights The time by which notification of exercise instructions for subscription of New Shares must validly be given to a financial intermediary may be earlier than the expiry of the Subscription Period. The same applies for instructions pertaining to trading in Subscription Rights and the last day of trading in such rights (which accordingly will be a deadline earlier than the end of trading of Subscription Rights on Oslo Axess on 2 June 2015 at 16:30 CET). Such deadlines will depend on the financial intermediary. Eligible Shareholders who hold their Shares through a financial intermediary should contact their financial intermediary if they are in any doubt with respect to deadlines.
6.2.7.3. Subscription Any Eligible Shareholder who holds its Subscription Rights through a financial intermediary and wishes to exercise its Subscription Rights, should instruct its financial intermediary in accordance with the instructions received from such financial intermediary. The financial intermediary will be responsible for collecting exercise instructions from the Eligible Shareholders and for informing the Manager of their exercise instructions.
A person or entity who has acquired Subscription Rights that are held through a financial intermediary should contact the relevant financial intermediary for instructions on how to exercise the Subscription Rights.
Please refer to section 16 “Selling and transfer restrictions” for a description of certain restrictions and prohibitions applicable to the exercise of Subscription Rights in certain jurisdictions outside Norway.
6.2.7.4. Method of Payment Any Eligible Shareholder who holds its Subscription Rights through a financial intermediary should pay the Subscription Price for the New Shares that are allocated to it in accordance with the instructions received from the financial intermediary. The financial intermediary must pay the Subscription Price in accordance with the instructions in this Prospectus. Payment by the financial intermediary for the New Shares must be made to Carnegie AS in accordance with section 6.2.9 “Payment for the New Shares” no later than the Payment Date. Accordingly, financial intermediaries may require payment to be provided to them prior to the Payment Date.
6.2.8 Mechanism of allocation Allocation of the New Shares will take place after the expiry of the Subscription Period on or about 5 June 2015. In accordance with the resolution passed by the EGM of the Company on 16 April 2015, the allocation of the New Shares will be made according to the following criteria:
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(i) Allocation will be made to subscribers on the basis of granted and acquired subscription rights which have been validly exercised during the subscription period. Each subscription right will give the right to subscribe for and be allocated one (1) new share.
(ii) If not all subscription rights are validly exercised in the subscription period, subscribers having exercised their subscription rights and who have over-subscribed will have the right to be allocated remaining new shares on a pro rata basis based on the number of subscription rights exercised by the subscriber. In the event that pro rata allocation is not possible, the Company will determine the allocation by lot drawing. The shares in the Employee Offering that are not subscribed for by eligible subscribers in the Employee Offering may be allocated to over-subscribers in the Rights Offering.
(iii) Any remaining new shares not allocated pursuant to the criteria in items i. and ii. above will be subscribed by and allocated to the underwriters to the extent the underwriters have not fulfilled their underwriting obligations through subscription for shares in the subscription period, based on and in accordance with their respective underwriting obligations.
The Board reserves the right to round off, reject or reduce any subscription for New Shares not covered by Subscription Rights. The Company will not allocate fractional New Shares.
Allocation of fewer New Shares than subscribed for by a Subscriber will not impact the Subscriber’s obligation to pay for the number of New Shares allocated.
The result of the Rights Offering is expected to be published on or about 5 June 2015 in the form of a stock exchange notification from the Company through Oslo Børs’ information system. Notifications of allocated New Shares and the corresponding subscription amount to be paid by each Subscriber are expected to be distributed in a letter by the Manager on or about 5 June 2015. Subscribers having access to investor services through their VPS account manager will be able to check the number of New Shares allocated to them from 14:00 CET on 5 June 2015. Subscribers who do not have access to investor services through their VPS account manager may contact the Manager, from 14:00 CET on 5 June 2015 to obtain information about the number of New Shares allocated to them.
6.2.9 Payment for the New Shares The payment for New Shares allocated to a subscriber falls due on 9 June 2015 (the “Payment Date”). Payment must be made in accordance with the requirements set out below.
6.2.9.1. Subscribers who have a Norwegian bank account Subscribers who have a Norwegian bank account must, and will by signing the Subscription Form, provide the Manager with a one-time irrevocable authorisation to debit a specified bank account with a Norwegian bank for the amount payable for the New Shares which are allocated to the subscriber.
The specified bank account is expected to be debited on the Payment Date. However, there must be sufficient funds in the specified bank account from and including 8 June 2015. The Manager is only authorised to debit such account once, but reserves the right to make up to three debit attempts, and the authorisation will be valid for up to seven working days after the Payment Date.
The subscriber furthermore authorises the Manager to obtain confirmation from the subscriber’s bank that the subscriber has the right to dispose over the specified account and that there are sufficient funds in the account to cover the payment.
If there are insufficient funds in a subscriber’s bank account or if it for other reasons is impossible to debit such bank account when a debit attempt is made pursuant to the authorisation from the subscriber, the subscriber’s obligation to pay for the New Shares will be deemed overdue. If payment for the allotted New Shares is not received when due, the New Shares will not be delivered to the Subscriber, and the Board reserves the right, at the risk and cost of the Subscriber, to cancel the subscription in respect of the New Shares for which payment has not been made, or to sell or otherwise dispose of the New Shares, and hold the Subscriber liable for any loss, cost or expense suffered or incurred in connection therewith. The original Subscriber remains liable for payment
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of the entire amount due, including interest, costs, charges and expenses accrued, and the Manager may enforce payment of any such amount outstanding.
Payment by direct debiting is a service that banks in Norway provide in cooperation. In the relationship between the subscriber and the subscriber’s bank, the standard terms and conditions for “Payment by Direct Debiting – Securities Trading”, which are set out on page 2 of the Subscription Form, will apply, provided, however, that subscribers who subscribe for an amount exceeding NOK 5 million by signing the Subscription Form provide Carnegie AS with a one-time irrevocable authorisation to directly debit the specified bank account for the entire subscription amount.
6.2.9.2. Subscribers who do not have a Norwegian bank account Subscribers who do not have a Norwegian bank account must ensure that payment with cleared funds for the New Shares allocated to them is made on 9 June 2015 at 10:00 CET at the latest.
Prior to any such payment being made, the subscriber must contact the Manager for further details and instructions.
6.2.9.3. Overdue payments Overdue and late payments will be charged with interest at the applicable rate from time to time under the Norwegian Act on Interest on Overdue Payment of 17 December 1976 No. 100, currently 9.25% per annum. If a subscriber fails to comply with the terms of payment, the New Shares will, subject to the restrictions in the Public Limited Companies Act and at the discretion of the Manager, not be delivered to the subscriber.
6.3 THE EMPLOYEE OFFERING
6.3.1 Overview The Employee Offering comprises an offering of 1,500,000 Employee Offer Shares at NOK 10 per share, raising gross proceeds of NOK 15,000,000.
The Employee Offering is split into the following sub-tranches; - 500,000 shares are offered to the Company’s full-time employees as of the date of the transferal of the Acquired Interests; - 500,000 shares are offered to the Company’s Executive Management; and - 500,000 shares are offered to the Company’s Board of Directors
The minimum subscription in each sub-tranche is 500 shares.
6.3.2 Subscription period The subscription period in the Employee Offering is identical to the Subscription Period in the Rights Offering, as further described in section 6.2.2. Thus, the subscription period will commence 09:00 CET on 26 May 2015 and expire at 16:30 CET on 4 June 2015. The subscription period may be extended by the Board, but may not in any event be later than 25 June 2015. An extension, if any, will be announced by a press release through www.newsweb.no and on Weifa’s webpage www.weifa.no. In case of extension, all relevant deadlines will be extended accordingly. The subscription period may not be closed earlier than 16:30 CET on 4 June 2015.
6.3.3 Subscription price The Subscription Price for one (1) Employee Offer Share is NOK 10, i.e. the same subscription price as in the Rights Offering, cf. section 6.2.3. The subscribers will not incur any costs related to the subscription for, or allotment of, the Employee Offer Shares.
6.3.4 Subscription procedure Subscription for Employee Offer Shares must be made by submitting a correctly completed subscription form, attached as Appendix E hereto to the Manager during the Subscription Period. The Prospectus is available at www.weifa.no and www.carnegie.no, and at the offices of the Company (Østensjøveien 27, 0661 Oslo, Norway) and the Manager (Grundingen 2, Aker Brygge, 0106 Oslo, Norway).
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Correctly completed subscription forms must be received by the Manager no later than 16:30 CET on 4 June 2015 at the following address, fax number or email address:
Carnegie AS Grundingen 2, Aker Brygge PO Box 684 Sentrum 0106 Oslo, Norway Fax: +47 22 00 99 60 Tel: +47 22 00 93 60 E-mail: [email protected]
Neither the Company nor the Manager may be held responsible for postal delays, unavailable fax lines or servers or other logistical or technical problems that may result in subscriptions not being received in time or at all by the Manager. Subscription forms received after the end of the Subscription Period and/or incomplete or incorrect subscription forms and any subscription that may be unlawful may be disregarded at the sole discretion of the Company and/or the Manager without notice to the subscriber.
Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified by the subscriber after having been received by the Manager. The subscriber is responsible for the correctness of the information filled into the subscription form.
6.3.5 Allocation Allocation of the Employee Offer Shares shall be made by the Board of Directors, and will take place on or about 5 June 2015.
The following allocation criteria shall apply for the various sub-tranches:
Employees The Company’s full-time employees as of the date of the transferal of the Acquired Interest (i.e. on or about 1 June 2015) will receive full allocation of subscribed shares up to a maximum of 3,400 shares per subscriber. In the event that total subscriptions exceed the 500,000 shares offered to the Company’s employees and not all employees utilize their right to subscribe for new shares, those who have subscribed for more than the guaranteed allocation of 3,400 shares will receive the same number of shares beyond the guaranteed allocation. In the event that the employee sub-tranche is not fully subscribed, the remaining shares may be allocated to members of the Executive Management and Board who have not received full allocation in their respective sub- tranches.
Executive Management Members of the Company’s Executive Management will receive full allocation of subscribed shares up to a maximum of 83,300 shares per subscriber. In the event that total subscriptions exceed the 500,000 shares offered to the Company’s Executive Management and not all members of the Executive Management utilize their right to subscribe for new shares, those who have subscribed for more than the guaranteed allocation of 83,300 shares will receive the same number of shares beyond the guaranteed allocation.
In the event that the Executive Management sub-tranche is not fully subscribed, the remaining shares may be allocated to employees and Board members who have not received full allocation in their respective sub- tranches.
Board of Directors The Company’s Board members will receive full allocation of subscribed shares up to a maximum of 100,000 shares per subscriber. In the event that total subscriptions exceed the 500,000 shares offered to the Company’s Board members and not all Board members utilize their right to subscribe for new shares, those who have subscribed for more than the guaranteed allocation of 100,000 shares will receive the same number of shares beyond the guaranteed allocation.
In the event that the sub-tranche offered to the Board is not fully subscribed, the remaining shares may be allocated to employees and members of the Executive Management who have not received full allocation in their respective sub-tranches.
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Any Employee Offer shares not allocated based on the allocation principles set out above, will be allocated to those who have over-subscribed in the Rights Offering, pro rata based on their number of subscription rights. Any Employee Offer Shares not allocated following allocation to potential over-subscribers in the Rights Offering will be allocated to the Underwriters.
The subscribers in the Employee Offering will receive an e-mail form the Manager regarding the number of Employee Offer Shares allotted to the subscriber and payment instructions on or about 5 June 2015. The subscribers in the Employee Offering may also contact the Manager, from 14:00 CET on 5 June 2015, to obtain information about the number of Employee Offer Shares allocated to them.
6.3.6 Payment The payment for Employee Offer Shares allocated to a subscriber falls due on 9 June 2015. The subscribers in the Employee Offering must ensure that payment with cleared funds for the Employee Offer Shares allocated to them is made by 10:00 CET on 9 June 2015.
If payment is not received by the Manager by 10:00 CET on 9 June 2015 the subscriber’s obligation to pay for the Employee Offer Shares will be deemed overdue.
Overdue and late payments will be charged with interest at the applicable rate from time to time under the Norwegian Act on Interest on Overdue Payment of 17 December 1976 No. 100, currently 9.25% per annum. If a subscriber fails to comply with the terms of payment, the Employee Offer Shares will, subject to the restrictions in the Public Limited Companies Act and at the discretion of the Manager, not be delivered to the subscriber.
6.4 VPS REGISTRATION OF THE OFFER SHARES The Offer Shares will be registered in book-entry form with VPS under ISIN NO 0010734122.
The Offer Shares will not be delivered to the Subscribers' VPS account before they are fully paid, the share capital increase relating to the issuance of the Offer Shares has been registered with the Norwegian Register for Business Enterprises and the Offer Shares have been registered in the VPS.
6.5 DELIVERY AND LISTING OF THE OFFER SHARES All Subscribers subscribing for Offer Shares must have a valid VPS account (established or maintained by an investment bank or Norwegian bank that is entitled to operate VPS accounts) to receive Offer Shares.
It is expected that the share capital increase relating to the issue of the Offer Shares in the Offering will be registered in the Norwegian Register of Business Enterprises on or about 9 June 2015 and that the Offer Shares will be delivered to the Subscribers’ VPS accounts on or about 10 June 2015 (subject to payment being received from the Subscribers). The final deadline for registration of the share capital increase pertaining to the Offering in the Norwegian Register of Business Enterprises, and hence for the subsequent delivery of the Offer Shares, is, pursuant to the Norwegian Public Limited Companies Act, three months from the expiry of the Subscription Period (i.e., 4 September 2015).
Subscribers should be aware that delivery of the Offer Shares will only be made if the Subscriber pays for the Offer Shares.
All of the Offer Shares will be object for an application for admission to trading on Oslo Axess. The Shares will not be sought or admitted to trading on any other regulated market than Oslo Axess. For further information regarding the expected conditions for listing of the Company on Oslo Axess see section 5.4. Assuming that the conditions for Listing are satisfied through the Offering, the first day of trading of the Company’s Shares on Oslo Axess is expected on or about 10 June 2015. The Shares will trade under the ticker code “VISTIN”.
6.6 THE RIGHTS CONFERRED BY THE OFFER SHARES The Offer Shares will in all respects be equal to the existing Shares of the Company once the Offer Shares have been issued and registered with the Norwegian Register of Business Enterprises, expected on or about 9 June 2015, and hereunder have the right to receive dividends, if any.
For a description of rights attached to the Shares in the Company, see section 11.3.
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6.7 SHARE CAPITAL FOLLOWING THE OFFERING The number of Offer Shares to be issued is 17,054,935, all with a nominal value of NOK 1.00 per Share. As further described in section 5, the one (1) million Shares currently owned by Weifa will be redeemed prior to the Listing. Thus, the Company’s share capital following the Offering and Listing will be NOK 17,054,935, consisting of 17,054,935 Shares, each with a par value of NOK 1.00.
6.8 PUBLICATION OF INFORMATION RELATING TO THE OFFERING In addition to press releases at the Company’s website, the Company will use Oslo Børs’ information system to publish information in respect of the Offering.
General information on the result of the Offering is expected to be published on or about 5 June 2015 in the form of a release through Oslo Børs’ information system and the Company’s website, www.vistin.com. All subscribers being allocated Offer Shares will receive a letter from the VPS confirming the number of Offer Shares transferred to the subscribers’ VPS account.
6.9 EXPENSES AND NET PROCEEDS The Company will bear the fees and expenses related to the Offering and Listing, which are estimated to amount to approximately NOK 9 million. Thus, net proceeds from the Offering will be approximately NOK 161.5 million. No expenses or taxes will be charged by the Company or the Manager to the subscribers in the Offering.
6.10 INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE OFFERING The following members of the Board of Directors are part of the Underwriting Syndicate, cf. section 6.1.3:
- Strata Marine & Offshore AS, Ferncliff Listed DAI and AS Ferncliff, companies controlled by the Board member Øystein Stray Spetalen, have guaranteed NOK 25 million of the Offering. - Ole Enger has guaranteed NOK 5 million of the Offering. - Cipriano AS, a company controlled by Einar J. Greve who will be appointed as a Board member following the Listing, has guaranteed NOK 5 million of the Offering.
The above mentioned Board members will thus be allocated the remaining Offer Shares not subscribed for in the event that the Offering is not fully subscribed, and as such have an interest in the Offering.
Further, in connection with the Rights Offering, the Underwriters, Board members and members of the Executive Management may receive Subscription Rights (if they are Eligible Shareholders) and may exercise their right to take up such Subscription Rights and subscribe for New Shares, and, in that capacity, may retain, purchase or sell Subscription Rights or New Shares and any other securities of the Company or other investments for their own account and may offer or sell such securities (or other investments) other than in connection with the Offering. Neither the Manager nor the Underwriters intend to disclose the extent of any such investments or transactions other than in accordance with any legal or regulatory obligation to do so.
Except from above, the Company is not aware of any other material interests to the Offering involving any Board members or Executive Management of the Company.
The Manager and its affiliates may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may receive customary fees and commissions. The Manager will receive a fixed fee in relation to the Offering.
Other than what is set out above, the Company is not aware of any interest, including conflicting ones, of any natural or legal persons involved in the Offering.
6.11 MANAGER AND LEGAL ADVISERS The Manager for the Offering and Listing is Carnegie AS, Grundingen 2, PO Box 684 Sentrum, 0106 Oslo, Norway. Advokatfirmaet Schjødt AS has acted as legal adviser (as to Norwegian law) in connection with the Offering and Listing.
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6.12 JURISDICTION This Prospectus is subject to Norwegian law, unless otherwise indicated herein. Any dispute arising in respect of this Prospectus is subject to the exclusive jurisdiction of Oslo City Court.
The Company and its shares are pursuant to the Norwegian Public Limited Liability Companies Act.
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7. PRESENTATION OF VISTIN PHARMA
7.1 HISTORICAL BACKGROUND AND COMPANY DEVELOPMENT Vistin Pharma ASA was incorporated on 6 March 2015 for the purpose of being the holding company for Vistin Pharma AS, which will acquire the Acquired Interests currently owned by Weifa AS. The Acquired Interests to be acquired from Weifa AS consists of one business segment with three business areas; (i) Metformin, (ii) Opioids and (iii) CMO tablet manufacturing. The Company is headquartered in Oslo, while the production facilities that will be transferred as a part of the Acquired Interests are located in Kragerø.
Up until the completion of the Sale, the Acquired Interests have been owned by Weifa AS, which was founded in 1940 as Weiders Farmasøytiske A/S by Olaf Weider. Its purpose was the “fabrication and trade of pharmacy goods, nutritional preparations and other articles as well as agency activities.” Weifa AS opened its first production facility in Kragerø in 1952 and moved the remaining manufacturing there in 1963. Weifa AS operated as a family owned company until it was acquired by Aqualis ASA (later renamed Weifa ASA) in August 2014 and has since then been a subsidiary of Weifa ASA. Over its 75 year history Weifa AS has grown to become a significant player in the Norwegian pharmaceutical industry with several branded products, such as Paracet, Ibux and Pyrisept.
Weifa AS started manufacturing of opioid codeine phosphate (API used in strong pain killers) based on poppy seeds in the 1950s, while pholcodine was added to the opioid product portfolio in the 1980’s. These products, including codeine tablets, will make up Vistin Pharma’s opioid offering following the Sale. The production of metformin was introduced in 1969, and has since then been developed to include the supply of metformin HCl (hydrochloride), metformin DC (direct compressible) and metformin tablets. These products will make up Vistin Pharma’s metformin offering following the Sale. Tablet manufacturing has been a core competence and business of Weifa AS since the early days, including the manufacturing of Paralgin Forte, Paracet and Ibux, as well as other brands for recognised international pharmaceutical companies. However, it has not been a separate business area within Weifa AS. The CMO tablet manufacturing business area will therefore be formally established upon completion of the Sale and Vistin Pharma will further develop this business area following the listing of the Company.
The following table summarizes the important events in the history and development of the Acquired Interests and Vistin Pharma.
Year Key milestones & events 1940 ...... Weiders...... Farmasøytiske...... A/S founded by Olaf...... Weider ...... 1950 ...... Production...... start of codeine...... API ...... 1952 ...... First...... production facility...... opened in Kragerø...... (Gruveveien) ...... 1960 ...... Production...... start of Paralgin...... Forte ...... 1969 ...... Launch...... of metformin...... API ...... 1977 ...... Production...... start of Paracet...... 1986 ...... Production...... start of Ibux...... 2002 ...... New...... FDA-approved ...... metformin production...... facility (Fikkjebakke)...... opened in Kragerø 2014 ...... Codeine...... tablets added...... to the product portfolio...... 2014 ...... Weifa...... AS acquired by...... Aqualis ASA ...... 2015 ...... Vistin...... Pharma established......
7.2 BUSINESS DESCRIPTION Vistin Pharma will be a producer and supplier of active pharmaceutical ingredients (API) and finished dose formulation (FDF) tablets used in medications for diabetes, pain relief and cough medicine. The Company will sell its products to leading pharmaceutical companies worldwide. The Company will have one segment with three business areas; Metformin, Opioids and CMO tablet manufacturing.
The Metformin business, which is the largest of the three business areas in terms of revenue, supplies metformin products in three different forms; bulk powder, granulated pre-tablet form (DC) and finished dose tablets. These products are sold to pharmaceutical companies worldwide, and are used in the treatment of type 2 diabetes. The Opioids business, which is the second largest in terms of revenue, produces two types of opioid API products;
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codeine phosphate (“codeine”) and pholcodine. Both products are used as an API in cough medicine. In addition, codeine is used as an API in analgesics (pain killers). The Opioids business also produces finished dose codeine tablets. The CMO tablet manufacturing business will produce FDF tablets based on CMO agreements with external parties. The Company has entered into a five year agreement with Weifa AS for the production of Weifa AS’ key pain relief brands, which will be the only contract allocated to the CMO business area at the time of the Sale.
The Acquired Interests also have other CMO agreements, but these will be allocated to either the Metformin or Opioid business areas, depending upon the API that is used in the tablet that is supplied. The additional CMO agreements include an agreement with a leading UK pharmaceutical company for the supply of strong pain killers to the UK market, as well as certain other agreements with pharmaceutical companies in Europe and South East Asia. These contracts are allocated to either the Metformin- or the Opioid business area because they include the full value chain that will be offered by Vistin Pharma AS (API and tablet production), while the CMO Agreement with Weifa AS only includes tablet manufacturing, as the API is purchased from a third party. The Company will seek to extend its customer portfolio within contract manufacturing going forward and will emphasize contract manufacturing of products based on the APIs that are already produced by the Acquired Interests. The Company will utilise the existing organisation within the Metformin and Opioids business areas in extending the customer portfolio.
For a more detailed description of each business area see section 7.2.1, 7.2.2 and 7.2.3 below.
7.2.1 Metformin The Metformin business area of the Acquired Interests supplies metformin from the dedicated Fikkjebakke plant in Kragerø, Norway. Based on customer feedback from the past 10 years, the business area supplies one of the purest and most free-flowing qualities of metformin available in the market. The metformin is sold to more than 30 reputable international pharmaceutical companies that use it to make finished products, primarily in tablet form. According to Executive Management estimates, Vistin Pharma AS will have the fifth largest metformin production capacity in the world, and will hold eight percent of the global manufacturing capacity. The production process is currently certified by all significant international regulatory bodies and the Company will be the only European manufacturer to be certified by the US Food and Drug Administration (FDA).
Products Vistin Pharma will supply three different forms of metformin to meet different customer requirements:
- Metformin hydrochloride (“Metformin HCl”) - (bulk powder) - Direct compressible metformin, a granulated pre-tablet form (“Metformin DC”) - (granulated) - Tablets (250 mg, 500 mg, 850 mg and 1000 mg) – (finished dose tablets)
The different forms are extracted at different steps in the manufacturing process, with Metformin HCl being the least processed and finished dose tablets being the most (see figure below). The more processed products are sold at a higher price but are typically associated with a higher production cost, as they are subject to a higher level of customer customization. The majority of the Acquired Interests’ metformin sale was in the fiscal year ended December 31, 2014 in the form of Metformin HCl, followed by Metformin DC and finished dose tablets.
Figure: Metformin synthesis Input factors Step 1 Step 2 Step 3
DCDA(1)
DMA(2) Metformin HCI Metformin DC Metformin tablets
Oil, water, etc.
(1) Dicyandiamide; (2) Dimetylamin hydrochloride Note: The synthesis uses mineral oil
Customers The metformin is mainly sold to pharmaceutical companies that use the metformin to produce tablets. This include plain generic and branded generic metformin tablets, as well as branded and patented fixed-dose tablets
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that combine metformin with more potent diabetes APIs. Plain generic and branded tablets are the most common products, but fixed dose tablets that are combined with other diabetes APIs are becoming a major growth area.
The Metformin business area positions the metformin products and services as “high value” in a competitive market with many low-cost Asian competitors. The “high value” customers consist of pharmaceutical companies worldwide that produce patented and branded metformin products. These companies require responsiveness and consistent quality, and are therefore willing to pay a premium price. The Metformin business area, which earlier was dependent to a large extent on sales in the lower value spot-market, is now targeting the higher end market, based on strong relationships with the pharmaceutical companies and long-term product supply agreements. The main focus is on signing long-term contracts with Western and Japanese customers that demand reliable supply and consistent high quality APIs. The shift towards the high-end market is expected to result in a higher average unit price and stronger margins, as well as an increase in sales visibility as revenues are contracted several months ahead of product delivery. The effect of the strategic shift is already evident, as contracts for ~95 percent of the Acquired Interests metformin production capacity in 2015 was secured by the end of the first quarter of 2015.
The largest current markets for the Metformin business area are Europe and Africa. Other key markets include the “high value” Japanese market, where the business area registered a Drug Master File (DMF) in 2014, and made its first sale during the first quarter of 2015, as well as Latin-America. In addition, the Metformin business area is discussing potential supply agreements for metformin API with several pharmaceutical companies in the US. According to the Company, the Japanese and US markets have the potential of becoming strong growth markets for the Metformin business area going forward.
Vistin Pharma will be one of 25 companies that are approved by the European Directorate for the Quality of Medicines and Healthcare, and one of only two certified suppliers of metformin API in Europe (the other being Farmhispania in Spain). This provides a geographical advantage relative to many of its competitors, and the Company claims that it will be able to reach any European market within 24 hours. In addition, the Acquired Interests’ production facilities are approved by the US Food and Drug Administration (FDA), and the Company will be the only European operator with a Generic Drug User Fee Amendment (GDUFA) listed metformin Drug Master File (DMF) in the US (one of seven foreign manufacturers), giving the Company access to and credibility in the US metformin market.
Suppliers There are two main raw materials for the metformin synthesis, dicyandiamide (DCDA) and dimetylamin hydrochloride (DMA). In addition, the process requires oil and water. The raw materials are sourced from several international suppliers in order to secure sufficient supplies of the right quality at a competitive price. The Acquired Interests have through efficient sourcing been able to reduce the direct cost and recently secured two long-term supply contracts. The contracts are typically long-term with prices being renegotiated on a quarterly basis. The Company expects a stable price picture going forward.
Manufacturing The Acquired Interests’ metformin in HCl and DC form is produced at the dedicated Fikkjebakke facility, in Kragerø, Norway. The purpose-built plant was opened in 2002. The facility offers state-of-the-art technology and a high level of automation. According to the Company, the strictly controlled and modern production process provides among the purest and best free-flowing qualities in the market. This has been proven through customer feedback from more than 10 years. The high quality is assured through an optimised production process that includes an “in-line” filtering process that removes product contaminants, as well as the use of clean chemical raw materials in the production process. The metformin supplied by the Acquired Interests has been found to have a lower tendency to lump and to remain free flowing for a longer time relative to metformin produced by its competitors. This prevents the metformin from hardening under storage, which reduces the need for re-pulverisation before it is further processed. This characteristic is acknowledged and valued by customers. The plant currently has an annual production capacity of 3,100 MT of metformin HCl and 800 – 1,000 MT of metformin DC and is at the date of this Prospectus run at full capacity. Metformin in tablet form is manufactured at the multi-purpose tablet manufacturing facility, Gruveveien, in Kragerø Norway. See section 7.2.2 and 7.2.3 for a further description of the Gruveveien plant.
The metformin HCl capacity can be increased to 3,500 MT through de-bottlenecking and the installation of new packaging lines. This will only require minor investments and will, according to the Company, be sufficient to meet the expected near-term increase in demand. For the longer term, the production capacity can be increased
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by ~3,000 MT by adding another production line within the same production facility. The additional capacity can be added at an estimated cost of NOK 40-50 million and with a ~18 month lead time. The investment decision for the additional production line will be made when future demand becomes more visible. This is expected after the effect of the current marketing efforts in Japan and the US becomes evident. The production process was re-approved/audited by the FDA in July 2014 and is certified according to Good Manufacturing Practice (GMP).
7.2.2 Opioids The Opioid business area serves more than 40 pharmaceutical companies worldwide with codeine and pholcodine API produced at the Gruveveien facility in Kragerø. According to its management, the Company will be one of few independent suppliers of opioids with in-house API and tablet production capabilities, making it an attractive collaboration partner for companies that are vertically integrated further back in the opioid supply chain. The APIs are used as ingredients in strong painkillers and cough syrup. In addition, the Company will be a supplier of FDF codeine tablets. The Opioid business area holds a strong position in the opioids industry, built on proven high-quality products, reliable supply and the ability to handle controlled drugs safely and efficiently. The Acquired Interests have operated within the industry since 1950, and has developed a relationship of trust with both regulators and the police, enabling rapid execution of new orders.
Products The Opioid business supplies the following three products; - Codeine API - Pholcodine API - Codeine tablets (“FDF”)
For the fiscal year ended December 31, 2014 codeine API generated the most revenue of the Acquired Interests’ opioid offering, followed by pholcodine and codeine tablets.
The codeine and pholcodine APIs are extracted and synthesized from morphine rich concentrate of poppy straw (M-CPS), while codeine also can be extracted and synthesized from codeine rich concentrate of poppy straw (C- CPS). M-CPS is currently the main raw material obtained from the opium plant for codeine production, while C- CPS is a relatively new concentrate from genetically modified opium plants. Using C-CPS eliminates several steps in the extraction and synthesis of codeine and Vistin Pharma is considering increasing the use of C-CPS when synthesizing codeine. This could positively impact the Company’s production process following the Sale.
Figure: Opioid value chain
Synthesis Codeine
M-CPS Synthesis Morphine
Pholcodine Synthesis
Synthesis C-CPS Codeine
Vistin Pharma will, according to the Company, become the largest independent API supplier with in-house FDF capabilities. This makes it an attractive collaborator for producers of CPS. In addition, it enables Vistin Pharma to exploit the opportunities in emerging codeine markets. As further explained in section 8.2, export and import of opioid API is heavily regulated, while FDFs in general can be more readily exported and imported.
Customers The Opioid business areas’ customers are international pharmaceutical companies. Europe will be the Company’s main market for codeine, and according to the Company’s Executive Management, it will be the
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market leader for codeine APIs in Germany based on sales revenue, and hold a strong position in the UK, both for APIs and tablets. The Opioid business also sells codeine API to Asia, Africa and South America. The US is a closed market in the sense that only US companies are allowed to extract raw materials and manufacture FDFs. According to the Company and based on volume data provided by the INCB, the Opioid business holds a global market share of 6-7% and 15-20% for codeine and pholcodine, respectively.
In 2014, the Acquired Interests signed a five-year supply contract for FDF tablets with a major supplier of strong pain killers for the UK market. This demonstrates the Acquired Interests ability to move up the value chain and strengthen its position as a major opioids supplier offering products ranging from APIs to finished dose tablets.
Suppliers As further explained in section 8.2, the raw material for all natural and semi-synthetic opioids is raw opium. The market is constrained due to the narcotic nature of the products and the according regulatory requirements. This has resulted in a limited number of suppliers who have kept the price of key raw materials at a level which leaves the refinement step with low margins. In addition, the limited number of independent suppliers has prevented the Acquired Interests from expanding into new classes of opioids. However, the Acquired Interests have focused on establishing long term supply agreements with sustainable volumes and secured contracts at competitive prices for delivery of raw materials for the full production capacity in 2015 in the fourth quarter of 2014.
Manufacturing The opioid products are produced at the Gruveveien manufacturing facility in Kragerø. The production facility consists of a chemical production line that manufactures codeine and pholcodine APIs for the Opioids business area, and a multi-purpose tablet facility that produces FDF tablets and high volume tablets for all of the Acquired Interests’ business areas. The initial facility was completed in 1950. Since then a second building has been added and the facilities have been upgraded several times. The chemical API unit has a total annual production capacity of 30 MT, divided between ~27 MT of codeine and ~3 MT of pholcodine. According to Vistin Pharma’s Executive Management this represents ~7% and ~16% of global manufacturing capacity of codeine and pholcodine, respectively. The total production capacity of the chemical unit can be increased by 5 MT through fine tuning of the existing production process and de-bottlenecking. According to Executive Management estimates, the additional capacity will require an investment of NOK 6-8 million.
The multi-purpose tablet manufacturing facility has a total capacity of ~650 million tablets a year. The facility is GMP and GDP certified.
7.2.3 CMO Weifa’s key brands within the consumer health pain segment, i.e. Paracet, Ibux and Paralgin Forte, are produced at the tablet manufacturing facility at Gruveveien, which will be transferred to the Company in connection with the Sale. Tablet manufacturing, which was formerly an integrated part of the Consumer Health segment of Weifa AS, will be established as a separate business area (CMO) within the Company following the completion of the Sale, and will produce finished products through CMO agreements with external parties. The Company has entered into a five year CMO Agreement with Weifa AS and, at the time of the Sale, this will be the only CMO agreement allocated to the business area. While the Company will establish a defined strategy for its CMO division in the months following its listing on Oslo Axess, the Company generally expects to target the markets in which the Acquired Interests already have a presence.
The general CMO industry is competitive and requires an efficient operational model in order to deliver satisfying margins. The competition within the production of opioid tablets is, however, subject to less competition, as it requires a certificate for handling of narcotic substances. In addition, Vistin Pharma will be one of very few independent CMO-suppliers that can provide an end-to-end product offering ranging from APIs to tablets.
On 17 April 2015, Vistin Pharma AS entered into a five year exclusive contract manufacturing agreement (the “CMO Agreement”) with Weifa AS for the production of all tablets currently produced internally by Weifa AS for the sale through its Consumer Health segment (i.e. Ibux, Paracet, Paralgin Forte, Metformin) and certain products to third parties in which Weifa AS has the exclusive right to sell within certain geographical areas (i.e. metformin, strong pain killers). The contract includes an option to extend the agreement for another two years. Neither party can fully or partially terminate the contract within the initial five year period, unless the other party commits a material breach, as defined in the agreement, or if certain defined events occur. The CMO
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Agreement with Weifa AS will be the only contract allocated to the CMO tablet manufacturing business area following the Sale.
The CMO Agreement was negotiated between the two parties and an external lawyer and is considered to be on arms-length terms. It should, however, be noted that the contract was based on an “open-book” principle, as Weifa AS had insight into the production costs at the time of entering into the contract. In addition, it would have taken Weifa AS 12 to 18 months to establish a new supplier relationship with an external party due to strict testing requirements before a new supplier relationship is established and fully functional. Weifa AS therefore did not have the option to change to another supplier at the time of entering into the contract. The contract is still considered to be on competitive market based terms.
Under the contract, Vistin Pharma shall, to the extent it is able to deliver on Weifa AS’ orders, be the exclusive supplier of said tablets to Weifa AS within the European Economic Area (respectively, the “Territory”). In return, Weifa AS shall order its entire requirement of said products to be sold within the Territory from Vistin Pharma. Considering that Weifa is a Norwegian brand with sales in Norway and that sales outside the Territory is highly unlikely, the agreement is, for all practical purposes, fully and mutually exclusive.
Pursuant to the CMO Agreement, Vistin Pharma shall not produce any products based on the APIs covered by the CMO Agreement to customers for sale in the Nordic countries, while for the APIs used in Paralgin Forte, this restriction extends to the Territory. In addition, Vistin Pharma shall not use any of Weifa’s know-how to supply products to any third party.
The price of the products that will be supplied by Vistin Pharma AS to Weifa AS is based on the estimated fully loaded production costs (including allocation of Vistin Pharma’s general overhead and administration expenses), excluding depreciation, at the time of entering into the contract, plus a mark-up of 8%. Under the CMO Agreement, Vistin Pharma carries all risks related to cost overruns, with the exception of cost overruns directly caused by certain predetermined input factors (e.g. raw materials) in which Weifa AS takes all risk. Any cost savings relative to the fixed cost level set at the time of entering into the contract shall be equally split between Vistin Pharma and Weifa AS.
The price setting methodology used in the CMO Agreement with Weifa AS is not materially different from the other CMO agreements that will be transferred to the Company following the Sale, as the quoted price typically is based on an estimated production cost plus a margin. However, the agreements typically do not explicitly state the cost base and margin. This was included in the CMO Agreement because it was entered into on an “open book” basis, as Weifa AS had knowledge of the actual production costs at the time of entering into the contract. The Company estimates that the other CMO agreements that will be transferred to the Company as a part of the Sale are based on a similar margin level. It should, however, be noted that the CMO agreements are not directly comparable, as the CMO Agreement with Weifa AS will be the only agreement where the APIs used in the tablets are sourced from an external party.
The tablets supplied by the CMO tablet manufacturing business will be produced at the Gruveveien multi- purpose tablet facility. Production capacity at the multi-purpose tablet facility is estimated to ~650 million tablets in 2015. This production level can be increased to ~950 million with limited investments in the production facilities.
7.3 BUSINESS STRATEGY Metformin Vistin Pharma aims to further strengthen the Acquired Interests’ position as a supplier of metformin APIs to the major international pharmaceutical companies, particularly within metformin HCl. The Company will strive to secure a leading position amongst high-end customers in Europe, Japan and the US who are willing to pay a premium price. This is to be achieved by focusing on value-added product customization and services, quality in production and process, along with customer focus in product development and relationship building. The strategy has already been initiated at Weifa AS and the Metformin business increased the share of high value metformin customers throughout 2014.
Opioids The Acquired Interests are strongly positioned in codeine and is one of a very few independent opioid API and FDF producers that is neither owned by a narcotic raw material (“NRM”) producer nor state-owned/controlled.
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Going forward, Vistin Pharma will seek to exploit the Acquired Interests’ market position and customer relationships in key markets to expand the opioids business in general and codeine in particular. The long-term goal is to establish a dominant position in codeine and widen the portfolio of opioid APIs it offers. The Company aims to become a leading backward-integrated global supplier of high-value opioid FDFs through a “powder to pill” strategy, starting with codeine generic formulations including combinations.
CMO tablet manufacturing Vistin Pharma will be an independent supplier of generic FDF’s to the global generic industry and will seek to expand the tablet manufacturing volume at the manufacturing plant in Gruveveien, Kragerø, by establishing itself as a FDF Contract Development & Manufacturing Organization (CDMO) operating as a strategic partner to international pharmaceutical and biotechnical companies. Vistin Pharma will focus on continuous operational excellence to make its supply chain long-term cost competitive.
7.4 PRODUCT DEVELOPMENT There are no current plans to establish product development for new APIs, but the Company will continue to work with process improvements and cost optimization for the APIs and tablets that will be transferred as a part of the Acquired Interests in the Sale.
Vistin Pharma’s ambition in the medium term is to develop its own FDFs (based on opioids and other controlled substances), primarily utilizing its international CRO (Contract Research Organisations) network. The FDFs will be commercialized via pharmaceutical partners worldwide. In addition, the Company will prioritize process development and process improvement projects to further improve and strengthen its core products.
7.5 PATENTS, LICENSES AND OTHER MATERIAL BUSINESS AGREEMENTS The Company will not hold any patents and the products manufactured and/or distributed by the Company will generally not be subject to patent rights.
The Acquired Interests have a dossier for the production of metformin tablets of various concentrations and strengths. The dossier has to be continuously updated to satisfy regulatory requirements and guidelines but it does not have a defined duration. The Company’s dependency upon the dossier will be limited, as the manufacturing of metformin tablets will constitute a small share of the Company’s sales. Since the dossier is related to the production of metformin tablets, which is a generic product with a number of suppliers and accompanying dossiers, the value of the dossier, in itself, is limited. The Company’s assessment is that it would be very difficult to sell the dossier and it has therefore not been allocated any value in the transaction.
The Company will be dependent upon a number of business agreements regarding supplies of raw materials as well as for sales of APIs and finished products. In addition, the Company will be dependent upon regulatory approvals for the manufacturing and sales of its products. For a further discussion of these, see section 7.5.1 to 7.5.4.
7.5.1 B2B - Metformin The material business agreements regarding the Metformin business area relates to raw materials suppliers and customers. The Company is dependent upon these agreements for the sourcing of raw materials and sales of products to customers.
There are two main raw materials for the metformin synthesis carried out at Fikkjebakke. These raw materials are sourced from several international suppliers in order to secure sufficient supplies of the right quality. The supply contracts have been based on Weifa AS templates with small variations in the contents. The agreements do not create any purchase or sales exclusivity, are based on non-binding forecasts and nothing in the agreements obliges the Acquired Interests to purchase a particular quantity, volume or value of goods. The supply agreements are supplemented by quality agreements in which general product requirements are set out.
The main metformin customers are large international pharmaceutical companies. The contracts have been entered into on the customer’s contractual terms and therefore vary in terms and wording. However, in general the contracts contain detailed quality requirements for the products that the Company has to comply with. These requirements include manufacturing according to GMP, retaining an effective change control system, issuing a Certificate of Analysis and a Certificate of Conformance for each batch manufactured etc. The agreements do in
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general not contain any purchasing obligations and delivery conditions are Delivery at Place. The contracts are also supplemented with non-disclosure agreements to protect the parties’ scientific, technical and business information.
7.5.2 B2B - Opioids The material agreements regarding the Opioids business area relates to raw materials suppliers and customers. The Company will be dependent upon these agreements for the raw material supplies and sales of products to customers.
The raw material for opioids is raw opium. The market is constrained due to the type of product and the according regulatory requirements. There are a limited number of suppliers and Weifa AS has worked to establish long term supply agreements with sustainable volumes.
The main opioids customers are international pharmaceutical companies. Similar to the Metformin business, the agreements regulate supplies, quality assurance and confidentiality.
In 2014, Vistin Pharma signed a five-year supply contract for FDF tablets with a major supplier of strong pain killers for the UK market. This demonstrates Vistin Pharma’s ability to move up the value chain and strengthen its position as a major opioids supplier.
7.5.3 CMO In connection with the Sale, Vistin Pharma entered into a five year contract manufacturing agreement with Weifa AS for the production of all tablets currently produced internally by Weifa AS, cf. section 5.5. The agreement covers the manufacturing of Paracet, Ibux and Paralgin Forte, as well as certain other products that Weifa AS has the exclusive right to sell in certain geographic areas.
7.5.4 Regulatory approvals The import, manufacturing, marketing, sales and export of medicinal products are thoroughly regulated through laws and regulations. The most important laws, regulations and regulatory approvals concerning the Acquired Interests are described below.
In Norway, the main legislation is the Norwegian Act on Medicinal Products of 12 April 1992 no. 132, which is supplemented by a large number of regulations that apply to specific areas, of which the Regulation on Manufacturing and Import of Medicinal Products (FOR-2004-11-02-1441) is the most important. The Norwegian Medicines Agency (NoMA) is the public supervisory authority responsible for ensuring that medicinal products marketed in Norway are safe and effective in their use. NoMA gives licenses and authorisations, classifies medicinal products and sets the prices for drugs that require prescription. The relevant certificates to the Acquired Interests that are managed by NoMA are valid in all countries in Europe as well as a number of other countries outside the EU.
Manufacturing license A manufacturing license is obtained by filing for such license with NoMa and providing necessary information with respect to the manufacturing process, what sort of medicinal products will be manufactured and where the manufacturing will take place. The manufacturer must ensure that the manufacturing is in accordance with GMP. The Company will hold manufacturing licenses, which include sale and import of any raw material necessary for producing medicinal products at the premises located at Fikkjebakke and Gruveveien. All licenses are valid from 1 June 2015 until 1 June 2020.
GMP certificate Both Fikkjebakke and Gruveveien hold written confirmation from NoMA, which state that they comply with the principles and guidelines of GMP (GMP certificates). The GMP certificates are set to expire in June 2015 and April 2016 for the Gruveveien and Fikkjebakke facilities, respectively. The Gruveveien facility was re-inspected by NoMA in May 2015 and the Company expects to receive a new GMP certificate shortly after the current one is expiring. The Company will be able to operate under the expired certificate until the evaluation of a new certificate is completed. The Company expects that the Fikkjebakke facility will be re-inspected for a renewal of its GMP certificate in late 2015 or early 2016. There are no costs associated with the renewal of the GMP certificates.
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GDP certificate The Gruveveien facility also holds a certificate of good distribution practice (GDP). This certificate is not necessary for the Fikkjebakke plant, as it is only required for plants that will engage in the storage and distribution of medicinal products for third parties, which Gruveveien will engage in through the CMO Agreement with Weifa AS. The Gruveveien facility was last inspected in August 2012 and the certificate is set to expire in August 2017. The current GDP certificate is issued to Weifa AS and the Company does not expect that a GDP certificate will be issued to Vistin Pharma until the existing one expires. Instead, it is expected that NoMA will declare that the validity of the current certificate in Weifa AS’ name will be valid for Vistin Pharma from the completion of the Sale until it expires. There are no costs associated with the renewal of the GDP certificate.
FDA approval Foreign regulatory authorities (e.g. US Food and Drug Administration (“FDA”) may also demand approval of manufacturing plants before export of APIs or finished products to their country. The Fikkjebakke facility was re-approved by the FDA as late as in July 2014. The expiry of the FDA approval is not defined, as inspections are risk based and, as such, dependent upon a continuous evaluation by the FDA. The Fikkjebakke facility was inspected and approved by the FDA in 2011 and re-inspected and re-approved in July 2014 (~3 years). However, this is not necessarily indicative of the duration until the next inspection.
There is an inherent risk that the Company could lose one or many of the certificates which are required for it to operate. The Company could lose one or many of its licenses due to such things as missing documentation and new knowledge regarding safety. However, it is the Company’s assessment that the risk of losing one or many of the certificates is limited as it would require that the Company repeatedly breaches the regulations without making the necessary modifications or corrections to its production process and/or production facilities.
7.6 PROPERTY, PLANT AND EQUIPMENT The Company has entered into a rental agreement with Weifa AS for its headquarters located in Østensjøveien 27, 0661 Oslo, Norway. Vistin Pharma’s headquarter is, at the time of this Prospectus, located in the same building as Weifa AS. The current rental agreement has an initial duration of two years and an option to extend the contract for another two years.
In addition, following the Sale, the Company will have two wholly owned manufacturing plants, both located in Kragerø;
- Fikkjebakke: Dedicated purely to the production of metformin - Gruveveien: Production of metformin and opioid tablets and codeine and pholcodine APIs
The tablet unit in Gruveveien is a multi-purpose facility, meaning that the same equipment is used for the manufacturing of different products. This requires special precautions to protect against cross-contamination, both in synthesis and preparation of finished products. Stringent cleaning procedures and systematic laboratory analysis are essential.
Quality assurance in pharmaceutical manufacturing is about building robust systems and ensuring compliance with regulatory requirements. The focal point of the Acquired Interests’ quality work is the production plants in Kragerø. Both plants are certified according to good manufacturing practice (“GMP”). In addition, the metformin plant is inspected and approved by the FDA. Documented training in procedures is performed for all levels of personnel. All processes are governed by a standard operational procedure (“SOP”), an essential tool in ensuring predictable, reliable and correct quality. Other key documents include the Site Master File, which represents the formal licence to produce, and the Validation Master Plan, which specifies everything that needs to be in place in terms of processes, equipment and information systems. Further attesting to its quality, analysis takes place according to the European Pharmacopoeia, a recognised common standard for use by healthcare professionals and others concerned with the quality of medicines. The production of metformin granulates, an ingredient in products sold in the USA, is also governed by the US Pharmacopoeia.
Environmental issues concerning emissions and emission permits The Acquired Interests have faced environmental issues in connection with its two manufacturing plants in Kragerø; Gruveveien and Fikkjebakke, concerning emissions and emission permits. In 2013, unauthorized
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emissions to air were registered at the production site at the Gruveveien plant. The situation was investigated by the Climate and Pollution Agency, which resulted in further (ongoing as of date) investigations by the police.
The BTA for the Acquired Interests specifies that Weifa AS will be liable to pay damages related to the ongoing investigation if the indemnity claim ranges from NOK 2 million to 10 percent (NOKm 12) of the consideration that will be paid for the Acquired Interests (NOKm 120). The range has been determined as a part of the negotiation of the BTA and is not in any way representative to what the indemnity claim could be in the event that the investigation leads to a charge against the Company. In the event that the claim exceeds NOK 12 million, the Company will be liable for the amount in excess of the NOK 12 million. The risk and potential size of the claim was thoroughly investigated in relation with the acquisition of Weifa AS in August 2014 and the Company assess that the probability of the indemnity claim exceeding NOK 12 million is very low. In line with this assessment, the Company has not established a contingent liability related to the ongoing investigation.
In 2014, the Climate and Pollution Agency required a reduction of emissions from both plants. All emissions to water from Gruveveien were immediately stopped and collected for disposal. The production has since then been running uninterrupted at full capacity while meeting the requirements of its permanent emission permit to both air and water. To meet the requirements of the permanent emission permit the Acquired Interests are required to collect and destruct water used in the production process. This has an estimated monthly cost of NOK 170,000. The current emission permit requires renewal and an application for a new permanent emission permit for Gruveveien will be submitted in June 2015. If the new permit is approved, the Company will be allowed to discharge the water directly into the public outlet, which will eliminate the costs mentioned above. The Company expects that the application process will be completed within 9 months (March 2016).
The Fikkjebakke plant received a temporary emission permit to water in July 2014, which it is currently operating under. An application for a permanent emission permit was submitted in December 2014 and the Company expects to receive a permanent emission permit in October 2015. Should the Company not receive a permanent emission permit for the Fikkjebakke plant, the Company expects that it will have to comply with its previous permanent emission permit. The previous permanent permit allows no emissions. To operate in line with this permit, the Company expects that it will be required to install a new purification system in connection with the manufacturing plant. Due to the low probability of this occurring, the Company has not estimated the cost of installing a new purification system.
Weifa AS has dedicated considerable resources to identify, analyse, control and reduce the emissions of the Acquired Interests. It has engaged external consultants, strengthened its competence within HSE, employed a new Vice President of Operations and Quality and established a project group that is responsible for monitoring the progress towards specified emission goals. The initiatives have resulted in a ~85 percent reduction in the emission of solvents and pharmaceutical remnants and the remaining emissions are currently being combusted. Following Weifa AS’ initiatives the risk for unwanted interruption or reduction of activity in the factories due to emission related issues is considered to be very low.
7.6.1 Fikkjebakke In 2002, Weifa AS opened a modern and highly efficient GMP-approved plant for production of metformin HCl, an active pharmaceutical ingredient in first-line treatment of diabetes 2. According to Vistin Pharma’s Executive Management, the production line is the largest in the world of its kind. In a strictly controlled process, metformin is synthesised and processed and the plant is recognized by its customers for providing among the purest and best free-flowing qualities in the market. More than 30 international pharmaceutical companies are currently served from this plant. To meet various customer requirements, the plant produce metformin in the form of powder and direct compressible granulate, as well as tablets. Current capacity is 3,100 MT/year of metformin HCl and 800 – 1,000 MT/year of metformin DC. The metformin HCl capacity may be increased by 300-400 MT/year with minor investments. A new processing line may be added to the existing facility through an investment of approx. NOK 40-50 million and a lead time of ~18 months. The new processing line would increase the capacity by a further ~3,000 MT/year. The metformin plant was FDA-approved in 2011 and successfully re-inspected in July 2014.
The plant is certified according to the standards of good manufacturing processes (GMP) for production and quality control of pharmaceutical preparations.
Key features of the Fikkjebakke plant: - High-end metformin production
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- FDA approved - Current capacity: ~3,100 MT/year - Located in Kragerø, Norway - Purpose built in 2002 - Plant and land to be wholly owned by Vistin Pharma
7.6.2 Gruveveien The production plant in Gruveveien consists of a multi-purpose tablet facility which produces FDF tablets and high volume tablets (CMO), and an Opioids unit producing APIs for the global opioid market. The initial facility was completed in 1950. Since then an additional manufacturing facility has been added and the old facility has been upgraded several times. The tablet manufacturing facility has a total production capacity of ~650 million tablets per year, which can be increased to ~950 million with limited investments. The opioid manufacturing plant has a total production capacity of 30 MT/year, of which ~27 MT/year is devoted to codeine and ~3 MT/year to pholcodine. The annual capacity can be increased by 5 MT through additional investments of approximately NOK 6-8 million.
The plant is certified according to the standards of good manufacturing processes (GMP) for production and quality control of pharmaceutical preparations and good distribution process (GDP).
Key features of the Gruveveien plant: - High volume tablets production - Production of opioids - Current capacity of ~30 MT/year of opioid APIs and ~650 million tablets - GMP and GDP certified - Located in Kragerø, Norway - First building erected in 1950, other buildings erected and facility upgraded several times since then - Plant and land to be owned by Vistin Pharma
7.7 FACTORS AFFECTING THE GROUP The Company is not aware of any governmental, economic, fiscal, monetary or political policies or factors likely to have a material effect on the Company’s prospects for the current financial year.
7.8 TREND INFORMATION There have been no material changes in production, sales and inventory, and costs and selling prices for the Acquired Interests since the end of 2014 and up until the date of this Prospectus.
The Company is not aware of any trends, uncertainties, demands, commitments or events that could have a material effect on the Group’s prospects for the current financial year.
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8. MARKET OVERVIEW The Group provides a range of ingredients and finished products to the international pharmaceutical industry, as further described in section 7. The key catalysts of demand for Vistin Pharma’s products are the number of patients diagnosed with type 2 diabetes and the increasing requirements and expectations for pain relief.
8.1 METFORMIN MARKET The market statistics in this section has, unless otherwise noted, been obtained from the International Diabetes Federation (“IDF”), IDF Diabetes Atlas, 6th edn. Brussels, Belgium: International Diabetes Federation, 2013. http://www.idf.org/diabetesatlas. The publication is available free of charge.
Due to its efficacy, favourable side-effect profile and low cost, metformin is currently established as the first- line defence against type 2 diabetes (ADA, EASD). In addition, it is commonly used as a combination drug in second- and third-line medication of type 2 diabetes. It is, as far as the Company is concerned, at the time of this Prospectus no substance that directly competes with metformin in the treatment of diabetes.
Metformin is a genericized molecule and its market is therefore directly linked to the number of patients diagnosed with type 2 diabetes. IDF estimates that the total number of people with diabetes (both type 1 and type 2) in 2013 was 382 million and that this number will increase by 55% to reach 592 million in 2035. While all types of diabetes are increasing, type 2 is seeing the highest growth and as many as 85-95% of all patients in high-income countries diagnosed with diabetes have type 2 diabetes. The share of patients with type 2 diabetes is believed to be even greater in low- and middle-income countries. The growth is driven by economic development, ageing populations, increasing urbanisation, dietary changes, reduced physical activity and changes in other lifestyle patterns.
With the high number of patients diagnosed with diabetes, the total health related expenditure for diabetes is considerable. According to the IDF, 11% of global health spending is related to the treatment of diabetes, amounting to an estimated total of USD 548 billion. North America and Caribbean accounts for nearly half of this, with total diabetes related spending of USD 263 billion in 2013. In comparison, China, which is the country with the highest number of people with diabetes, only spent USD 38 billion on diabetes related treatment and the low- and middle-income countries, where 80% of the patients diagnosed with diabetes reside, is only responsible for 20% of global health related diabetes spending. In addition, estimates from the IDF suggest that as many as 175 million people with diabetes are undiagnosed and therefore receive no treatment.
Metformin, as the first-line treatment for type 2 diabetes, is with the high prevalence of type 2 diabetes responsible for a share of the global diabetes related health spending and Vistin Pharma’s Executive Management estimates that the total metformin market in 2013 was USD 2 billion. Actual metformin consumption in 2013 corresponded to ~50% of the diagnosed population and ~25% of total people with diabetes. The global market for metformin was estimated to be ~35 000 MT in 2014 and is expected to grow by 2 000 to 3 000 MT annually going forward (~8-10% annual growth).
There are approximately 25 manufacturers globally with regulatory approval to deliver metformin HCl in the EU and the US. The majority of the volume is produced in India and there are only two producers in Europe. The current market for metformin is competitive and there is sufficient global capacity to absorb the volume growth as many of the plants producing metformin API are multi-purpose. This is particularly true for the plants in Asia.
The current production volume of metformin DC is ~6 000 – 7 000 MT. Metformin DC is sold at a higher price per kg than HCl, but is usually made to customer specifications, making it more expensive and labour-intensive to produce depending on customer requirements.
While plain metformin tablets are commodity generics, some plain metformin tablets are sold as branded generics to a higher end user price. Combination products, especially where the other API still is on patent, are manufactured by innovator companies and sold to very high end-user prices. All combination products use metformin as the main component combined with another API and do not compete directly with the metformin API that will be supplied by the Vistin Pharma.
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8.2 OPIOID MARKET The market statistics in this section has, unless otherwise noted, been obtained from “Estimated World Requirements for 2014”, an annual publication by the International Narcotics Control Board (“INCB”), available free of charge at the following webpage: http://www.incb.org/documents/Narcotic-Drugs/Status-of- Estimates/2014/EstFeb14.pdf
Opioid is a collective term for all substances that are extracted from the opium poppy. The opiates manufactured by Vistin Pharma are used in pain killers and cough suppressant and have a number of competing substances. Common strong pain killers include codeine, which is what Vistin Pharma will be supplying, morphine, oxycodone and hydromorfon. The most common cough suppressants are pholcodine, which is what Vistin Pharma will be supplying, and etylmorfine. As such, there are a number of competing substances to the ones that will be supplied by Vistin Pharma. Of all opioids, codeine is the largest and most important based on volume per year.
The opioids market can be characterized as “protected”, as approximately half of the global markets are closed due to tight controls by the International Narcotics Control Board (INCB) and state specific sanctions (production and trade of poppies, narcotic raw materials (NRMs) and APIs are all subject to quotas and licenses). This creates considerable entry barriers and domestic monopolies that to a large extent are controlled by local players. Due to the strict regulations the market is dominated by producers located in Western countries and the opioid API industry is, unlike other API industries, currently not subject to low cost Asian competition.
According to INCB statistics, the defined daily doses of opioids have increased 3.5 times in the past 20 years, corresponding to an annual growth of 6.5%. North America currently dominates the market for opioids due to its aging population and huge patient base with chronic pain (~100 million people). The market for opioids is expected to deliver steady growth going forward. The growth will be driven by emerging markets where increasing wealth drives higher expectations for pain relief. Other important growth drivers include ageing populations with chronic pain-inducing diseases, the retreat from non-opioid pain therapeutics owing to major side effects and new (non-pain) applications, such as addiction management. Geographically, a majority of the growth is expected to come from Asia, and India and China in particular, due to a current shortage of opioid medication, fast economic development and less awareness of its side effects.
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As can be seen from the figure above, several different classes of natural and semi-synthetic drugs can be derived from raw opium. Codeine is the top selling opioid by volume and currently has global market of ~400 MT. World exports of codeine reached an all-time high of 176 tons in 2012, of which Weifa AS exported 8%. According to the Company, the size of the codeine markets in which the Acquired Interests reported geographical segmented revenues in 2014 was ~9 MT/year in Germany, ~1 MT/year in Algeria, ~1 MT/year in Switzerland and ~60 MT/year in the UK.
Codeine is classified as a Schedule II drug (i.e. less potent than Schedule I drugs such as morphine) and is therefore available over the counter (OTC) in limited doses and packages in some countries. It is also seen by physicians as the least addictive and is therefore the first-line opioid prescribed in many countries. Unlike the API, international trade in codeine FDFs is not subject to control by the INCB, only to local regulations. Demand growth in emerging markets is therefore best tapped by importation of codeine FDFs since local FDF production requires importation of restricted APIs. Pholcodine is the sixth most consumed semi-synthetic opiate and manufacturing and consumption has been fluctuating between 5 and 10 million MT since 1993. Its primary use is as a cough suppressant drug (antitussive). The largest markets include Hong Kong, France, Pakistan and Australia.
8.3 CMO TABLET MARKET The market statistics and information in this section has been obtained from Pharmafocus Asia, Whitepaper 2007(http://www.pharmafocusasia.com/whitepapers/crippled-by-cost), as well as from the Company’s Executive Management.
According to Pharmafocus Asia’s Whitepaper 2007, the global CMO market will reach USD 40.7 billion by 2015. Patent expiry of drugs, stringent price regulations (especially in Europe and US) to purchase drugs from pharmaceutical companies and Government budget cuts for pharma R&D are the forces that are expected to reshape the future of pharma and the CMO industry. At least 100 manufacturing facilities owned by pharmaceutical companies were shut down in the US alone in 2013 due to reduced profits. In an effort to reduce fixed costs, global biopharma companies have been forced towards ‘Outsourcing’. This generates increasing opportunities for CMOs and CDMOs going forward. Currently, it appears that emerging markets like India, China and Latin America will be the favoured destinations for outsourcing in the future.
According to Pharmafocus Asia’s Whitepaper 2007, the solid dosage (tablet) CMO market is expected to grow at a CAGR of 10% to 11% by 2017, with players in emerging markets driving the market growth. Some of the reasons why solid dosage will continue to dominate the non-sterile market includes the lack of manufacturing challenges when compared to other dosage forms and inventions of new technologies (e.g. OptiMelt, OptiDose) to improve the bioavailability of the drug by Catalent and other leading CMOs. In addition, Delayed/Sustained Release, Multiple control release tablets are expected to gain momentum in the solid dosage market.
8.4 COMPETITIVE LANDSCAPE 8.4.1 Metformin The global manufacturing capacity for Metformin HCl is according to Vistin Pharma’s Executive Management approximately 35,000 MT per year, whereof Vistin Pharma will hold the fifth largest capacity of 3,100 MT (~8.5% of the global capacity). 67% of the global volume is manufactured in India.
Vistin Pharma’s main competitors will be manufacturers holding CEP (Certificate of Suitability) issued by EDQM (European Directorate for the Quality of Medicines and Healthcare). Currently there are approximately 25 producers worldwide holding CEP. Vistin Pharma will position its products and services as “high value” in a competitive market with many low cost Chinese and Indian competitors.
In addition to Vistin Pharma, Farmhispania, with annual capacity of 4,000 MT, is the only manufacturer in Europe with export, and will be Vistin Pharma’s nearest competitor.
Vistin Pharma’s closest competitors in the markets in which it will operate are the Spanish pharmaceutical company Farmhispania, the Indian pharmaceutical companies USV, Exemed Pharmaceuticals, Harman Finochem and Wanbury and the Chinese pharmaceutical company Shougang Fukan Pharmaceutical Co. Of these, Farmhispania and USV are the only ones directly targeting the high-value segment.
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8.4.2 Opioid Only a few companies are allowed to manufacture opioids due to strong international control and regulations by INCB. In some major markets such as US, France, UK and Spain, national import restrictions protect the positions of local manufacturers in their home markets. The illustration below depicts the strong vertical integration of suppliers in the opioids market.
API Finished dose Poppy NRM Finished dose development development cultivation supply marketing and supply and supply
Francopia (France) & Alcaliber (Spain) Sanofi
Tasmanian Alkaloids (Australia) & Noramco (US) J&J
Alkaloida (Hungary) Sun Pharmaceuticals
GSK Tasmania (Australia) GSK
TMO (Turkey)
Macfarlan Smith (UK)
TPI Enterprises (Australia)
Vistin Pharma (Norway)
Most opioid API manufacturers are vertically integrated from poppy growing to manufacturing of API’s. Vistin Pharma will be, according to Vistin Pharma’s Executive Management, the largest independent codeine phosphate manufacturer in Europe, and one of very few manufacturers of FDFs that also has API production.
Vistin Pharma’s main competitors in the supply of codeine will be the UK pharmaceutical company Macfarlan Smith (Johnson Matthey), the Spanish pharmaceutical companies Alcaliber, Francopia (Sanofi), the US pharmaceutical company Noramco (Johnson & Johnson) and the Italian pharmaceutical company Salars.
Vistin Pharma’s main competitors in the supply of pholcodine will be the UK pharmaceutical company Macfarlan Smith (Johnson Matthey), the Italian pharmaceutical company Salars and the Slovenian pharmaceutical company Saneca.
Vistin Pharma’s competitor within the supply of opioids in the UK market will be Macfarlan Smith, while its main competitor in the German market will be Noramco.
8.4.3 CMO tablet manufacturing For a discussion of the competitive landscape regarding opioid containing tablets, please refer to section 8.4.2.
There are a number of CMOs providing tablet manufacturing similar to the Acquired Interests with regard to paracetamol and ibuprophen. Depending on the formulation, specific coatings, effervescent tablets etc. the number of alternative manufacturers is more limited. The majority of CMO tablet manufacturers are located in Asia and some of these may not be qualified for manufacturing for the US and European markets. A benchmark study conducted by Weifa in 2013 indicated that the tableting facility in Gruveveien was competitive compared to third party CMOs.
The established players in the European CMO market include the Swedish pharmaceutical company Recip and the German pharmaceutical companies Next Pharma and Dragenopharm-Contract Pharma.
The current market for the Acquired Interests’ CMO tablet manufacturing is, however, limited to the market of Weifa AS’ products in Norway, the codeine market in the UK and certain other markets in Europe and South East Asia. Weifa AS’ main competitors in the Norwegian consumer health sector are, according to its Management, Novartis, McNeil (Johnson & Johnson), Takeda Nycomed, Actavis, Bayer and Meda. Weifa AS also has an ambition to grow its business to the Nordic region. The market for OTC and Rx painkillers in the
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Nordics and the UK has shown stable, albeit not very high, growth during the later years and could become a market of growth for Vistin Pharma as a CMO manufacturer.
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9. FINANCIAL INFORMATION Vistin Pharma ASA was incorporated on 6 March 2015, and has no financial history. The Company is currently a wholly-owned subsidiary of Weifa ASA, a publicly listed company on the Oslo Stock Exchange.
The Acquired Interests that will be transferred to Vistin Pharma AS prior to the Listing is currently part of Weifa AS and thus no separate statutory financial statements have been prepared for the Acquired Interests being transferred to Vistin Pharma.
Audited special purpose carve-out financial information for Vistin Pharma AS for the years ended 31 December 2014 and 2013 are presented below. Audited interim financial information for the newly incorporated entity Vistin Pharma ASA for the period from 6 March 2015 to 31 March 2015 prepared in accordance with IFRS are attached as Appendix B to this Prospectus.
9.1 HISTORICAL FINANCIAL INFORMATION The audited special purpose carve-out financial statements for the Acquired Interests presented below have been prepared based on recognition and measurement principles in International Financial Reporting Standards (IFRS) as approved by the European Union, and are mandatory for fiscal years beginning on or after 1 January 2014 and their interpretations adopted by the International Accounting Standards Board (IASB). However, given the carve-out, certain assumptions are required for determining which assets and liabilities, income and expenses as well as cash flows are to be assigned to the Acquired Interests as described in note 2 to the special purpose carve-out financial statements for the Acquired Interests (Appendix C).
The special purpose carve-out financial statements have been prepared on the basis of Weifa AS' internal reporting for the departments relating to the Acquired Interests, based on historical results and carrying amounts as at 31 December 2014 and 2013.
The assets that will be transferred as a part of the Acquired Interests are related to both the Consumer Health and B2B segments of Weifa AS. A majority of the revenue related to the B2B assets will be transferred to Vistin Pharma, with the exception of certain contracts in which Weifa AS has exclusivity. A portion of the Consumer Health revenue will be transferred to Vistin Pharma through the CMO Agreement between Vistin Pharma and Weifa AS. The results, presented in the annual and quarterly reports of Weifa AS and Weifa ASA, either as a whole or by segment, are therefore not representative to the financial results of the assets that will be transferred as a part of the Acquired Interests.
The special purpose carve-out financial statements reflect assets, liabilities, revenue and expenses directly attributable to the operations included, including management fee allocations recognised historically in the relevant accounting records on a legal entity basis. However, the special purpose carve-out financial position, results of operations and cash flows of the Acquired Interests may differ from those that would have been achieved had the Acquired Interests operated as an autonomous entity for all the years presented, as the Acquired Interests may have had, for example, additional administrative expenses, including legal, accounting, treasury and regulatory compliance and other costs normally incurred by an autonomous entity. No such expenses have been allocated, or added, for the purpose of the special purpose carve-out financial statements.
Total revenue comprises of revenue from external B2B customers and allocated revenue from sale of finished goods from Acquired Interests to Weifa AS under a contract manufacturing (CMO) agreement. Historically, CMO was not a separate business area and historical transactions between the Acquired Interests and Weifa AS have therefore not been recorded. To incorporate these sales for the purpose of the special purpose carve-out financial statements, revenue from the sales to Weifa AS from the Acquired Interests has been allocated based on an allocation key considering the revenue base at a cost plus model (i.e. direct costs and allocated overhead plus a manufacturing margin of 8%). As further described in section 5.5, the Company has entered into a CMO agreement with Weifa AS for the production and supply of finished dose tablets currently being produced internally in Weifa AS by the Acquired Interests. The allocation key used for the purpose of the special purpose carve-out financial statements is consistent with the future agreement for sales to Weifa AS by the Company and is considered to represent a reliable and representative allocation method for the prior periods. Sales are recognised by the Company at the time of shipment to the external customer of Weifa AS.
The selected financial information set forth below should be read in conjunction with the audited special purpose carve-out financial statements attached as Appendix C to this Prospectus.
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9.1.1 Statements of special purpose carve-out profit and loss and other comprehensive income The table below sets out the Acquired Interests’ audited special purpose carve-out statement of income for the years ended 31 December 2013 and 2014.
NOK 1,000 2014 2013
Revenue...... 361 461(1) 347 253(1) Total revenue and income ...... 361 461 347 253
Cost of materials ...... 154 708 147 819 Payroll expenses ...... 108 594 106 872 Depreciation, amortisation and impairment ...... 110 093 16 272 Other operating expenses ...... 70 369 65 263 Operating profit/(loss) ...... -82 304 11 027
Finance income ...... - 1 365 Finance costs ...... 2 080 - Profit/(Loss) before tax from continuing operations ...... -84 383 12 393
Income tax expense ...... -22 784 4 008 Profit/(Loss) for the period ...... -61 600 8 385
Other comprehensive income Other comprehensive income not to be reclassified to profit or loss in subsequent periods Remeasurement of pension plans ...... -2 552 24 868 Income tax effect ...... -689 6 714 Total other comprehensive income not to be reclassified to profit or loss...... -1 863 18 154
Other comprehensive income for the year, net of tax ...... -1 863 18 154
Total comprehensive income for the year, net of tax ...... -63 463 26 539
Total comprehensive income for the year, net of tax attributable to: Equity holders of the parent company ...... -63 463 26 539 Non-controlling interests ...... - - Total ...... -63 463 26 539 Note: (1) 33.0% and 34.1% of the recognized special purpose carve-out revenue in 2014 and 2013, respectively, was allocated to inter- company transaction as described using the principles in section 9.1 above. Source: Weifa AS' internal reporting for the departments relating to the Acquired Interests for the years ended 31 December 2013 and 2014, see section 9.1.
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9.1.2 Statement of special purpose carve-out financial position The table below sets out the Acquired Interests’ audited special purpose carve-out financial position as at 31 December 2013 and 2014.
NOK 1,000 31.12.2014 31.12.2013
ASSETS Non-current assets Property, plant and equipment ...... 28 278 129 574 Deferred tax assets* ...... 32 929 7 804 Total non-current assets ...... 61 207 137 379
Current assets Inventory ...... 92 075 88 328 Trade receivables ...... 47 660 45 128 Other receivables ...... 2 732 - Total current assets ...... 142 466 133 456 Total assets ...... 203 673 270 835
INVESTED CAPITAL AND LIABILITIES Invested capital Parent company investment ...... 127 977 199 777 Total invested capital ...... 127 977 199 777
Non-current liabilities Net employee defined benefit liability...... s 9 325 5 648 Total non-current liabilities ...... 9 325 5 648
Current liabilities Trade payables ...... 39 104 33 593 Other current liabilities ...... 27 267 31 816 Total current liabilities ...... 66 371 65 409
Total liabilities ...... 75 696 71 057 Total equity and liabilities ...... 203 673 270 835 *The deferred tax asset cannot be transferred as a part of the net asset transaction of the Acquired Interests and Vistin Pharma will therefore be in an immediate taxable position if it generates taxable income in its first year of operation. See section 9.4.1 for a further description. Source: Weifa AS' internal reporting for the departments relating to the Acquired Interests for the years ended 31 December 2013 and 2014, see section 9.1.
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9.1.3 Special purpose carve-out cash flow statements The table below sets out the Acquired Interests’ audited special purpose carve-out statement of cash flow for the years ended 31 December 2013 and 2014.
NOK 1,000 2014 2013
Cash flow from operating activities Net profit/(loss) before income tax ...... -84 383 12 393
Non-cash adjustment to reconcile profit before tax to cash flow: Difference between pension costs and in-/out payment in pension scheme ...... 1 153 1 153 -432 Depreciation, amortisation and impairment ...... 110 093 16 272 Unrealised foreign currency (gains)/losses ...... 245 - Changes in working capital: Changes in trade receivables and trade creditors ...... 2 735 -1 363 Changes in inventory ...... -3 746 -10 511 Changes in other accruals ...... -8 963 4 842 Net cash flow from operating activities ...... 17 133 21 200
Cash flow from investing activities Purchase of equipment ...... -8 797 -8 197 Net cash flow from investing activities ...... -8 797 -8 197
Cash flow from financing activities Net invested capital transferred** ...... -8 337 -13 002 Net cash flow from financing activities ...... -8 337 -13 002
Net change in cash and cash equivalents* ...... - - Cash and cash equivalents beginning period ...... - - Cash and cash equivalents end period ...... - - * No cash and cash equivalents are part of the Acquired Interests as the funding of the Company should be done through the Offering. ** Net invested capital transferred is a net amount of change in invested capital considering all cash is left with Weifa AS. Source: Weifa AS' internal reporting for the departments relating to the Acquired Interests for the years ended 31 December 2013 and 2014, see section 9.1.
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9.1.4 Special purpose carve-out statement of changes in invested capital The table below shows the Acquired Interests’ special purpose carve-out statement of changes in equity for the years ended 31 December 2013 and 2014.
NOK 1,000 Invested capital
Invested capital as at 01.01.2013 ...... 186 240
Loss for the year ...... 8 385 Other comprehensive income for the year ...... 18 154 Total comprehensive income ...... 26 539
Movement on invested capital ...... -13 002
Invested capital as at 31.12.2013 ...... 199 777
Invested capital as at 01.01.2014 ...... 199 777
Loss for the year ...... -61 600 Other comprehensive income for the year ...... -1 863 Total comprehensive income for the year ...... -63 463
Movement in invested capital ...... -8 337
Invested capital as at 31.12.2014 127 977 Source: Weifa AS' internal reporting for the departments relating to the Acquired Interests for the years ended 31 December 2013 and 2014, see section 9.1.
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9.2 AUDITOR The Company’s auditor is Ernst & Young AS, Dronning Eufemias gate 6, 0154 Oslo, Norway. The Company’s auditor is member of The Norwegian Institute of Public Accountants.
Ernst & Young AS was appointed as the Company’s auditors on 6 March 2015 and has audited the Company’s interim financial statements for the period from 6 March 2015 to 31 March 2015. The auditor’s report for this period was issued without qualifications. Ernst & Young AS has also audited the special purpose carve-out figures for the Acquired Interests for the year ended December 31, 2014. The special purpose carve-out figures for the fiscal year ended December 31, 2013 has been audited by Nitschke AS, Gamle Drammensv. 40, 1369 Stabekk. The auditor’s reports for the two fiscal years were issued without qualifications.
9.3 SEGMENT REPORTING Following the acquisition of the Acquired Interests, the Company will have one business segment with three business areas; Metformin, Opioids and CMO tablet manufacturing.
In the Acquired Interests special purpose carve-out financial information the Company reported its geographical revenue distribution, as displayed below. It is not yet determined whether the Company will continue to report geographically segmented revenue going forward.
Geographic information
NOK 1,000 2014 2013
Revenue by geography Norway ...... 119 229 118 373 Germany ...... 77 954 63 298 Algeria ...... 61 081 45 191 Switzerland...... 31 597 28 167 Great Britain ...... 22 297 25 626 Other countries ...... 49 302 66 598 Total revenue ...... 361 461 347 253 Source: Weifa AS' internal reporting for the departments relating to the Acquired Interests for the years ended 31 December 2013 and 2014, see section 9.1.
9.4 MANAGEMENT DISCUSSION AND ANALYSIS The discussion below is based on the audited special purpose carve-out financial information for the Acquired Interests for the years ended 31 December 2014 and 2013 as presented above and included in Appendix C. The interim financial information for Vistin Pharma ASA in the period 6 March to 31 March 2015 are not discussed as the Company in the period was a shell company without any operational activity. The interim financials can be found in Appendix B.
9.4.1 Years ended 31 December 2014 and 2013 Profit and loss The Acquired Interests recorded total revenues of NOK 361.5 million in the fiscal year ended 31 December 2014, compared to NOK 347.3 million in the fiscal year ended 31 December 2013. Total revenues for 2014 and 2013 consist of revenue generated from the sale of APIs (metformin and opioids) to external B2B customers and the sale of finished dose tablets to Weifa AS. The allocation of revenue from the sale of finished goods to Weifa AS is based on a cost plus model (i.e. direct costs and allocated overhead plus a manufacturing margin of 8%). For a further description of the allocation method, see section 9.1. Sale of APIs for 2014 and 2013 amounted to NOK 242.2 million and NOK 228.9 million, respectively, while sale of tablets to Weifa AS for the same period amounted to NOK 119.2 million and NOK 118.4 million, respectively. The increase in revenue from the sale of APIs of NOK 13.4 million (5.9%) from 2013 to 2014 mainly relates to increased sales volumes of pholcodine (+1.3 MT) and a marginally higher average sales price for metformin.
Total operating expenses were NOK 443.8 million in the fiscal year ended 31 December 2014, compared to NOK 336.2 million in the fiscal year ended 31 December 2013. NOK 94.2 million of the NOK 107.5 million
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increase in operating expenses from 2013 to 2014 relates to an impairment loss on fixed assets recognized in 2014. The impairment loss was recognized following a value in use assessment of the operational assets at 31 December 2014. The remaining increase in operating expenses is principally explained by a higher sales volume of pholcodine, resulting in higher raw materials costs, as well as other general cost increases.
Net financial income was NOK (2.1) million in the fiscal year ended 31 December 2014, compared to a financial income of NOK 1.4 million in the fiscal year ended 31 December 2013. The change was due to realized currency gains/losses, which mainly related to the development in the USD and EUR exchange rates.
The Acquired Interests incurred a net loss of NOK 61.6 million in the fiscal year ended 31 December 2014, compared to a net income of NOK 8.4 million in the fiscal year ended 31 December 2013.
Financial position Total assets per 31 December 2014 amounted to NOK 203.7 million, compared to NOK 270.8 million on 31 December 2013. The decrease is largely due to a reduction in property, plant and equipment caused by an impairment charge of NOK 94.2 million, which was recognized in 2014 following a value in use assessment of the Acquired Interests operational assets related to the production of tablets and APIs. The reduction in total assets due to the impairment charge was partly offset by additional investments into property, plant and equipment amounting to NOK 8.8 million during 2014, and an increase in deferred tax assets of NOK 25.1 million.
The deferred tax asset of NOK 32.9 million as of December 31, 2014 has been calculated based on timing differences between tax and book values of the assets being carved out. These timing differences are directly linked to the special purpose carve-out financial statements but will not be available to Vistin Pharma going forward, as it cannot be transferred as a part of the net asset transaction of the Acquired Interests taking place in 2015. Vistin Pharma will therefore be in an immediate taxable position if it generates taxable income in its first year of operation.
The Acquired Interests had no cash and cash equivalents or interest bearing debt as of December 31, 2014 and 2013. No cash is allocated to the Acquired Interests, as no cash will be transferred to the Company in connection with the Sale, and all necessary cash for the acquisition of the Acquired Interests and future operational purposes will be raised in the Offering.
Total liabilities per 31 December 2014 amounted to NOK 75.7 million, compared to NOK 71.1 million on 31 December 2013. The increase was largely due higher trade payables, as it increased from 33.6 million on December 31, 2013 to 39.1 million on December 31, 2014. This was principally due to the increased cost of materials for the year, as well as a marginal increase in payables to cost of materials. In addition, the net employee defined benefit liability increased from NOK 5.6 million in 2013 to NOK 9.3 million in 2014. The increases were partly offset by a reduction in other current liabilities, which went from NOK 31.8 million on December 31, 2013 to 27.3 million on December 31, 2014. The decrease was mainly related to a reduction in accrued expenses, which declined from NOK 16.9 million on 31 December 2013 to NOK 4.1 million on 31 December 2014.
Total invested capital per 31 December 2014 amounted to NOK 128.0 million, compared to NOK 199.8 million on 31 December 2013. The decrease was caused by a comprehensive income in 2014 of negative NOK 63.5 million as well as a reduction in net invested capital of NOK 8.3 million.
Cash flow The Acquired Interests generated net cash flow from operating activities of NOK 17.1 million in the fiscal year ended 31 December 2014, compared to NOK 21.2 million in the fiscal year ended 31 December 2013. The change was mainly caused by a NOK 3.4 million decrease in net financial income. In addition, changes in other accruals had a negative effect of NOK 13.8 million. These were offset by a NOK 6.8 million positive effect from changes in inventories, a NOK 4.1 million positive effect from changes in trade and creditors and a NOK 1.6 million positive effect from the difference between pension cost and in-/out payment in pension scheme. The net negative effect from non-cash adjustments, excluding depreciation, and changes in working capital were NOK 1.1 million. The Acquired Interests’ depreciation, amortisation and impairment increased from NOK 16.3 million to NOK 110.1 million from 2013 to 2014, but this had no impact on cash flows, as the Company was not in a taxable position in any of the years.
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Net cash flow from investing activities was NOK (8.8) million in the fiscal year ended 31 December 2014, compared to NOK (8.2) million in the fiscal year ended 31 December 2013. The cash flow from investing activities was related to investments in machinery and equipment. The marginal change from 2013 to 2014 is explained by an increase in investment into furniture, fittings and equipment that was offset by a slight reduction in the investment into vehicles and machinery. For a further description of the investments of the Acquired Interests, see section 9.6.1.
Net cash flow from financing activities was NOK (8.3) million in the fiscal year ended 31 December 2014, compared to NOK (13.0) million in the fiscal year ended December 31, 2013. The negative cash flow from financing activities is equal to the negative net sum of cash flows from the other sources and represents a net change in invested capital for the parent company considering that all cash is left with Weifa ASA. The net cash flow for the Acquired Interests for the years ended December 31 2014 and 2013 was NOK 0.0 million, as cash flows net of operations and investments were transferred to Weifa ASA and recorded as an increase in invested capital.
9.5 CAPITAL RESOURCES Prior to the Offering, the Company will have no cash or cash equivalents, as the funding will be raised in the Offering. The capital raised in the Offering will be used to acquire the Acquired Interests from Weifa AS, for working capital as well as other capital requirements. Following the Offering, the acquisition of the Acquired Interests and net of transaction costs, the Company expects to have a cash balance of approximately NOK 41 million.
At the date of this Prospectus there are no material restrictions on the Company’s access or possibility to use its cash and cash equivalents.
9.6 INVESTMENTS
9.6.1 Historical investments Vistin Pharma has not completed any material investments since incorporation and up until the date of this Prospectus.
Total investments in the assets associated with the Acquired Interests in the period from 01.01.2015 until the date of this Prospectus amounts to approximately NOK 2.7 million and relates to general maintenance investments in property, plant and equipment.
As displayed in the special purpose carve-out cash flow statements in section 9, the Acquired Interests recorded investments of NOK 8.8 million in the financial year ended December 31, 2014 and NOK 8.2 million in the financial year ended December 31, 2013. The largest share of the investments during 2014 was related to furniture, fittings and equipment, which amounted to NOK 5.1 million. The Acquired Interests also made a NOK 2.1 million investment into vehicles and machinery, as well as a NOK 1.6 million investment into land, buildings and fixtures. The largest share of the investments during 2013 was related to vehicles and machinery, which amounted to NOK 4.5 million. The Acquired Interests also made a NOK 1.8 million investment into furniture, fittings and equipment, as well as a NOK 1.8 million investment into land, buildings and fixtures.
As described above, the change in total investments from 2013 to 2014 is explained by the increase in investment into furniture, fittings and equipment that was offset by a slight reduction in the investment into vehicles and machinery.
In terms of investments per business area for the year ended 31 December 2014, the investments allocated to CMO tablet manufacturing was NOK 6.7 million, where the largest investment was related to a new wrapping machine with a total investment of NOK 3.1 million. The investments allocated to the Metformin business area was NOK 0.9 million, with the largest investment being a new pump for the production process with a total investment of NOK 0.7 million. No investments were made into the Opioid business area for the period. In addition, the Acquired Interests incurred NOK 1.1 million of un-allocated investments.
In terms of investments per business area for the year ended 31 December 2013, the investments allocated to CMO tablet manufacturing was NOK 4.7 million, where the largest investment was related to a new control system for the manufacturing process amounting to NOK 1.0 million. The investments allocated to Metformin
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was NOK 1.9 million, while the investments allocated to Opioids was NOK 0.2 million. None of the investments allocated to the two business areas exceeded NOK 0.5 million. In addition, the Acquired Interests incurred NOK 1.4 million of un-allocated investments.
9.6.2 Investments in progress As of the date of this Prospectus, with the exception of the planned acquisition of the Acquired Interests from Weifa ASA, which is i.a. subject to completion (to be determined by the Company when such completion is unconditional) by Vistin Pharma of an offering of new shares in an amount of at least NOK 170 million at an aggregate pricing of Vistin Pharma ASA of at least NOK 120 million, the Company has no significant ongoing investments, and have not committed to any future investments.
9.7 CAPITALISATION AND INDEBTEDNESS The following tables below set forth information about the Group’s capitalisation and indebtedness as of 31 March 2015, and the changes following the contemplated Sale and Offering. The tables should be read together with the financial statements and the notes related hereto, as well as the information included in this section 9 “Financial Information”.
The table below sets forth the Group’s capitalisation as of 31 March 2015, and the changes following the Sale and the Offering.
31.03.15 Post the Sale and the Offering NOK 1,000 (unaudited) (unaudited)
Shareholders’ Equity Share Capital ...... 1 000 ...... 17 055¹ Share Premium...... - ...... 153 494 Other paid-in equity ...... - ...... - Other Equity ...... - ...... - Retained earnings ...... - ...... - Total Equity (A) ...... 1 000 ...... 170 549
Indebtedness Guaranteed ...... -...... - Secured ...... - - Unguaranteed / unsecured ...... - - Total current debt ...... - ...... -
Guaranteed ...... -...... - Secured ...... - - Unguaranteed / unsecured ...... - - Total non-current debt ...... - .. -
Total indebtedness (B) ...... - ... -
Total capitalisation (A+B) ...... 1...... 000 170 549
¹ Includes the 17,054,935 Offer Shares, each with a nominal value of NOK 1, to be issued in connection with the Offering. The share capital of NOK 1,000,000 as of the date of this Prospectus will be reduced to NOK 0 through the redemption of the 1 million shares currently owned by Weifa ASA.
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The table below sets forth the Group’s net indebtedness as of 31 March 2015, and the changes following the Sale and the Offering.
31.03.15 Post the Sale and the Offering NOK 1,000 (unaudited) (unaudited)
A. Cash ...... 1 000...... 41 549¹ B. Cash equivalents ...... - ...... - C. Tradable securities ...... - ...... - D. Liquidity (A+B+C) ...... 1 000 ... 41 549
E. Current financial receivables ...... - ...... 50 391
F. Current bank debt ...... - ...... - G. Current portion of non-current debt ...... - ...... - H. Other current financial debt ...... -...... 66 371 I. Current financial debt (F+G+H) ...... - ...... 66 371
J. Net current financial indebtedness (I- -1 000 -25 569 E-D)......
K. Non-current bank loans ...... - - L. Bonds issued ...... - ...... - M. Other non-current loans ...... - - N. Non-current financial indebtedness - - (K+L+M) ......
O. Net financial indebtedness (J+N) ...... -1 000 ...... -25 569 ¹ Equals total proceeds from the Offering less NOK 120 million to be paid to Weifa AS for the Acquired Interests and approximately NOK 9 million in transaction costs. The NOK 1 million in cash currently owned by the Company will be paid to Weifa ASA in connection with the redemption of the 1,000,000 shares currently owned by Weifa ASA.
As at 31 March 2015 and as at the date of the Prospectus, the Group does not have any contingent or indirect indebtedness.
9.8 WORKING CAPITAL The Company is of the opinion that the working capital available to the Group is sufficient for the Group’s present requirements, for the period covering at least 12 months from the date of this Prospectus.
9.9 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The main risks arising from the Group’s financial instruments are interest rate risk, credit risk, foreign currency risk and liquidity risk. The Group's Executive Management oversees the management of these risks, which is being reviewed by the Board of Directors. Please see section 2.2 for a further description of the abovementioned risk factors.
The primary objective of the Group’s capital management is to ensure that the Company maintains a solid capital structure enabling it to develop and build its business to maximise shareholder value. The Group’s objective is to maintain a balance of financial assets that reflects the cash requirement of its operations and investments for at least the next 12 - 24 months.
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9.10 SIGNIFICANT CHANGES IN THE GROUP’S FINANCIAL OR TRADING POSITION SINCE 31 MARCH 2015 Except for the contemplated acquisition of the Acquired Interests from Weifa AS, the Listing and the Offering (cf. section 5 and 6), there has been no significant change in the financial or trading position of the Group since 31 March 2015.
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10. BOARD OF DIRECTORS, EXECUTIVE MANAGEMENT AND EMPLOYEES
10.1 BOARD OF DIRECTORS
10.1.1 Overview In accordance with Norwegian law, the Board of Directors is responsible for administering the Company’s affairs and ensuring that the Company’s operations are organised in a satisfactory manner.
The Company’s Articles of Association provide that the Board of Directors shall consist of a minimum of three and a maximum of eight Board members. As of the date of this Prospectus, the Company’s Board of Directors consists of the following individuals:
Name Position Served since Term expires Business address
Ole Enger ...... Chairman ...... 2015 ...... 2017 Riddervoldsgate 3, 0258 Oslo Øystein Stray Spetalen ...... Board member...... 2015 ...... 2017 c/o Ferncliff, Sjølyst Plass 2, 0278 Oslo Kathrine Gamborg Andreassen ...... Board member ...... 2015 2017 Østensjøveien 27, 0661 Oslo
In addition, the following two individuals will be appointed to the Board of Directors following the Company’s listing on Oslo Axess:
Name Position Served since Term expires Business address Einar J. Greve ...... Board member ...... On or about 10 2017 Munkedamsveien 45 F, 8. Etasje, June 2015 PO 1566 Vika, 0188 Oslo Ingrid Leisner ...... Board member ...... On or about 10 2017 Vettaliveien 8, 0781, Oslo June 2015
10.1.2 Brief biographies of the current and future Board members Ole Enger, Chairman Mr. Enger has extensive industrial experience and is currently the Chairman of the Board of REC Solar ASA. Mr Enger was previously the CEO of REC ASA, a position held from April 2009. Prior to REC ASA, Mr. Enger was the president & CEO of SAPA AB, and he has also held the position as president & CEO of Elkem AS and Executive Vice President of Elkem AS. In addition, he has lead Norsk Hydro’s Bio-division, including the development of Omega 3 products for both pharmaceutical and food applications, and has been the Chairman of the Board of Borregaard, a producer of fine chemicals for the global pharmaceutical market. Ole Enger holds a degree from the Norwegian University of Life Sciences and a business degree from the Norwegian School of Economics. Mr. Enger is a Norwegian citizen, and resides in Norway.
Current directorships and senior management position ...... REC Solar ASA...... (chairman), Weifa. ASA (board member), Norske Skog ASA (nominated to the board) Previous directorships and senior management positions REC ASA (chief executive officer) last five years ......
Øystein Stray Spetalen, Board member Mr. Spetalen is Chairman and owner of investment firm Ferncliff TIH AS. He is an independent investor. He has worked in the Kistefos Group as an investment manager, as corporate advisor in different investment banks and as a portfolio manager in Gjensidige Forsikring. Mr. Spetalen is a chartered petroleum’s engineer from NTNU. Mr. Spetalen is a Norwegian citizen and resides in Oslo, Norway.
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Current directorships and senior management Gardermoen Media AS (chief executive officer), Ferncliff TIH 1 position ...... AS (chairman),...... Saga Tankers ASA...... (chairman), Tycoon Industrier AS (chairman), Tymar AS (chairman), Gross Management AS (chairman), Ferncliff TIH AS (chairman), Ferncliff (chairman), Dasut AS (chairman), AS Simask (chairman), Unified AS (chairman), Krøs AS (chairman), Tycoon Trading 2 AS (chairman), Allum Holding AS (chairman), Renewable Energy Corporation AS (board member), Hydrogen Technologies Holding AS (board member), Namdalen Træsliberi AS (board member), Van Severen & Co AS (board member), Bangdal Brug AS (board member), Skorovas Gruber AS (board member), Visitfonna AS (board member), Grøndalselva AS (board member), Strata Marine & Offshore AS (board member), Vallhall Fotballhall AS (board member), Sjølyst Kontorfellesskap AS (board member), Vallhall Fotballhall KS (board member), Vallhall Fotballhall Drift AS (board member), Namdal Skoger AS (board member), Namdal Bruk AS (board member), Namdal Kraft AS (board member), Spectrum ASA (board member), Aqualis ASA (board member)
Previous directorships and senior management Jetfly KS (chairman), Jetfly AS (chairman), Strata AS (chairman), positions last five years ...... Ferncliff...... Asset Management...... Holding AS (chairman), Singapore Drilling AS (chairman), Connect Venture AS (chairman), Maross Invest AS (chairman), AS Ferncliff (chairman), Global Små Mellomstore Bedrifter AS (chairman), Televekst AS (chairman), Sirius Simask AS (chairman), Standard Drilling ASA (chairman), Ferndrill Management AS (chairman), Pesoss AS (chairman), Gyoss Invest AS (chairman), Ferncliff Invest AS (board member), Gardermoen Media AS (board member), Global Geo Services ASA (board member), Standard Holding AS (board member), HT Lufttransport AS (board member), Unionen AS (board member), Aktiv Kapital ASA (board member), Kverneland ASA (board member), Norske Skog ASA (board member), Standard Drilling ASA (board member), Bank 2 ASA (board member), B2 Holding AS (board member), Salmar ASA (board member), Altinex ASA (board member), Allum Marine AS / Noble Denton Sandefjord AS (board member), VIF ASA (board member)
Kathrine Gamborg Andreassen, Board member Ms. Andreassen joined Weifa in August 2012, as Vice President of Weifa’s Consumer Health business area. She is an experienced marketing professional and she has held several top management positions within the FMCG, food and health business (Orkla, Bakers). Ms. Andreassen holds a M.Sc. in Business Strategy & Marketing from the University of Wisconsin.
Current directorships and senior management position ...... Weifa ASA (vice...... president consumer. health)
Previous directorships and senior management Kemetyl Group (group marketing and communications director), positions last five years ...... MarkUp...... Consulting (manager)......
New Board members to be appointed following the listing of Vistin Pharma ASA on Oslo Axess on or about 10 June 2015:
Einar J. Greve, Board member Mr. Greve works as a strategic advisor at Cipriano AS. Mr. Greve has previously worked as head of the legal department of Oslo Børs ASA, as partner at Wikborg Rein & Co and as Partner of Arctic Securities ASA. Mr. Greve has held various positions in Norwegian listed and unlisted companies. He holds a degree in law (cand.jur) from the University of Oslo.
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Current directorships and senior management position ...... Cipriano AS (chairman...... and CEO), JE. Greve AS (board member), Positano AS (chairman and owner), Pagano AS (board member), C Sundstgt. 19 AS (chairman), Datum Invest AS (board member), Scandinaviegaarden AS (board member), Elliptic Laboratories AS (Board member), Advokatfirmaet Greve (Chairman and owner)
Offpiste AS (Board member), Tjuvstart AS (Chairman), Starten Previous directorships and senior management AS (Chairman), Norske Skogindustrier ASA (Board member), positions last five years ...... Saga ...... Tankers ASA (Board...... member), Eltek ASA (Board member), Union Gruppen AS (Chairman), Tjuvholmen 1 AS (Board member), Boleyn Holding AS (Board member)
Ingrid Elvira Leisner, Board member Ms. Leisner has previously worked as Head of Portfolio Management for Electric Power in Statoil Norge AS. She also has a background as a trader of different oil and gas products in her 15 years in Statoil ASA. Ms. Leisner holds a Bachelor of Business degree (Siviløkonom) with honors from the University of Texas at Austin. She has served on the board of several companies listed on the Oslo Stock Exchange.
Current directorships and senior management position ...... Spectrum ASA ...... (board member), . Fortuna Mare AS (board member), Aurora LPG Holding ASA (board member)
Previous directorships and senior management Intex Resources ASA (board member), Imarex ASA (board positions last five years ...... member),...... International ...... Maritime Exchange ASA (board member), Saga Tankers ASA (board member), Global Tender Barges ASA (board member), Norex Resources AS (Chairman), Icefire Diamonds (Chairman)
10.2 EXECUTIVE MANAGEMENT
10.2.1 Overview The table below sets forth the members of the Executive Management following the transfer of the Acquired Interests on or about 1 June 2015. The Company’s registered business address, Østensjøveien 27, 0661 Oslo, Norway, serves as the business address for the members of the Executive Management in relation to their employment with the Group.
Name Current position within the Group Kjell-Erik Nordby ...... Chief...... Executive Officer Gunnar Manum ...... Chief...... Financial Officer Valborg Godal Vold ...... Vice President...... – Sales and marketing Liesl Hellstrand ...... Vice...... President – HR Gitte Jensen Wegge ...... Vice President...... – Operations Hilde Merete Næss ...... Vice President...... – Quality Assurance
10.2.2 Brief biographies of the Executive Management Kjell-Erik Nordby, Chief Executive Officer Mr. Nordby has been CEO of Weifa since February 2009. Prior to joining Weifa, he was Vice President of Business Development at Photocure. Previous experience includes several years at Alpharma, most recently as Senior Director API Project Management. Mr. Nordby holds a Master's degree in Pharmacy and a Master's degree in Business Administration.
Current directorships and senior management position ...... Weifa ASA (chief...... executive officer) .
Previous directorships and senior management n.a. positions last five years ......
Gunnar Manum, Chief Financial Officer Mr. Manum joined Weifa ASA (previously Aqualis and Clavis Pharma) in April 2007. Prior to joining the Company, he was a senior advisor at Handelsbanken Capital Markets, Corporate Finance, for eight years. Mr. Manum has long and wide ranging experience from several managerial positions within finance and accounting
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at Stolt Sea Farm (now part of Marine Harvest) and PricewaterhouseCoopers, Australia. He holds a MCom in Finance and Accounting from the University of New South Wales, Sydney. Mr. Manum is based in Oslo, Norway.
Current directorships and senior management position ...... Weifa ASA (chief...... financial officer) .
Previous directorships and senior management positions last five years ...... Aqualis...... ASA (acting chief...... executive officer), Clavis Pharma ASA (chief financial officer)
Valborg Godal Vold, Vice President Sales and Marketing Ms. Godal Vold joined Weifa’s Executive Management team in October 2012 as Vice President of the B2B business area. She is an experienced executive manager within the biotechnology and pharmaceutical industry. Ms. Godal Vold holds a BA in Biomedical Laboratory Science (BLS) and an Executive Master in Business & Administration from BI Norwegian Business School /ESCP-EAP Paris.
Current directorships and senior management position ...... Weifa ASA (vice...... president B2B sales. and marketing)
Previous directorships and senior management positions last five years ...... Den Norske...... Eterfabrikk AS...... (CEO), Fageråsen AS (CEO)
Liesl Hellstrand, Vice President HR Ms. Hellstrand joined Weifa as Vice President of HR in January 2014. She previously held the position as VP of HR at Jordan for five years, prior to that she spent nine years in Hydro as VP of HR in Oslo and four years as VP of HR at Volvo Car Corporation in Gothenburg, Sweden. Ms. Hellstrand holds a BSc in Human Resource Development and Labour Relations, specializing in Organization, from Uppsala University, Sweden.
Current directorships and senior management position ...... Weifa ASA (vice...... president HR) .
Previous directorships and senior management positions last five years ...... Jordan...... AS (vice president ...... HR)
Gitte Jensen Wegge, Vice President Operations Ms. Wegge has been the Head of Operations at Bergen Engines AS (Rolls-Royce Power Systems) since 2012, and joined Vistin Pharma in April. She has held several management positions at Elkem, where she was employed for more than 20 years. Ms. Wegge holds a Master of Science from the Norwegian Institute of Technology.
Current directorships and senior management position ...... Bergen Engines ...... AS (head of operations. )
Previous directorships and senior management positions last five years ...... Elkem...... Carbon AS (production...... manager)
Hilde Merete Næss, Vice President Operations Ms. Næss joined Weifa in March 2015. She previously held the position as Head of Quality & Regulatory Affairs Global Omega-3 at Pronova Biopharma, where she has held several management positions with QA during her 20 years with the company. Ms. Næss holds a Master of Science in Chemistry from the University of Oslo and a Master of Management from the Norwegian School of Management (BI).
Current directorships and senior management position ...... Weifa AS (Vice ...... President of Quality. Assurance)
Previous directorships and senior management Pronova Biopharma (head of quality & regulatory affairs global positions last five years ...... omega...... -3 ......
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10.3 CONFLICTS OF INTERESTS, FAMILY RELATIONSHIP, DIRECTORSHIPS ETC. There are no potential conflicts of interests between any duties to the Company, of any of the Board members or members of the Executive Management and their private interests and or other duties, except as described below.
Ole Enger, Chairman of the Board Mr. Enger is currently a board member of Weifa AS. Weifa AS will become a major customer of the Company through the CMO Agreement that was signed as part of the Sale of the Acquired Interests. Mr. Enger is thus not considered as an independent Board member.
Øystein Stray Spetalen, member of the Board Companies controlled by, or associated with, board member Øystein Stray Spetalen will own 15.1% of the shares in the Company if all subscription rights are used to subscribe for shares in the contemplated Offering. Mr. Spetalen is also a board member of Weifa AS. Weifa AS will become a major customer of the Company through the CMO Agreement that was signed as part of the Sale of the Acquired Interests. Mr. Spetalen is thus not considered as an independent Board member.
Kathrine Gamborg Andreassen, member of the Board Ms. Andreassen will take on the position as CEO of Weifa AS from 1 June. Weifa AS will become a major customer of the Company through the CMO Agreement that was signed as part of the Sale of the Acquired Interests. Ms. Andreassen is thus not considered as an independent Board member.
There are no family relations between any of the Company’s Board members or Executive Management.
10.4 DETAILS OF ANY CONVICTIONS FOR FRAUDULENT OFFENCES, BANKRUPTCY ETC. In June 2013, NEL Hydrogen AS filed for bankruptcy, with Ferncliff and associated companies being the largest shareholders of the company. Øystein Stray Spetalen acted as chairman. Following the bankruptcy, the company was restructured and restarted, with four former employees taking over the management of the company. Ferncliff and associated companies remained the largest shareholders of New NEL Hydrogen AS.
Other than the abovementioned, no member of the Board of Directors or the Executive Management have for at least the previous five years preceding the date of this Prospectus been;
Convicted in relation to any fraudulent offences; Involved in any bankruptcies, receiverships or liquidations when acting in the capacity of member of an administrative, management or supervisory body; Subject to any official public incrimination and/or sanctions by statutory or regulatory authorities (including designated professional bodies), or been disqualified by a court from acting as a member of the administrative, management or supervisory body of an issuer or from acting in the management or conduct of the affairs of any issuer.
10.5 REMUNERATION AND BENEFITS
10.5.1 Remuneration of the Executive Management Vistin Pharma was established on 6 March 2015, but the majority of the Executive Management team of Weifa (set out below) will be transferred to the Company in connection with the Sale and Listing, and the following information is therefore deemed relevant for prospective investors. Gitte Jensen Wegge and Hilde Merete Næss were not part of Weifa’s Executive Management throughout 2014 and are therefore not included. The remuneration for Kjell-Erik Nordby, Valborg Godal Vold and Liesl Hellestrand is for the period from August 2014 to December 2014, as they were a part of Weifa AS before it was acquired by Aqualis ASA (later renamed Weifa ASA) and, as such, were not a part of the parent company before the acquisition. The remuneration for Gunnar Manum is for the full fiscal year, as he was the Acting CEO of the acquiring company Aqualis ASA (later renamed Weifa ASA) prior to the acquisition of Weifa AS. Following the acquisition he was appointed CFO for Weifa ASA. He was therefore remunerated for the full fiscal year in Weifa ASA’s annual accounts for 2014.
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Salary Pension Other(1) Share Total Name contributions options(2) Kjell-Erik Nordby(3)...... 788 ...... 39 ...... 67 ...... 754 1 648 Gunnar Manum(4) ...... 2 254(4) ...... 85 ...... 38 ...... 377 2 754 Valborg Godal Vold(3) ...... 457 ...... 45 ...... 47 ..... 270 819 Liesl Hellstrand(3) ...... 450 ...... 45 ...... 43 ...... 270 808 Total ...... 3 948 ...... 214 ...... 195 1 671 6 028 Note: All numbers in NOK thousands (1) Principally company vehicle or car allowance (2) Options for shares in Weifa ASA, not Vistin Pharma (3) Remuneration for the period August 2014 to December 2014; (4) Includes compensation as Acting CEO from January 2014 to September 2014 and CFO from September 2014 to December 2014; (5) Salary includes earned bonus of NOK 600,000 Source: The information has been extracted from Weifa ASA’s 2014 annual report.
10.5.2 Benefits upon termination No employee, including any member of the Executive Management, has entered into employment agreements which provide for any special benefits upon termination, except for Kjell-Erik Nordby who is, under certain circumstances, entitled to 18 months’ severance pay.
10.6 CORPORATE GOVERNANCE
10.6.1 Audit committee The function of the audit committee is to prepare matters to be considered by the Board and to support the Board in the exercise of its management and supervisory responsibilities relating to financial reporting, statutory audit and internal control. Currently, the Company’s full Board constitutes the audit committee.
10.6.2 Remuneration committee The Remuneration Committee is appointed by the Board to evaluate and propose the compensation of the Company’s Chief Executive Officer and other senior executives of the Company. In addition, the Remuneration Committee shall produce an annual report on the compensation of the Senior Executives, which shall include the Company’s annual accounts pursuant to applicable rules and regulations, including accounting standards, promulgated from time to time. At least annually, the Remuneration Committee shall review and reassess these instructions and recommend any proposed changes to the Board, which shall have sole authority to amend these instructions.
10.6.3 Corporate Governance compliance The Company has adopted and implemented a corporate governance regime which complies with the Norwegian Code of Practice for Corporate Governance. The Company will follow all recommendations of the code, with the following exemptions:
Item 6: The Company may from time to time recommend that the Chairman of the Board chairs the General Meeting.
Item 11: The Board intends to solicit consultancy services from a company held by the Chairman Ole Enger. These services will be in addition to the services Mr. Enger shall provide as Chairman of the board. The rationale for the arrangement is that the Company will be a newly formed stand-alone entity, and at least for a period, it is deemed in the interest of the Company that the Executive Management has extra support i.a. in the business development and communication areas.
10.7 EMPLOYEES The following table sets out the number of employees in Vistin Pharma following the acquisition of the Acquired Interests, split by the various business areas. Contractors and freelancers have been accounted for on a 100% utilization basis.
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Division Total Executive Management 6 Administration 13 Metformin 52(1) Opioids 9 CMO tablet manufacturing 71 Sales and marketing 4 Total 155 Note: (1) Number includes four temporary employees
10.8 PENSIONS AND OTHER OBLIGATIONS
10.8.1 Pensions The Company will establish a defined contribution plan. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee services in the current and/or prior periods.
For defined contribution plans, the Company pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognised as when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available.
No amount has as of the date of this Prospectus been set aside for pension.
A pension obligation relating to the CEO will be transferred to the Company from Weifa AS. The obligation is related to an early retirement agreement, under which the CEO will receive pension from the age of 62.
10.8.2 Loans and guarantees The Company has not granted any loans, guarantees or other commitments to any of its Board Members or to any member of the Executive Management.
10.9 SHAREHOLDINGS
10.9.1 Board of Directors As at the date of this Prospectus, none of the Board Members holds any Shares or share options in the Company However, the Board members Ole Enger, Øystein Stray Spetalen and Einar J. Greve have underwritten parts of the Offering, cf. section 6.1.3. In addition, based on the Board members shareholdings in Weifa as of the Record Date, the following members of the Board will receive Subscription Rights in the Offering:
Board member Number of subscription rights Ole Enger ...... 15 561 ...... Øystein Stray Spetalen ...... 2...... 069 339 ...... Einar J. Greve ...... 49 019 ......
10.9.2 Executive Management As at the date of this Prospectus, none of the members of the Executive Management hold any Shares or share options in the Company. However, based on the Executive Managements shareholdings in Weifa as of the Record Date, the following members of the Executive Management will receive Subscription Rights in the Offering:
Executive manager Number of subscription rights Gunnar Manum ...... 4 617 ......
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11. CORPORATE INFORMATION AND DESCRIPTION OF THE SHARE CAPITAL
11.1 COMPANY CORPORATE INFORMATION The Company’s registered and commercial name is Vistin Pharma ASA. The Company is a public limited liability company pursuant to the Norwegian Public Limited Liability Companies Act (Nw: Allmennaksjeloven), incorporated under the laws of Norway. The Company was incorporated on 6 March 2015 by Weifa ASA for the purpose of the Sale and the Listing and to be the parent company of Vistin Pharma AS going forward. The Company’s organisation number is 915157882, and its registered office is Østensjøveien 27, 0661 Oslo, Norway with telephone number: +47 35 98 42 00. The Company’s webpage will be www.vistin.com and will be available from 1 June 2015.
11.2 LEGAL STRUCTURE
11.2.1 Overview Prior to completion of the Sale, Vistin Pharma ASA and Vistin Pharma AS are wholly owned subsidiaries of Weifa ASA. Following the Sale, the Group will consist of the holding company, Vistin Pharma ASA, and its wholly owned subsidiary; Vistin Pharma AS.
The holding company, Vistin Pharma ASA, will not conduct any operational activities. All operational activities will be conducted by Vistin Pharma AS.
11.2.2 Description of the Group companies
Vistin Pharma ASA Vistin Pharma ASA is the holding company of the Group. The Company has no operating activities as of the date of this Prospectus. Its registered address is Østensjøveien 27, 0661 Oslo.
Vistin Pharma AS All of the Group’s operational activities will be conducted by Vistin Pharma AS. Its registered address is Østensjøveien 27, 0661 Oslo.
11.3 SHARE CAPITAL AND SHARE CAPITAL HISTORY The Company’s current share capital is NOK 1 000 000 divided into 1 000 000 ordinary shares, each with a nominal value of NOK 1.00. The Company has one class of shares. The Shares are equal in all respects, including the right to dividend; voting rights; rights to share in the issuer’s profit; rights to share in any surplus in the event of liquidation; redemption provisions; reserves or sinking fund provisions; liability to further capital calls by the issuer; and any provision discriminating against or favoring any existing or prospective holder of such securities as a result of such shareholder owning a substantial number of shares. Each Share carries one vote at the Company's general meeting. The Company’s Shares are freely transferable.
The following changes in the share capital of the Company have taken place since incorporation in March 2015:
Share capital Subscription Par value Share capital Date Type of change increase price (NOK/ Issued shares Total shares (NOK) (NOK) (NOK/share) share) 06.03.15 Incorporation 1 000 000 1 000 000 1.00 1.00 1 000 000 1 000 000
The number of Offer Shares to be issued is 17,054,935, all with a nominal value of NOK 1.00 per Share. As further described in section 5, the one (1) million Shares currently owned by Weifa will be redeemed prior to the Listing. Thus, the Company’s share capital following the Offering and Listing will be NOK 17,054,935, consisting of 17,054,935 Shares, each with a par value of NOK 1.00.
11.4 OWN SHARES As of the date of this Prospectus, the Company does not own any treasury shares.
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11.5 SHAREHOLDER AGREEMENTS The Board is not aware of any shareholder agreements by and among the Company’s shareholders relating to the Company.
11.6 STOCK EXCHANGE LISTING, SHARE REGISTRAR AND SECURITIES NUMBER Vistin Pharma ASA is a Norwegian public limited liability company and the Shares are issued pursuant to the Norwegian Public Limited Companies Act.
The Company applied for admission to trading of its Shares on Oslo Axess on 23 April 2015. It is expected that the board of directors of the Oslo Stock Exchange approves the listing application of the Company on or about 26 May 2015, subject to certain conditions being met.
The Company currently expects commencement of trading in the Shares on Oslo Axess on or about 10 June 2015. The Shares will be listed on the Oslo Axess under the ticker symbol “VISTIN”.
The Shares are registered in the Norwegian Central Securities Depository (VPS). The registrar for the Company’s shares in VPS is Nordea Bank Norge ASA, Securities Services/Issuer Services, P.O. Box 1166 Sentrum, 0107 Oslo, Norway. The Shares carry the securities number ISIN NO 0010734122.
11.7 OUTSTANDING AUTHORIZATIONS On the Company’s EGM held 16 April 2015 the Board of Directors was granted the following authorisation for one or several share capital increases:
"The board proposes an authorization to increase the share capital with up to NOK 7,750,000 through one or several share capital increases.
The purpose of the use of the authorisation shall include (i) financing purposes, including in connection with investments, and (ii) incentives for the employees.
Price and subscription terms shall be determined by the board at each issuance, with respect to the company's need and the market value of the shares at the relevant time. Shares can be issued against cash contribution or against contribution in the form of other assets (contribution in kind).
Existing shareholders pre-emptive rights to subscribe for shares can be deviated from by the board in connection with the exercise of the authorisation. The authorisation includes share capital increases in connection with mergers.
This authorisation expires at the date of the next annual general meeting (cf. the Norwegian Public Limited Liability Companies Act section 5-6).
The board is at the same time given authorisation to do necessary amendments to the articles of association upon using the authorisations"
Furthermore, the same EGM granted the Board the following authorization to acquire own shares:
"The board is authorised to acquire the company's own shares, in one or several rounds, with an aggregate nominal value of up to NOK 1,555,493.
The purpose of using the authorisation shall include (i) financing purposes, including in connection with investments, (ii) incentives for employees and (iii) repurchases of own shares in the market for subsequent deletion.
The lowest and highest purchase price to be paid for the shares that may be acquired in accordance with the authorization is NOK 1 and NOK 100 respectively. The board has discretion as regard to the manner of which any acquisition and sale of shares shall be made.
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The authorisation is valid until the company's ordinary general meeting in 2016, however in any case not later than 15 months from the date of this general meeting.
The board is at the same time given authorisation, to the extent necessary, to make necessary amendments to the articles of association when exercising the authorisation."
11.8 SHARE OPTIONS As of the date of this Prospectus, the Company has no outstanding share options.
11.9 CONVERTIBLE INSTRUMENTS AND WARRANTS As of the date of this Prospectus, the Company has no outstanding convertible instruments or warrants.
11.10 DIVIDEND POLICY The Board shall, in cooperation with the Executive Management, issue the Company’s dividend policy and shall annually submit proposal for distribution of dividend to the General Meeting.
It is an objective of the Company to generate high and stable returns, which is at least on the same level as other investment possibilities with comparable risk. This will be achieved, first and foremost, through strong and profitable growth within the Company’s business areas. To support this growth the Company’s earnings will be reinvested in the Company and no dividend is therefore expected to be paid in the near future.
11.11 SHAREHOLDERS As of the date of this Prospectus, the Company has one (1) shareholder, Weifa ASA, owning 100% of the outstanding shares. For further information see section 5.
Shareholders with ownership exceeding 5% must comply with disclosure obligations according to the Norwegian Securities Trading Act section 4-3. For more detailed description please see section 12.7.
As far as the Company is aware of, there is no other natural or legal person other than the above mentioned, which indirectly or directly has a shareholding in the Company above 5% which must be notified under Norwegian law.
To the knowledge of the Company, no person, entity or group directly or indirectly controls the issuer to such extent that special measures is considered necessary to ensure that such control is not abused.
The Offering is fully underwritten by the Underwriting Syndicate. In the event that the Offering is not fully subscribed all unsubscribed shares will be allocated to the Underwriting Syndicate according to the allocation set forth in the Underwriting Agreement, cf. section 6.1.3.
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12. SHAREHOLDER MATTERS AND NORWEGIAN COMPANY AND SECURITIES LAW The following is a summary of certain information relating to the Shares and certain shareholder matters, including the Company’s articles of association and a summary of applicable Norwegian corporate and securities law in effect as of the date of this Prospectus. The summary does not purport to be complete and is qualified in its entirety by the Company’s Articles of Association and Norwegian law.
Under Norwegian law, all shares are to provide equal rights in a company. However, Norwegian law permits a company’s articles of association to provide for different types of shares (e.g., several classes of shares). In such case, a company’s articles of association must specify the different rights, preferences and privileges of the classes of shares and the total par value of each class of shares. The Company’s articles of association provide for a single class of shares with equal rights.
There are no restrictions affecting the right of Norwegian or non-Norwegian residents or citizens to own the Shares. The Company’s articles of association do not contain any provisions restricting the transferability of Shares.
12.1 THE GENERAL MEETING OF SHAREHOLDERS Under Norwegian law, a company’s shareholders are to exercise supreme authority in the Company through the general meeting.
In accordance with Norwegian law, the annual general meeting of the Company’s shareholders is required to be held each year on or prior to 30 June. The following business must be transacted and decided at the annual general meeting:
• approval of the annual accounts and annual report, including the distribution of any dividend;
• the Board of Directors’ declaration concerning the determination of salaries and other remuneration to senior executive officers;
• any other business to be transacted at the general meeting by law or in accordance with the Company’s articles of association
In addition to the annual general meeting, EGMs of shareholders may be held if deemed necessary by the Board. An EGM must also be convened for the consideration of specific matters at the written request of the Company’s auditors or shareholders representing a total of at least 5% of the share capital.
Norwegian law requires that written notice of general meetings needs be sent to all shareholders whose addresses are known at least three weeks prior to the date of the meeting. The notice shall set forth the time and date of the meeting and specify the agenda of the meeting. It shall also name the person appointed by the Board to open the meeting. See Article 9 of the Company’s articles of association for further details. A shareholder may attend the general meeting either in person or by proxy. The Company will include a proxy form with its notices of general meetings.
A shareholder is entitled to have an issue discussed at a general meeting if such shareholder provides the Board with notice of the issue within seven days before the three week notice period, together with a proposal to a draft resolution or a basis for putting the matter on the agenda.
12.2 VOTING RIGHTS Subject to the terms of a company’s articles of association to the contrary, Norwegian law provides that each outstanding share shall represent a right to one vote. All of the Company’s Shares have an equal right to vote at general meetings. No voting rights can be exercised with respect to treasury shares held by a company.
In general, decisions that shareholders are entitled to make under Norwegian law or the Company’s articles of association may be made by a simple majority of the votes cast. In the case of elections, the persons who obtain the most votes are elected. However, as required under Norwegian law, certain decisions, including resolutions to waive preferential rights to subscribe in connection with any share issue, to approve a merger or demerger, to amend the Company's articles of association, to authorise an increase or reduction in the share capital, to
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authorise an issuance of convertible loans or warrants or to authorise the board of directors to purchase shares and hold them as treasury shares or to dissolve the Company, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a general meeting of shareholders. Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval by the holders of such shares or class of shares as well as the majority required for amending the Articles of Association. Decisions that (i) would reduce the rights of some or all shareholders in respect of dividend payments or other rights to assets or (ii) restrict the transferability of shares, require that at least 90 percent of the share capital represented at the general meeting of shareholders in question vote in favour of the resolution, as well as the majority required for amending the articles of association. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby as well as the majority required for amending the articles of association. There are no quorum requirements for general meetings.
In general, in order to be entitled to vote at a general meeting, a shareholder must be registered as the owner of shares in the Company’s share register kept by the VPS, or alternatively, report and show evidence of the shareholder’s share acquisition to the Company prior to the general meeting.
Under Norwegian law, a beneficial owner of shares registered through a VPS-registered nominee may not be able to vote the beneficial owner’s shares unless ownership is re-registered in the name of the beneficial owner prior to the relevant general meeting. Investors should note that there are varying opinions as to the interpretation of Norwegian law in respect of the right to vote nominee-registered shares. For example, Oslo Børs has in a statement made on 21 November 2003 taken the position that “nominee-shareholders” may vote in general meetings if they actually prove their shareholding prior to the general meeting.
12.3 ADDITIONAL ISSUANCES AND PREFERENTIAL RIGHTS If the Company issues any new Shares, including bonus shares (i.e. new Shares issued by a transfer from funds that the Company is allowed to use to distribute dividend), the Company’s articles of association must be amended, which requires a two-thirds majority of the votes cast as well as at least two-thirds of the share capital represented at a general meeting.
In addition, under Norwegian law, the Company’s shareholders have a preferential right to subscribe for the new Shares on a pro rata basis in accordance with their then-current shareholdings in the Company. Preferential rights may be derogated from by resolution in a general meeting of shareholders passed by the same vote required to approve amending the articles of association. A derogation of the shareholders’ preferential rights in respect of bonus issues requires the approval of all outstanding Shares.
The general meeting may, in a resolution supported by at least two-thirds of the votes cast and share capital represented, authorize the Board to issue new Shares. Such authorisation may be effective for a maximum of two years, and the nominal value of the Shares to be issued may not exceed 50% of the nominal share capital as at the time the authorization is registered with the Norwegian Register of Business Enterprises. The shareholders’ preferential right to subscribe for Shares issued against consideration in cash may be set aside by the Board only if the authorization includes such possibility for the Board.
Any issue of Shares to shareholders who are citizens or residents of the United States upon the exercise of preferential rights may require the Company to file a registration statement in the United Stated under U.S. securities law. If the Company decides not to file a registration statement, these shareholders may not be able to exercise their preferential rights.
Under Norwegian law, bonus shares may be issued, subject to shareholder approval and provided, amongst other requirements, that the transfer is made from funds that the Company is allowed to use to distribute dividend. Any bonus issues may be effectuated either by issuing Shares or by increasing the nominal value of the Shares outstanding. If the increase in share capital is to take place by new Shares being issued, these new Shares must be allocated to the shareholders of the Company in proportion to their current shareholdings in the Company.
12.4 MINORITY RIGHTS Norwegian law contains a number of protections for minority shareholders against oppression by the majority, including but not limited to those described in this and preceding and following paragraphs. Any shareholder
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may petition the courts to have a decision of the Board or general meeting declared invalid on the grounds that it unreasonably favours certain shareholders or third parties to the detriment of other shareholders or the Company itself. In certain grave circumstances, shareholders may require the courts to dissolve the Company as a result of such decisions. Shareholders holding in the aggregate 5% or more of the Company’s share capital have a right to demand that the Company holds an EGM to discuss or resolve specific matters. In addition, any shareholder may demand that the Company places an item on the agenda for any general meeting as further described in section 12.1 above.
12.5 LEGAL CONSTRAINTS ON THE DISTRIBUTION OF DIVIDENDS Dividends may be paid in cash or in some instances in kind. The Norwegian Public Limited Liability Companies Act provides several constraints on the distribution of dividends:
• Pursuant to section 8-1 of the Norwegian Public Limited Liability Companies Act the Company may only distribute dividend to the extent that the Company's net assets following the distribution covers (i) the Company's share capital, (ii) the reserve for valuation differences and (iii) the reserve for unrealized gains. In the amount that may be distributed, a deduction shall be made for the aggregate nominal value of treasury shares that the Company has purchased for ownership or as security before the balance day. It shall also be made a deduction for credit and collateral etc. according to sections 8- 7 to 8-10 from before the balance day which after these provisions shall lay within the scope of the funds the company may distribute as dividend. It shall however not be made a deduction for credit and collateral etc. that is reimbursed or settled before the time of decision, or credit to a shareholder to the extent that the credit is settled by a netting in the dividend.
• The calculation of the distributable equity shall be made on the basis of the balance sheet in the approved annual accounts for the last financial year, but so that the registered share capital as of the date of the resolution to distribute dividend shall apply. Following the approval of the annual accounts for the last financial year, the general meeting may also authorise the Board of Directors to declare dividend on the basis of the Company's annual accounts.
• Dividend may also be distributed by the general meeting based on an interim balance sheet which has been prepared and audited in accordance with the provisions applying to the annual accounts and with a balance sheet date not further into the past than six months before the date of the general meeting's resolution.
• Dividend may only be distributed to the extent that the Company after the distribution has a sound equity and liquidity.
• The amount of distributable dividends is calculated on the basis of the Company’s separate financial statements and not on the basis of the consolidated financial statements of the Company and its subsidiaries.
• Distribution of dividends is resolved by a majority vote at the general meeting, and on the basis of a proposal from the Board. The general meeting cannot distribute a larger amount than what is proposed or accepted by the Board.
The Norwegian Public Limited Liability Companies Act does not provide for any time limit after which entitlement to dividends lapses. Subject to various exceptions, Norwegian law provides a limitation period of three years from the date on which an obligation is due. There are no dividend restrictions or specific procedures for non-Norwegian resident shareholders to claim dividends. For a description of withholding tax on dividends applicable to non-Norwegian residents, see Chapter 14 “Norwegian taxation”.
12.6 PROCEDURE FOR DIVIDEND PAYMENTS Any potential future payments of dividends on the Shares will be denominated in NOK, and will be paid to the shareholders through the VPS. Payment to investors registered in the VPS whose address is outside Norway will be conducted by the Company’s registrar (Nordea) based on information received from the VPS. Investors registered in the VPS with an address outside Norway who have not supplied VPS with their bank account details or who do not have a valid bank account number will receive a letter from the Company’s VPS registrar which needs to be returned before the dividend payment can take place.
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12.7 MANDATORY TAKEOVER BIDS, SQUEEZE OUT, ETC The Norwegian Securities Trading Act requires any person, entity or consolidated group who becomes the owner of Shares representing more than 1/3 of the voting rights of the Company to, within four weeks, make an unconditional general offer for the purchase of the remaining Shares in the Company. A mandatory offer obligation may also be triggered where a party acquires the right to become the owner of Shares which, aggregated with the party's own shareholding, represent more than 1/3 of the voting rights in the Company, and Oslo Børs decides that acquiring such rights must be regarded as effectively being an acquisition of the Shares in question.
The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the Shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered.
In the mandatory offer, all shareholders shall be treated equally and the price to be paid per Share shall be at least as high as the highest price paid or agreed by the acquirer during the last 6 months prior to the date the threshold was exceeded. However, if it is clear that the market price was higher when the mandatory offer obligation was triggered, the Norwegian Securities Trading Act states that the offer price shall be at least as high as the market price. If the acquirer acquires or agrees to acquire additional Shares at a higher price prior to the expiration of the mandatory offer period, the acquirer is obliged to restate its offer at such higher price. The offer must be made in cash or contain a cash alternative at least equal in value to any non-cash offer. Pursuant to the Norwegian Securities Trading Act section 6-6, a repeated bid obligation applies when passing 40% and 50% of the votes of the Company.
In the event of a failure to make a mandatory offer or to sell the portion of the Shares that exceeds the threshold within four weeks, Oslo Børs may force the acquirer to sell the Shares exceeding the threshold by public auction. Moreover, a shareholder who fails to make an offer may not, as long as the mandatory offer obligation remains in force, exercise rights in the Company, such as voting at a general meeting, without the consent of a majority of the remaining shareholders. The shareholder may, however, exercise its 89s and pre-emption rights in the event of a share capital increase. If the shareholder neglects its duty to make a mandatory offer, Oslo Børs may impose a cumulative daily fine that runs until the circumstance has been rectified.
Any person, entity or consolidated group who has passed any of the above-mentioned relevant thresholds for a mandatory offer without triggering such an obligation due to an applicable exemption, and who has therefore not previously made an offer for the remaining Shares in the Company in accordance with the mandatory offer rules, is, as a main rule, obliged to make a mandatory offer in the event of a subsequent acquisition of Shares in the Company (subsequent offer obligation).
Pursuant to the Norwegian Public Limited Companies Act, compulsory acquisition (squeeze out) of the remaining shares may be initiated by a purchaser who has acquired 90 per cent or more of the shares (and corresponding voting rights). If the shareholders being squeezed out do not accept the purchaser’s offer price, the price shall be determined through a valuation by the court. The purchaser will in any event obtain title to the shares immediately. Each of the minority shareholders have a corresponding right to require that the majority shareholder representing 90 per cent or more of the shares/votes, acquire their shares. Unless agreed, the price shall be determined through a valuation by the court.
12.8 DISCLOSURE OBLIGATIONS If a person’s, entity’s or consolidated group’s proportion of the total issued shares and/or rights to shares in a company listed on a regulated market in Norway (with Norway as its home state, which will be the case for the Company) reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or the voting rights of that company, the person, entity or group in question has an obligation under the Norwegian Securities Trading Act to notify Oslo Børs and the issuer immediately. The same applies if the disclosure thresholds are passed due to other circumstances, such as a change in the Company’s share capital.
The disclosure obligation also requires an investor to disclose agreements giving an investor voting rights over another party’s shares if the total holding of shares and voting rights cross any of the mentioned thresholds.
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12.9 RIGHTS OF REDEMPTION AND REPURCHASE OF SHARES The Company has not issued redeemable shares (i.e., shares redeemable without the shareholder’s consent). The Company’s share capital may be reduced by reducing the par value of the Shares. Such a decision requires the approval of two-thirds of the votes cast and share capital represented at a general meeting. Redemption of individual Shares requires the consent of the holders of the Shares to be redeemed.
The Company may purchase its own Shares if an authorization to the Board to do so has been given by the shareholders at a general meeting with the approval of at least two-thirds of the aggregate number of votes cast and share capital represented. The aggregate nominal value of treasury shares so acquired and held by the Company is not permitted to exceed 10% of the Company’s share capital, and treasury shares may only be acquired if the Company’s distributable equity, according to the latest adopted balance sheet, exceeds the consideration to be paid for the shares. The authorization by the shareholders at the general meeting cannot be given for a period exceeding 18 months. At the date of this Prospectus, the Company has not granted such authorization to the Board and does not hold any treasury shares. A Norwegian public limited company may not subscribe for its own shares. 12.10 SHAREHOLDER VOTE ON CERTAIN REORGANISATIONS A decision to merge with another company or to demerge requires a resolution of the Company’s shareholders at a general meeting passed by at least two-thirds of the votes cast and share capital represented. A merger plan or demerger plan signed by the Board along with certain other required documentation must be sent to all shareholders and registered with the Register of Business Enterprises at least one month prior to the general meeting.
12.11 DISTRIBUTION OF ASSETS ON LIQUIDATION Under Norwegian law, a company may be liquidated by a resolution of the Company’s shareholders in a general meeting passed by the same vote as required with respect to amendments to the articles of association. The shares rank equally in the event of a return on capital by the Company upon liquidation or otherwise.
12.12 ARTICLES OF ASSOCIATION The Company's articles of association do not contain more rigid procedures for changing shareholder rights than what is included in the Norwegian Public Limited Liability Companies Act.
There are no provisions in the Articles of Association which would have an effect of delaying, deferring or preventing a change of control in the Company. Please refer to section 12.7 for a description of the requirements under the Norwegian Securities Trading Act for mandatory take-over bids.
The Company’s Articles of Association are as follows:
§ 1. Name The Company's name is Vistin Pharma ASA. The company is a public limited company.
§ 2. Business address The company's business address is in the municipality of Oslo, Norway.
§ 3. Purpose The company's purpose is the development, production and sale of medicaments, and other health-related products and services, and other activities related to such, alone, or through partnering or ownership in other businesses.
§ 4. Share capital The company's share capital is NOK 1,000,000 divided into 1,000,000 shares, each with a nominal value of NOK 1. The shares of the company shall be registered in the Norwegian Central Securities Depository.
§ 5. The board of directors The company's board of directors shall consist of between three and eight members.
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The board is elected for two years at a time, and the board members may be re-elected. In the event of equality of votes in the board, the chairman of the board of directors shall have the casting vote. The collective board shall constitute the company's audit committee.
§ 6. Signature The right to sign on behalf of the company is assigned to one board member. The board may grant power of procuration.
§ 7. Annual general meeting Notice of the company's shareholders meeting shall be given by the board in accordance with applicable legislation.
The annual general meeting shall consider the following: 1. Approval of the financial statements and the annual report, including distribution of dividends. 2. Determination of remuneration to the board of directors and approval of remuneration to the Auditor. 3. Election of chairman of the board, board members and auditor. 4. Other issues that shall be considered by the general meeting according to law or the articles of association.
§ 8. Electronic distribution of annual accounts and other documents for the shareholders meeting Documents related to matters to be considered at the shareholders meeting need not be sent to shareholders if the documents are made available for the shareholders on the company's website. This also applies to documents which according to law shall be included in or attached to the notice for a shareholders meeting. A shareholder may however request to receive documents related to matters for consideration at a shareholders meeting by mail.
§ 9. Advance voting at shareholders meetings The board may resolve that shareholders may give written advance votes in matters to be considered at shareholders meetings in the company. Such votes may also be given by electronic communication. The possibility of voting in advance is contingent upon the existence of a satisfactory method for verifying the identity of the voter. The board of directors may establish more detailed guidelines for written advance votes, including the period for such advance voting. If the opportunity to provide written votes in advance of the shareholders meeting is given, this shall be evident from the notice of the shareholders meeting, together with the guidelines, if any, that have been established for such voting.
§ 10 Participation at shareholders meetings and proposals for items on the agenda The company may in the notice of a shareholders meeting state that shareholders wishing to participate in the shareholders meeting shall notify the company of this within a specific time limit. The time limit cannot expire earlier than five days prior to the shareholders meeting. Shareholders who have not given notice within the time limit may be denied participation.
In order for a shareholder to be entitled to exercise its rights to attend and to vote on the shareholders meeting, the shareholder’s holdings of shares must be registered with the company’s share register the fifth (5th) business day prior to the day the shareholders meetings is held (the record date).
§ 11 Nomination committee The company shall have a nomination committee of 2 or three members elected by the shareholders meeting. The majority of the members of the nomination committee shall be independent of the board and the management. The nomination committee shall propose members to the board and nomination committee and remuneration to the members of the board and the nomination committee. The nomination committee shall state the grounds for the recommendations of the nomination committee.
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13. LEGAL MATTERS
13.1 LEGAL PROCEEDINGS There are no governmental, legal or arbitration proceedings, including any such proceedings which are pending or threatened, during a period covering at least the previous 12 months which may have, or have had in the recent past significant effects on the Group’s financial position or profitability.
13.2 RELATED PARTY TRANSACTIONS On 17 April 2015, the Company entered into the BTA, cf. section 5.1, with Weifa AS for the purchase of the Acquired Interests for a consideration of NOK 120 million. At the time of this agreement, the Company and Weifa AS were subsidiaries of the same parent, Weifa ASA. The shareholders of Weifa ASA approved the sale of the Acquired Interests and the sales price of NOK 120 million, at the extraordinary general meeting held on 16 April 2015. Further, the BTA has been approved by the Board of Directors of Weifa AS and Vistin Pharma AS, and the two companies have prepared a Board report, and statements by an independent expert (Ernst & Young) have been issued, pursuant to Section 3-8 of the Norwegian Private Limited Liability Companies Act.
On 17 April 2015, the Company entered into the CMO Agreement with Weifa AS for the production of Weifa's key pain relief brands. The CMO Agreement has been negotiated between the Executive Management of Vistin Pharma AS and Weifa AS and an external lawyer and is considered to be on normal market terms and therefore to be an arms-length transaction. Transactions equivalent to the CMO Agreement have historically been accounted for as intra-company transactions. These transactions constituted 33.0 percent and 34.1 percent of the special purpose carve-out revenue in 2014 and 2013, respectively. For a further description of the CMO Agreement see section 5.5.
Effective as of the closing of the Sale, Vistin Pharma AS and Weifa AS shall also enter into the Transitional Services Agreement, cf. section 5.5, regarding the provision of certain services by Vistin Pharma AS to Weifa AS with respect to the conduct of certain aspects of the remaining business in Weifa AS following the Sale until 31 December 2015.
Vistin Pharma’s headquarters is currently located in the same building as Weifa ASA and Vistin Pharma will rent the premises from Weifa ASA. The rental agreement is a standard subletting agreement entered into on arm’s length terms where Vistin Pharma will be paying a price per square meter of office space occupied.
13.3 MATERIAL CONTRACTS OUTSIDE THE ORDINARY COURSE OF BUSINESS Except for the BTA entered into with Weifa AS on 17 April 2015, cf. section 5.1, the Company has not entered into any material contracts outside the ordinary course of business.
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14. NORWEGIAN TAXATION The following is a summary of certain Norwegian tax considerations relevant to the acquisition, ownership and disposition of shares by holders that are residents of Norway for purposes of Norwegian taxation ("resident Shareholders") and holders that are not residents of Norway for such purposes ("non-resident Shareholders").
The summary is based on applicable Norwegian laws, rules and regulations as they exist as at the date of this Prospectus. Such laws, rules and regulations may be subject to changes after this date, possibly on a retroactive basis for the same tax year. The summary is of a general nature and does not purport to be a comprehensive description of all the tax considerations that may be relevant to the Shareholders and does not address foreign tax laws.
Each Shareholder should consult with and rely upon their own tax advisor to determine the particular tax consequences for him or her and the applicability and effect of any Norwegian or foreign tax laws and possible changes in such laws.
Please note that for the purpose of the summary below, a reference to a Norwegian or foreign shareholder refers to the tax residency rather than the nationality of the shareholder.
14.1 TAXATION OF DIVIDENDS
14.1.1 Resident corporate Shareholders Norwegian corporate shareholders (i.e. limited liability companies and similar entities resident in Norway for tax purposes) are generally exempt from tax on dividends received on shares in Norwegian limited liability companies and similar entities, pursuant to the participation exemption (Norwegian: Fritaksmetoden). However, 3% of dividend income is deemed taxable as general income at a flat rate of 27%, implying that dividends distributed from the Company to resident corporate Shareholders are effectively taxed at a rate of 0.81%.
14.1.2 Resident personal Shareholders Personal shareholders tax resident in Norway are in general tax liable to Norway for their worldwide income. Dividends distributed to personal Shareholders who are individuals resident in Norway for tax purposes, are taxed as ordinary income at a flat rate of 27 % to the extent the dividends exceed a statutory tax-free allowance (Norwegian: Skjermingsfradrag).
The allowance is calculated on a share-by-share basis, and the allowance for each share is equal the cost price of the share multiplied by a determined risk-free interest rate based on the effective rate after tax of interest on treasury bills (Norwegian: "Statskasseveksler") with three months maturity. The Directorate of Taxes announces the risk free-interest rate in January the year after the income. The risk-free interest rate for 2014, announced in January 2015, was 0.9%.
Any part of the calculated allowance one year exceeding dividend distributed on the same share ("excess allowance") can be carried forward and set off against future dividends received on, or capital gains upon realisation of the same share. Furthermore, excess allowance can be added to the cost price of the share and included in basis for calculating the allowance on the same share the following year.
14.1.3 Non-resident Shareholders Dividends distributed to Shareholders not resident in Norway for tax purposes are in general subject to withholding tax at a rate of 25%, unless otherwise provided for in an applicable tax treaty or the recipient is covered by the specific regulations for corporate shareholders tax-resident within the European Economic Area (“EEA”) (ref. the section below for more information on the EEA exemption). The Company distributing the dividend is responsible for the withholding of tax. Norway has entered into tax treaties with approximate 80 countries. In most tax treaties the withholding tax rate is reduced to 15%.
In accordance with the present administrative system in Norway, the Norwegian distributing company will normally withhold tax at the regular rate or reduced rate according to an applicable tax treaty, based on the information registered with the VPS with regard to the tax- residence of the Foreign Shareholder. Dividends paid to Foreign Shareholders in respect of nominee- registered shares will be subject to withholding tax at the
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general rate of 25% unless the nominee has obtained approval for a reduced or zero rate from the Central Office for Foreign Tax Affairs (Norwegian: Sentralskattekontoret for utenlandssaker).
Non-resident Shareholders who are exempt from withholding tax and Shareholders who have been subject to a higher withholding tax than applicable in the relevant tax treaty, may apply to the Norwegian tax authorities for a refund of the excess withholding tax. The application is to be filed with the Central Office for Foreign Tax Affairs.
If a Foreign Shareholder is engaged in business activities in Norway, and the shares are effectively connected with such business activities, dividends distributed to such shareholder will generally be subject to the same taxation as that of Norwegian Shareholders, cf. the description of tax issues related to Norwegian Shareholders above.
Foreign Shareholders should consult with their own advisers regarding the availability of treaty benefits in respect of dividend payments, including the ability to effectively claim refunds of withholding tax.
14.1.4 Foreign Shareholders tax-resident within the EEA Foreign Shareholders who are individuals tax-resident within the EEA (“Foreign EEA Personal Shareholders”) are upon request entitled to a deductible allowance. The shareholder shall pay the lesser amount of (i) withholding tax according to the rate in an applicable tax treaty or (ii) withholding tax at 25% of taxable dividends after allowance. Foreign EEA Personal Shareholders may carry forward any unused allowance, if the allowance exceeds the dividends.
Foreign Shareholders that are corporations tax-resident within the EEA for tax purposes (“Foreign EEA Corporate Shareholders”) are exempt from Norwegian tax on dividends distributed from Norwegian limited liability companies, provided that the Foreign EEA Corporate Shareholder in fact is the beneficial owner of the shares and genuinely established within the EEA and performs genuine economic business activities within the EEA.
14.2 TAXATION UPON REALIZATION OF SHARES
14.2.1 Resident corporate Shareholders Norwegian corporate Shareholders are generally exempt from tax on capital gains upon the realization of shares in Norwegian limited liability companies and similar entities. Losses upon the realization and costs incurred in connection with the purchase and realization of such shares are not deductible for tax purposes.
Special rules apply for Norwegian corporate Shareholders that cease to be tax-resident in Norway.
14.2.2 Resident personal Shareholders Norwegian individual shareholders are taxable in Norway for capital gains upon the realisation of shares, and have a corresponding right to deduct losses that arise upon such realisation. The tax liability applies irrespective of time of ownership and the number of shares realised. Gains are taxable as general income in the year of realisation, and losses can be deducted from general income in the year of realisation. The tax rate for general income is currently 27%.
The taxable gain or loss is calculated per share as the difference between the consideration received and the cost price of the share, including any costs incurred in relation to the acquisition or realization of the share. Any unused allowance on a share (see above) may be set off against capital gains related to the realization of the same share, but may not lead to or increase a deductible loss i.e. any unused allowance exceeding the capital gain upon the realization of the share will be annulled. Furthermore, unused allowance may not be set of against gains from realization of other shares.
If a Shareholder disposes of shares acquired at different times, the shares that were first acquired will be deemed as first sold (the FIFO-principle) when calculating a taxable gain or loss.
Costs incurred in connection with the purchase and sale of shares may be deducted in the year of sale.
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A Norwegian personal shareholder, who moves abroad and ceases to be tax resident in Norway, will be deemed taxable in Norway for any potential gain of NOK 500,000 or more, on shares held at the time the tax residency ceased, as if the shares were realized at that time. Gains of NOK 500,000 or less are though not taxable. The tax payment may be postponed if adequate security is provided. If the personal shareholder moves to a jurisdiction within the EEA, a deferral of the payment of the taxes is granted without such guarantee, provided that Norway, pursuant to a treaty, can request information from the other jurisdiction regarding the person’s income- and wealth, and assistance in relation to the collection of taxes. Losses on shares held at the time tax residency ceases will, be tax deductible to the same extent as a gain would be taxable, if the personal shareholder moves to a jurisdiction within the EEA. In such case the loss is determined in the year of the emigration, but the taxation (loss deduction) will occur at the time the shares are actually sold or otherwise disposed of. The tax liability calculated under these provisions may be reduced if the value of the shares at the time of the realization is less than the value at the time of the emigration, or if the gain is regarded taxable in another jurisdiction. If the shares are not realized within five years after the shareholder ceased to be resident in Norway for tax purposes, the tax liability described above will not apply. Any tax treaty in force between Norway and the state to which the shareholder has moved may influence the application of these rules.
14.2.3 Non-resident Shareholders Gains from the sale or other disposition of shares by a non-resident Shareholder will not be subject to taxation in Norway unless (i) the shares are effectively connected with business activities carried out or managed in Norway, or (ii) the shares are held by an individual who has been a resident of Norway for tax purposes with unsettled/postponed exit tax calculated on the shares at the time of cessation as Norwegian tax resident.
Non-resident corporate shareholders are not subject to taxation in Norway on realization of Shares.
14.3 TAXATION OF SUBSCRIPTION RIGHTS
14.3.1 Resident corporate Shareholders A Norwegian corporate Shareholder’s subscription for shares pursuant to a subscription right is not subject to taxation in Norway. Costs related to the subscription for the shares will be added to the cost price of the shares.
Sale and other transfer of subscription rights are considered a realization for Norwegian tax purposes. However, capital gains and losses derived from the realization of subscription rights to shares in limited liability companies resident in Norway for tax purposes (and certain other entities) are included in the participation exemption method, and generally exempt from tax. Losses incurred upon realization of such subscription rights are not tax deductible.
14.3.2 Resident personal Shareholders A Norwegian personal Shareholder’s subscription for shares pursuant to a subscription right is not subject to taxation in Norway. Costs related to the subscription for shares will be added to the cost price of the shares. Sale and other transfer of subscription rights are considered a realization for Norwegian tax purposes. For Norwegian personal shareholders a capital gain or loss generated by a realization of subscription rights is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the basis for the computation of ordinary income in the year of disposal. The ordinary income is taxable at a rate of 27%.
14.3.3 Non-resident Shareholders
A Non-resident personal Shareholder’s subscription for shares pursuant to a subscription right is not subject to taxation in Norway.
Gains from the sale or other transfer of subscription rights by a Non-resident personal shareholder will not be subject to taxation in Norway unless the Non-resident personal shareholder holds the subscription rights in connection with business activities carried out or managed from Norway.
A Non-resident corporate Shareholder’s subscription for shares pursuant to a subscription right is not subject to taxation in Norway.
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Capital gains derived by the sale or other transfer of subscription rights by Non-resident corporate shareholders are not subject to taxation in Norway.
14.4 NET WEALTH TAX A resident Shareholder that is a joint stock company or a similar entity is exempted from net wealth tax.
For other resident Shareholders (personal Shareholders), the shares will form part of the basis for the calculation of net wealth tax. The marginal net wealth tax rate is 0.85% of taxable values.
Listed shares are valued at 100% of their quoted value on 1 January in the assessment year, i.e. the year following the income year.
A non-resident Shareholder is not subject to Norwegian net wealth tax with respect to the shares, unless his shareholding is effectively connected with a business carried out by the Shareholder in Norway.
14.5 INHERITANCE TAX As of 1 January 2014 the Norwegian Inheritance Tax was abolished. However, the heir acquires the donor's tax input value of the shares based on principles of continuity. Thus, the heir will be taxable for any increase in value in the donor's ownership, at the time of the heir's realisation of the shares.
14.6 STAMP DUTY There is currently no Norwegian stamp duty or transfer tax on the transfer or issuance of shares.
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15. ADDITIONAL INFORMATION
15.1 DOCUMENTS ON DISPLAY Copies of the following documents will be available for inspection at the Company’s business address at Østensjøveien 27, 0661 Oslo, Norway for a period of twelve months from the date of this Prospectus.
The Company’s Articles of Association and Certificate of Incorporation Audited interim financial statements for Vistin Pharma ASA for the interim period 6 March 2015 to 31 March 2015 Audited special purpose carve-out financial statements for the Acquired Interests for the years ended 31 December 2014 and 2013
15.2 STATEMENT REGARDING SOURCES The Company confirms that when information in this Prospectus has been sourced from a third party it has been accurately reproduced and as far as the Company is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.
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16. SELLING AND TRANSFER RESTRICTIONS
16.1 GENERAL The grant of Subscription Rights and/or issue of Offer Shares, upon exercise of Subscription Rights or subscription without Subscription Rights, to persons resident in, or who are citizens of countries other than Norway, may be affected by the laws of the relevant jurisdiction. Eligible Shareholders should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities to enable them to exercise Subscription Rights or purchase or subscribe for Offer Shares.
The Company does not intend to take any action to permit a public offering of the Shares in any jurisdiction other than Norway. Receipt of this Prospectus will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those circumstances, this Prospectus is for information only and should not be copied or redistributed. Except as otherwise disclosed in this Prospectus, if an Eligible Shareholder receives a copy of this Prospectus in any territory other than Norway, the Eligible Shareholder may not treat this Prospectus as constituting an invitation or offer to it, nor should the Eligible Shareholder in any event deal in the Shares, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be made to that Eligible Shareholder, or the Subscription Rights and Shares could lawfully be dealt in without contravention of any unfulfilled registration or other legal requirements. Accordingly, if an Eligible Shareholder receives a copy of this Prospectus, the Eligible Shareholder should not distribute or send the same, or transfer the Subscription Rights and/or Shares to any person or in or into any jurisdiction where to do so would or might contravene local securities laws or regulations. If the Eligible Shareholder forwards this Prospectus into any such territories (whether under a contractual or legal obligation or otherwise), the Eligible Shareholder should direct the recipient’s attention to the contents of this section 16.
Except as otherwise noted in this Prospectus and subject to certain exceptions: (i) the Subscription Rights and Offer Shares being granted or offered, may not be offered, sold, resold, transferred or delivered, directly or indirectly, in or into, Member States of the EEA that have not implemented the Prospectus Directive, Australia, Canada, Hong Kong, Japan, the United States, Switzerland or any other jurisdiction in which it would not be permissible to offer the Subscription Rights and/or the Offer Shares (the “Ineligible Jurisdictions”); (ii) this Prospectus may not be sent to any person in any Ineligible Jurisdiction; and (iii) the crediting of Subscription Rights to an account of an Ineligible Shareholder or other person in an Ineligible Jurisdiction or a citizen of an Ineligible Jurisdiction (referred to as “Ineligible Persons”) does not constitute an offer to such persons of the Subscription Rights or the Offer Shares. Ineligible Persons may not exercise Subscription Rights.
If an Eligible Shareholder takes up, delivers or otherwise transfers Subscription Rights, exercises Subscription Rights to obtain Offer Shares or trades or otherwise deals in the Subscription Rights and Shares, that Eligible Shareholder will be deemed to have made or, in some cases, be required to make, the following representations and warranties to the Company and any person acting on the Company’s or its behalf:
(i) the Eligible Shareholder is not located in an Ineligible Jurisdiction;
(ii) the Eligible Shareholder is not an Ineligible Person;
(iii) the Eligible Shareholder is not acting, and has not acted, for the account or benefit of an Ineligible Person;
(iv) unless the Eligible Shareholder is a “qualified institutional buyer” as defined in Rule 144A under the U.S. Securities Act, the Eligible Shareholder is located outside the United States and any person for whose account or benefit it is acting on a non-discretionary basis is located outside the United States and, upon acquiring Offer Shares, the Eligible Shareholder and any such person will be located outside the United States;
(v) the Eligible Shareholder understands that the Subscription Rights and Shares have not been and will not be registered under the U.S. Securities Act and may not be offered, sold, pledged, resold, granted, delivered, allocated, taken up or otherwise transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, registration under the U.S. Securities Act; and
(vi) the Eligible Shareholder may lawfully be offered, take up, subscribe for and receive Subscription Rights and Offer Shares in the jurisdiction in which it resides or is currently located.
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The Company and any persons acting on behalf of the Company, including the Manager, will rely upon the Eligible Shareholder’s representations and warranties. Any provision of false information or subsequent breach of these representations and warranties may subject the Eligible Shareholder to liability.
If a person is acting on behalf of a holder of Subscription Rights (including, without limitation, as a nominee, custodian or trustee), that person will be required to provide the foregoing representations and warranties to the Company with respect to the exercise of Subscription Rights on behalf of the holder. If such person cannot or is unable to provide the foregoing representations and warranties, the Company will not be bound to authorize the allocation of any of the Subscription Rights and Offer Shares to that person or the person on whose behalf the other is acting. Subject to the specific restrictions described below, if an Eligible Shareholder (including, without limitation, its nominees and trustees) is outside Norway and wishes to exercise or otherwise deal in or subscribe for Subscription Rights and/or Shares, the Eligible Shareholder must satisfy itself as to full observance of the applicable laws of any relevant territory including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territories.
The information set out in this section 16 is intended as a general overview only. If the Eligible Shareholder is in any doubt as to whether it is eligible to subscribe for the Offer Shares, that Eligible Shareholder should consult its professional adviser without delay.
Subscription Rights will initially be credited to financial intermediaries for the accounts of all shareholders who hold Weifa shares registered through a financial intermediary on the Record Date. Subject to certain exceptions, financial intermediaries, which include brokers, custodians and nominees, may not exercise any Subscription Rights on behalf of any person in the Ineligible Jurisdictions or any Ineligible Persons and may be required in connection with any exercise of Subscription Rights to provide certifications to that effect.
Subject to certain exceptions, financial intermediaries are not permitted to send this Prospectus or any other information about the Offering in or into any Ineligible Jurisdiction or to any Ineligible Persons. Subject to certain exceptions, exercise instructions or certifications sent from or postmarked in any Ineligible Jurisdiction will be deemed to be invalid and Offer Shares will not be delivered to an addressee in any Ineligible Jurisdiction. The Company reserves the right to reject any exercise (or revocation of such exercise) in the name of any person who provides an address in an Ineligible Jurisdiction for acceptance, revocation of exercise or delivery of such Subscription Rights and Offer Shares, who is unable to represent or warrant that such person is not in an Ineligible Jurisdiction and is not an Ineligible Person, who is acting on a non-discretionary basis for such persons, or who appears to the Company or its agents to have executed its exercise instructions or certifications in, or dispatched them from, an Ineligible Jurisdiction. Furthermore, the Company reserves the right, with sole and absolute discretion, to treat as invalid any exercise or purported exercise of Subscription Rights which appears to have been executed, effected or dispatched in a manner that may involve a breach or violation of the laws or regulations of any jurisdiction.
Notwithstanding any other provision of this Prospectus, the Company reserves the right to permit a holder to exercise its Subscription Rights if the Company, at its absolute discretion, is satisfied that the transaction in question is exempt from or not subject to the laws or regulations giving rise to the restrictions in question. Applicable exemptions in certain jurisdictions are described further below. In any such case, the Company does not accept any liability for any actions that a holder takes or for any consequences that it may suffer as a result of the Company accepting the holder’s exercise of Subscription Rights.
No action has been or will be taken by the Manager to permit the possession of this Prospectus (or any other offering or publicity materials or application or subscription form(s) relating to the Offering) in any jurisdiction where such distribution may lead to a breach of any law or regulatory requirement.
Neither the Company nor the Manager, nor any of their respective representatives, is making any representation to any offeree, subscriber or purchaser of Subscription Rights and/or Offer Shares regarding the legality of an investment in the Subscription Rights and/or the Offer Shares by such offeree, subscriber or purchaser under the laws applicable to such offeree, subscriber or purchaser. Each Eligible Shareholder should consult its own advisers before subscribing for Offer Shares or purchasing Subscription Rights and/or Offer Shares. Eligible Shareholders are required to make their independent assessment of the legal, tax, business, financial and other consequences of a subscription for Offer Shares or a purchase of Subscription Rights and/or Offer Shares.
A further description of certain restrictions in relation to the Subscription Rights and the Shares in certain jurisdictions is set out below.
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16.2 UNITED STATES The Subscription Rights and Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from the registration requirements of the U.S. Securities Act and in compliance with the securities laws of any state or other jurisdiction of the United States. There will be no public offer of the Subscription Rights and Shares in the United States. A notification of exercise of Subscription Rights and subscription of Offer Shares in contravention of the above may be deemed to be invalid.
The Subscription Rights and Offer Shares are being offered and sold outside the United States in reliance on Regulation S under the U.S. Securities Act. Any offering of the Subscription Rights and Offer Shares by the Company to be made in the United States will be made only to a limited number of “qualified institutional buyers” (as defined in Rule 144A under the U.S. Securities Act) pursuant to an exemption from registration under the U.S. Securities Act who have executed and returned an Eligible Shareholder letter to the Company prior to exercising their Subscription Rights. Prospective purchasers are hereby notified that sellers of the Subscription Rights and Shares may be relying on an exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A.
Accordingly, subject to certain limited exceptions, this document will not be sent to any shareholder with a registered address in the United States. In addition, the Company and the Manager reserve the right to reject any instruction sent by or on behalf of any account holder with a registered address in the United States in respect of the Subscription Rights and/or the Offer Shares.
Any recipient of this document in the United States is hereby notified that this document has been furnished to it on a confidential basis and is not to be reproduced, retransmitted or otherwise redistributed, in whole or in part, under any circumstances. Furthermore, recipients are authorized to use it solely for the purpose of considering an investment in the Offering and may not disclose any of the contents of this document or use any information herein for any other purpose. This document is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for Offer Shares or otherwise acquire Subscription Rights and/or Offer Shares. Any recipient of this document agrees to the foregoing by accepting delivery of this document.
Until 40 days after the commencement of the Offering, any offer or sale of the Subscription Rights and Offer Shares within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act.
The Subscription Rights and the Shares have not been approved or disapproved by the United States Securities and Exchange Commission, any state securities commission in the United States or any other United States regulatory authority nor have any of the foregoing authorities passed upon or endorsed the merits of the Offering or the accuracy or adequacy of this document. Any representation to the contrary is a criminal offense in the United States.
Each person to which Subscription Rights and/or Offer Shares are distributed, offered or sold in the United States, by accepting delivery of this Prospectus or by its subscription for Offer Shares, will be deemed to have represented and agreed, on its behalf and on behalf of any Eligible Shareholder accounts for which it is subscribing for Offer Shares, as the case may be, that:
(i) it is a “qualified institutional buyer” as defined in Rule 144A under the U.S. Securities Act, and that it has executed and returned an Eligible Shareholder letter to the Company prior to exercising their Subscription Rights; and
(ii) the Subscription Rights and Offer Shares have not been offered to it by the Company by means of any form of “general solicitation” or “general advertising” (within the meaning of Regulation D under the U.S. Securities Act).
Each person to which Subscription Rights and/or Offer Shares are distributed, offered or sold outside the United States will be deemed, by its subscription or purchase of Offer Shares, to have represented and agreed, on its behalf and on behalf of any Eligible Shareholder accounts for which it is subscribing for or purchasing Offer Shares, as the case may be, that:
90 VISTIN PHARMA ASA
(i) it is acquiring the Offer Shares from the Company or the Manager in an "offshore transaction" as defined in Regulation S under the U.S. Securities Act; and
(ii) the Subscription Rights and/or the Offer Shares have not been offered to it by the Company or the Underwriters by means of any “directed selling efforts” as defined in Regulation S under the U.S. Securities Act.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (THE “RSA”) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
16.3 EEA SELLING RESTRICTIONS In relation to each Member State of the EEA other than Norway, which has implemented the Prospectus Directive (each a “Relevant Member State”) an offer of Shares which are the subject of the Offering contemplated by this Prospectus may not be made to the public in that Relevant Member State except that an offer to the public in that Relevant Member State of any Shares may be made at any time under the following exemptions under the Prospectus Directive, provided such exceptions have been implemented in that Relevant Member State:
(i) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
(ii) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than EUR 43,000,000 and (3) an annual net turnover of more than EUR 50,000,000, as shown in its last annual or consolidated accounts;
(iii) to fewer than 150 natural or legal persons (other than qualified Eligible Shareholders as defined in the Prospectus Directive) subject to obtaining the prior consent of the Manager for any such offer; or
(iv) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Shares shall result in a requirement for the publication by the Company or any Underwriter of a Prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer to the public” in relation to any Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an Eligible Shareholder to decide to purchase or subscribe for any Shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
16.4 NOTICE TO AUSTRALIAN ELIGIBLE SHAREHOLDERS This Prospectus is not a disclosure document under Chapter 6D of the Corporations Act 2001 (Cth) (the “Australian Corporations Act”), has not been lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly:
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the offer of the Offer Shares in Australia may only be made to persons who are “sophisticated Eligible Shareholders” (within the meaning of section 708(8) of the Australian Corporations Act) or to “professional Eligible Shareholders” (within the meaning of section 708(11) of the Australian Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708(8) of the Australian Corporations Act, so that it is lawful to offer, or invite applications for, the Subscription Rights and Offer Shares without disclosure to persons under Chapter 6D of the Australian Corporations Act; and
this Prospectus may only be made available in Australia to persons as set forth in clause (a) above.
If you acquire Offer Shares, then you (i) represent and warrant that you are a person to whom an offer of securities can be made without a disclosure document in accordance with subsections 708(8) or (11) of the Australian Corporations Act and (ii) agree not to sell or offer for sale any Subscription Rights and Offer Shares in Australia within 12 months after their issue to the offeree or invitee under this Prospectus, except in circumstances where disclosure to Eligible Shareholders under Chapter 6D would not be required under the Australian Corporations Act.
No person receiving a copy of this Prospectus and/or receiving a credit of Subscription Rights to an account in VPS with a bank or financial institution in Australia may treat the same as constituting an invitation or offer to such person nor should such person in any event deal in Subscription Rights in VPS unless such an invitation or offer could lawfully be made to such person without contravention of any registration or other legal requirements. In such circumstances, this document is to be treated as received for information only and should not be copied or redistributed.
16.5 NOTICE TO CANADIAN ELIGIBLE SHAREHOLDERS Neither the Subscription Rights nor the Shares have been or will be qualified by a prospectus for sale to the public in Canada under applicable Canadian securities laws, and accordingly, any offer or sale of the Subscription Rights or Shares in Canada must be made pursuant to an exemption from the applicable prospectus and registration requirements, and otherwise in compliance with applicable Canadian laws.
16.6 NOTICE TO HONG KONG ELIGIBLE SHAREHOLDERS The contents of this Prospectus have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the Offering. If you are in any doubt regarding any of the contents of this Prospectus, you should obtain independent professional advice. This Prospectus does not constitute an offer or sale in Hong Kong of any Subscription Rights or the Shares and no person may offer or sell in Hong Kong, by means of this Prospectus other than to (a) professional Eligible Shareholders within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571) (“SFO”) and any rules made under the SFO (“professional Eligible Shareholders”) or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance of Hong Kong (Cap. 32) (“CO”) or which do not constitute an offer or invitation to the public for the purposes of the CO or the SFO. No person shall issue or possess for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to Subscription Rights or Shares which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to those Subscription Rights or Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to such professional Eligible Shareholders.
Existing shareholders agree not to offer or sell in Hong Kong any Subscription Rights or the Shares other than (a) to professional Eligible Shareholders; or (b) in other circumstances which do not result in the document offering for sale the Subscription Rights or the Shares being a “prospectus” as defined in the CO or which do not constitute an offer to the public within the meaning of the CO or the SFO. Existing shareholders also agree not to issue or have in their possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Subscription Rights or the Shares, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Subscription Rights or the Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to professional Eligible Shareholders.
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16.7 NOTICE TO JAPANESE ELIGIBLE SHAREHOLDERS The Offering of Shares offered hereby has not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the “Financial Instruments and Exchange Law”). Accordingly, each Underwriter has represented, warranted and agreed that the Shares to which it each subscribes will be subscribed by it as principal and that, in connection with the offering made hereby, it will not, directly or indirectly, offer or sell any Subscription Rights or Shares in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan) or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and other relevant laws and regulations of Japan.
16.8 NOTICE TO SWISS ELIGIBLE SHAREHOLDERS This Prospectus is not being publicly distributed in Switzerland. Each copy of this document is addressed to a specifically named recipient and may not be passed on to third parties. The Subscription Rights or Shares are not being offered to the public in or from Switzerland, and neither this document, nor any other offering material in relation to the Subscription Rights or Shares may be distributed in connection with any such public offering.
93 VISTIN PHARMA ASA
17. DEFINITIONS AND GLOSSARY OF TERMS The following definitions and glossary apply in this Prospectus and to the Specific purpose carve-out financial statements attached hereto (Appendix C) unless otherwise dictated by the context, including the foregoing pages of this Prospectus or the Specific purpose carve-out financial statements.
ADA American Diabetes Association API Active pharmaceutical ingredient which is used as an ingredient by pharmaceutical companies when making medications Acquired Interests The assets, currently owned by Weifa ASA, that will be transferred to Vistin Pharma on 1 June 2015 (provided the approval of the application for its listing on Oslo Axess) Board or Board of Directors The board of directors of the Company B2B Business-to-business referring to commerce transactions between businesses BTA Business transfer agreement entered into on 17 April 2015 between Vistin Pharma AS and Weifa AS CAGR Compound annual growth rate Carnegie Carnegie AS C-CPS Codeine concentrate of poppy seeds CDMO Contract development and manufacturing organisation referring to companies that supply the pharmaceutical industry with services ranging from drug development to finished products CEO Chief Executive Officer CEP Certificate of suitability CET Central European Time CFO Chief Financial Officer CMO Contract manufacturing organization Company Vistin Pharma ASA CPS Concentrate of poppy seeds CRO Contract research organization referring to companies that offers research on a contract basis DCDA Dicyandiamide Delayed/Sustained release Medicines where the release is delayed Delivery at place Seller is responsible for delivering the goods DMA Dimetylamin hydrochloride DMF Drug master file – a detailed document describing the manufacturing and controls of a drug component that the API manufacturer submits to each country’s regulatory body Dossier A collection of documents covering the specific product Drug Master File See DMF EASD European Association for the Study of Diabetes EBITDA Earnings before interest, taxes, depreciation and amortisation EC Regulation 809/2004 Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council, as amended from time to time EDQM European Directorate for the Quality of Medicines and Healthcare EEA European Economic Area EGM The Company’s extraordinary general meeting held 16 April 2015 Eligible Shareholders The Weifa ASA shareholders as per the Record Date with the exception of shareholders that are resident in jurisdictions where this Prospectus may not be distributed and/or with legislation that, according to the Company’s assessment, prohibits or otherwise restricts subscription for new shares. Employee offer shares 1,500,000 new shares offered to the Company’s Board of Directors, Executive Management and full-time employees as of the date of the transferal of the Acquired Interests ERP Enterprise resource planning EU European Union EUR Euro, the single currency of the European Union member states participating in the European Monetary Union Excess allowance The calculated allowance one year exceeding dividend distributed on the same share FDA Food and Drug Administration FDF Finished dose formulation Ferncliff Ferncliff TIH AS and associated companies FIFO First in first out
94 VISTIN PHARMA ASA
Foreign EEA Corporate Shareholders Foreign Shareholders that are corporations tax-resident within the EEA for tax purposes Foreign EEA Personal Shareholders Foreign Shareholders who are individuals tax-resident within the EEA Forward-looking statements May be identified by the use of forward-looking terminology, such as the terms “anticipates”, “believes”, “expects”, “intends”, “may”, “plans”, “projects”, “seeks”, “should”, “will”, or the negatives of these terms or similar expressions.These forward- looking statements as a general matter are all statements other than statements as to historic facts or present facts and circumstances. FSMA The Financial Services and Markets Act 2000 of the UK FTE Full-time employee GBP Pound Sterling, the lawful currency of the United Kingdom GDP Good distribution practice GDUFA Providing user fees for FDA to ensure timely review of applications for generic drugs Genericized molecule No patent protection GMP Good manufacturing practice Group Vistin Pharma ASA, its subsidiary and associated business areas IAS 39 An outline of the requirements for the recognition and measurement of financial assets, financial liabilities and some contracts to buy or sell non-financial items IASB International Accounting Standards Board IDF International Diabetes Federation IFRIC IFRS Interpretations Committee IFRS International Financial Reporting Standards INCB International Narcotics Control Board Independent supplier A supplier of pharmaceutical ingredients that is not a vertically integrated part of a large global pharmaceutical company Ineligible Jurisdiction Jurisdiction where this Prospectus may not be distributed and/or with legislation that, according to the Company’s assessment, prohibits or otherwise restricts subscription in the Offering Ineligible shareholder Shareholders resident in jurisdictions where this Prospectus may not be distributed and/or with legislation that, according to the Company’s assessment, prohibits or otherwise restricts subscription in the Offering IPO Initial public offering ISIN Securities number in the Norwegian Central Securities Depository (VPS) Listing The listing of the Company’s shares on Oslo Axess Ltd Limited Manager Carnegie AS M-CPS Morphine rich concentrate of poppy straw Metformin Oral antidiabetic used in the treatment of Diabetes MT Metric tons Multiple subscriptions Subscriptions on more than one Subscription Form New Shares 15,554,935 new shares directed towards the shareholders of Weifa ASA as of 19 May 2015 and registered as such in the VPS on 21 May 2015 New Weifa AS Weifa AS, which will consist of its Consumer Health segment following the Sale of the B2B segment and the tablet manufacturing business to Vistin Pharma AS NGAAP Norwegian Generally Accepted Accounting Principles NOK Norwegian Kroner, the lawful currency of the Kingdom of Norway NoMA Norwegian Medicines Agency Non-resident Shareholders Shareholders that are not residents of Norway Norwegian FSA The Financial Supervisory Authority of Norway (Nw. Finanstilsynet) Norwegian Public Limited Companies Act The Norwegian Public Limited Liability Companies Act of 13 June 1997 no. 45, as amended from time to time (Nw: Allmennaksjeloven) Norwegian Securities Trading Act The Norwegian Securities Trading Act of June 29, 2007 no. 75 as amended from time to time (Nw: Verdipapirhandelloven) NRM Narcotic raw material Offering 15 554 935 new shares offered to shareholders in Weifa ASA as of the Record Date and 1 500 000 new shares offered to employees and Board members of the Company Offer Shares The 15,554,935 New Shares and the 1,500,000 Employee Offer Shares offered in connection with the Offering Opioids An opioid is any chemical that resembles opiates in its pharmalogical effects Option The right to buy or sell a share at a predetermined price OTC Over the counter Over-subscription Subscription for more New Shares than the number of Subscription Rights held by the
95 VISTIN PHARMA ASA
subscriber entitles the subscriber to be allocated Metformin DC Metformin direct compressible Metformin HCl Metformin hydrochloride Payment date The payment for New Shares allocated to a subscriber falls due on 9 June 2015 Powder to pill Produce the API and tablets based on that API PPE Property, plant and equipment P&I Protection and indemnity Prospectus This Prospectus dated 22 May 2015 Prospectus Directive Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003, as amended from time to time R&D Research and development Record Date Eligible Shareholders as of 19 May 2015, and being registered as such in the VPS on 21 May 2015 Resident Shareholders Shareholders that are residents of Norway for purposes of Norwegian taxation Rx Drugs that require a prescription Sale The sale of Weifa AS’s B2B and CMO tablet manufacturing businesses to the Company Shareholder A holder of a Share Shares The ordinary shares in the capital of Vistin Pharma ASA, each with a par value of NOK 1 SOP Standard operating procedures Site masterfile Formal license to produce Subscriber An investor subscribed in the Offering Subscription form The forms included in Appendix D and Appendix E for the Rights Offering and Employee Offering, respectively Subscription office Carnegie AS, Grundingen 2, Aker Brygge, PO Box, 684 Sentrum, 0106 Oslo, Norway, Fax: +47 22 00 99 60, Tel: +47 22 00 93 00, e-mail: [email protected] Subscription period The Offering will commence on 26 May 2015 at 09:00 CET and (subject to extension) expire at 16:30 CET on 4 June 2015 Subscription Price The Subscription price in the Offering Subscription Rights Tradable subscription rights issued to the Eligible Shareholders in connection with the Offering. Territory European Economic Area Transitional services agreement The Business Agreement that Vistin Pharma AS and Weifa AS will enter into regarding the provision of services by Vistin Pharma AS to Weifa AS with respect to the conduct of certain aspects of the remaining business Underwriter The Underwriters of the fully underwritten Share Offering Underwriter syndicate The Underwriters of the Offering US United States of America USD United States Dollars, the lawful currency of the United States of America. Validation master plan Specifies everything that needs to be in place in terms of processes, equipment and information systems VPS The Norwegian Central Securities Depository, which organises the Norwegian paperless securities registration system (Nw: Verdipapirsentralen).
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Appendix A – The Company’s Articles of Association ARTICLES OF ASSOCIATION FOR VISTIN PHARMA ASA
§ 1. Name The company's name is Vistin Pharma ASA. The company is a public limited company.
§ 2. Business address The company's business address is in the municipality of Oslo, Norway.
§ 3. Purpose The company's purpose is the development, production and sale of medicaments, and other health- related products and services, and other activities related to such, alone, or through partnering or ownership in other businesses.
§ 4. Share capital The company's share capital is NOK 1,000,000 divided into 1,000,000 shares, each with a nominal value of NOK 1. The shares of the company shall be registered in the Norwegian Central Securities Depository.
§ 5. The board of directors The company's board of directors shall consist of between three and eight members.
The board is elected for two years at a time, and the board members may be re-elected. In the event of equality of votes in the board, the chairman of the board of directors shall have the casting vote. The collective board shall constitute the company's audit committee.
§ 6. Signature The right to sign on behalf of the company is assigned to one board member. The board may grant power of procuration.
§ 7. Annual general meeting Notice of the company's shareholders meeting shall be given by the board in accordance with applicable legislation.
The annual general meeting shall consider the following: 1. Approval of the financial statements and the annual report, including distribution of dividends. 2. Determination of remuneration to the board of directors and approval of remuneration to the Auditor. 3. Election of chairman of the board, board members and auditor. 4. Other issues that shall be considered by the general meeting according to law or the articles of association.
§ 8. Electronic distribution of annual accounts and other documents for the shareholders meeting Documents related to matters to be considered at the shareholders meeting need not be sent to shareholders if the documents are made available for the shareholders on the company's website. This also applies to documents which according to law shall be included in or attached to the notice for a shareholders meeting. A shareholder may however request to receive documents related to matters for consideration at a shareholders meeting by mail.
§ 9. Advance voting at shareholders meetings The board may resolve that shareholders may give written advance votes in matters to be considered at shareholders meetings in the company. Such votes may also be given by electronic communication. The possibility of voting in advance is contingent upon the existence of a satisfactory method for verifying the identity of the voter. The board of directors may establish more detailed guidelines for written advance votes, including the period for such advance voting. If the opportunity to provide written votes in advance of the shareholders meeting is given, this shall be evident from the notice of the shareholders meeting, together with the guidelines, if any, that have been established for such voting.
§ 10 Participation at shareholders meetings and proposals for items on the agenda The company may in the notice of a shareholders meeting state that shareholders wishing to participate in the shareholders meeting shall notify the company of this within a specific time limit. The time limit cannot expire earlier than five days prior to the shareholders meeting. Shareholders who have not given notice within the time limit may be denied participation.
In order for a shareholder to be entitled to exercise its rights to attend and to vote on the shareholders meeting, the shareholder’s holdings of shares must be registered with the company’s share register the fifth (5th) business day prior to the day the shareholders meetings is held (the record date).
§ 11 Nomination committee The company shall have a nomination committee of 2 or three members elected by the shareholders meeting. The majority of the members of the nomination committee shall be independent of the board and the management. The nomination committee shall propose members to the board and nomination committee and remuneration to the members of the board and the nomination committee. The nomination committee shall state the grounds for the recommendations of the nomination committee.
– – –
Appendix B – Audited Interim Financial Statements for Vistin Pharma ASA for the Interim Period 6 March 2015 to 31 March 2015
Statsautoriserte revisorer Foretaksregisteret: NO 976 389 387 MVA Ernst &Young AS Tlf: +47 24 00 24 00 EY Fax: +47 24 00 24 01 Dronning E~afemias gate 6, NO-0191 Oslo www.ey.no Building a better Oslo Atrium, P.O.Box 20, NO-0051 Oslo Medlemmer av Den norske revisorforening working world
To the Board of Directors of Vistin Pharma ASA
AUDITOR'S REPORT
Report on the financial statements We have audited the accompanying financial statements of Vistin Pharma ASA. The financial statements comprise the statement of financial position as at 31 Marcf~ 2015, the statements of income, comprehensive income, cash flows and changes in equity for the period 6 March till 31 March 2015 as well as a summary of significant accounting policies and other explanatory information.
The Board of Directors' and Chief Executive Officer's responsibility for the financial statements The Board of Directors and Chief Executive Officer are responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards as adopted by the EU, and for such internal control as the Board of Directors and Chief Executive Officer determine is necessary tU enable the preparation of financial statements that are free from material misstatement, whether due to fraud ar error.
Auditor's responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making fihose risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, lout not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that #he audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
A member firm of Ernst &Young Global Limited EY Building a better working world
Opinion on the financial statements In our opinion, the financial statements of Vistin Pharma ASA have been prepared in accordance with laws and regulations and present fairly, in all material respects, the financial position as at 31 March 2015 and its financial performance and cash flows for the period 6 March till 31 March 2015 in accordance with the International Financial Reporting Standards as adopted by the EU.
Oslo, 17 April 2015 ERNST &YOUNG AS .i?
Rolf erga— e State Authorise ublic Accountant(Norway)
A member firm of Ernst & Younq Global Limited
Appendix C – Audited Special Purpose Carve-out Financial Statements for the Acquired Interests for the Years Ended 31 December 2014 and 2013
Carve-out Financial Statements for Acquired Interest 2014 and 2013
2
Specific purpose Carve-out Statement of Profit and Loss for the year ended 31 December Acquired Interests
(NOK 000's) Note 2014 2013
Revenue 2,5,6,19 361 461 347 253 Total revenue and income 361 461 347 253
Cost of materials 14 154 708 147 819 Payroll expenses 8 108 594 106 872 Depreciation, amortisation and impairment 11 110 093 16 272 Other operating expenses 7 70 369 65 263 Operating profit/(loss) -82 304 11 027
Finance income 9 - 1 365 Finance costs 9 2 080 - Profit/(Loss) before tax from continuing operations -84 383 12 393
Income tax expense 10 -22 784 4 008 Profit/(Loss) for the period -61 600 8 385
Profit/(Loss) for the year attributable to: Equity holders of the parent company -61 600 8 385 Total -61 600 8 385
Earnings per share (NOK): basic and diluted - -
3
Specific purpose Carve-out Statement of Other Comprehensive Income for the year ended 31 December Acquired Interests
(NOK 000's) Note 2014 2013
Loss for the year -61 600 8 385
Other comprehensive income not to be reclassified to profit or loss in subsequent periods Remeasurement of pension plans 17 -2 552 24 868 Income tax effect 10 -689 6 714 Total OCI not to be reclassified to profit or loss -1 863 18 154
Other comprehensive income for the year, net of tax -1 863 18 154
Total comprehensive income for the year, net of tax -63 463 26 539
Total comprehensive income for the year, net of tax attributable to: Equity holders of the parent company -63 463 26 539 Non-controlling interests - - Total -63 463 26 539
4
Specific purpose Carve-out Statement of Financial Position as at 31 December Acquired Interests
(NOK 000's) Note 2014 2013
ASSETS Non-current assets Property, plant & equipment 11 28 278 129 574 Deferred tax assets* 10 32 929 7 804 Total non-current assets 61 207 137 379
Current assets Inventory 14 92 075 88 328 Trade receivables 13 47 660 45 128 Other receivables 13 2 732 - Total current assets 142 466 133 456
Total assets 203 673 270 835
INVESTED CAPITAL AND LIABILITIES Invested capital Parent company investment 127 977 199 777 Total invested capital 127 977 199 777
Non-current liabilities Net employee defined benefit liability 17 9 325 5 648 Total non-current liabilities 9 325 5 648
Current liabilities Trade payables 16 39 104 33 593 Other current liabilities 16 27 267 31 816 Total current liabilities 66 371 65 409
Total liabilities 75 696 71 057
Total invested capital and liabilities 203 673 270 835
*The deferred tax asset cannot be transferred as a part of the net asset transaction of the Acquired Interests and Vistin Pharma will therefore be in an immediate taxable position if it generates taxable income in its first year of operation.
Oslo, 11 May 2015 Board of Directors and Chief Executive Officer of Weifa AS
______Glen Rødland Ole Enger Frank Marius Hansen Chairman of the Board Board member Board member
______Sigrunn Nilsen Øystein Stray Spetalen Kjell-Erik Nordby Board member Board member CEO 5
Specific purpose Carve-out Statement of changes in invested capital Acquired Interests
Invested (NOK 000's) Note capital
Invested capital as at 1 January 2013 186 240
Loss for the year 8 385 Other comprehensive income for the year 18 154 Total comprehensive income 26 539
Net invested capital transferred -13 002
Invested capital as at 31 December 2013 199 777
Invested capital as at 1 January 2014 199 777
Loss for the year -61 600 Other comprehensive income for the year -1 863 Total comprehensive income -63 463
Net invested capital transferred -8 337
Invested capital as at 31 December 2014 127 977
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Specific purpose Carve-out Statement of Cash flows for the year ended 31 December Acquired Interests
(NOK 000's) Note 2014 2013
Cash flow from operating activities Net profit/(loss) before income tax -84 383 12 393
Non-cash adjustment to reconcile profit before tax to cash flow: Difference between pension cost and in-/out payment in pension scheme 17 1 153 -432 Depreciation, amortisation and impairment 11 110 093 16 272 Unrealised foreign currency (gains)/losses 9 245 - Changes in working capital: Changes in trade receivables and trade creditors 13.16 2 735 -1 363 Changes in inventory 14 -3 746 -10 511 Changes in other accruals -8 963 4 842 Net cash flow from operating activities 17 133 21 200
Cash flow from investing activities Purchase of equipment 11 -8 797 -8 197 Net cash flow from investing activities -8 797 -8 197
Cash flow from financing activities Net invested capital transferred** -8 337 -13 002 Net cash flow from financing activities -8 337 -13 002
Net change in cash and cash equivalents* - - Cash and cash equivalents beginning period - - Cash and cash equivalents end period - -
* No cash and cash equivalents are part of the Acquired Interest, as the funding of the Company will be achieved through an IPO. ** Net invested capital transferred is a net amount of change in invested capital considering all cash is left with Weifa AS.
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Note 1 Background and formation for the specific purpose carve-out financial statements
On 17 April 2015 Weifa AS entered into a definitive agreement for the sale of it's operations relating to production of finished dose tablets ("CMO") and the production and sale of API's ("B2B") the "Acquired Interests" to a new legal entity, Vistin Pharma AS. Vistin Pharma AS is 100% owned by Vistin Pharma ASA, which will carry out an IPO to finance this acquisition of the Acquired Interests. This IPO requires the preparation of a Prospectus and these specific purpose carve-out financial statements have been prepared for the purpose of inclusion herein and to provide historical financial information about the Acquired Interests for the investors. The Acquired Interests represents the assets and liabilities, which will be transferred to Vistin Pharma AS, as part of the transaction.
The sales transaction is expected to be completed on 1 June 2015.
The Acquired Interests include the following: i. All properties and buildings owned by Weifa AS, including, but not limited to the properties in Gruveveien and at Fikkjebakke in Kragerø ii. the machinery, hardware, office supplies, inventory and other supplies and equipment related to the properties and the Acquired Interests iii. all software, including ERP and financial systems, copyrights, domain names, inventions and other registered or unregistered intellectual property rights related to the Acquired Interests iv. all products and their complete documentation as well as regulatory permits, including, but not limited to Drug Master Files and dossiers v. all site-related documentation and authorisations, manufacturing licences and other regulatory approvals related to the Acquired Interests vi. the employer rights related to the employment of the employees vii. all right, title and interest in the contracts related to the Acquired Interests viii. books of accounts (copies), personnel records and other files that relate to the ownership or operation of the Acquired Interests ix. all accounts receivables, inventory (excluding finished inventory purchased from third party contract manufacturers) and other current assets pertaining to the Acquired Interests
The specific purpose carve-out financial statements for the Acquired Interest include the assets and liabilities stated above and revenue and costs relating to these assets and liabilities. See note 2 for basis for of preparation.
The remaining parts of Weifa AS will for the purpose of these specific purpose carve-out financial statements be named "New Weifa AS".
The specific purpose carve-out financial statements were approved for release by the Board of Directors of Weifa AS on 11 May 2015.
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Note 2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these specific purpose carve-out financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The specific purpose carve-out financial statements are prepared in English only.
Basis of preparation In connection with the potential IPO of Vistin Pharma ASA, specific purpose carve-out financial statements for the Acquired Interest were prepared as at and for the year ended 31 December 2014, including specific purpose carve-out comparative financial statements as at and for the year ended 31 December 2013.
The specific purpose carve-out financial statements have been prepared on the basis of Weifa AS' internal reporting for the departments relating to the Acquired Interest, based on historical results and carrying amounts as at 31 December 2014 and 2013.
The specific purpose carve-out financial statements have been prepared based on recognition and measurement principles in International Financial Reporting Standards (IFRS) as approved by the European Union, and are mandatory for fiscal years beginning on or after 1 January 2014 and their interpretations adopted by the International Accounting Standards Board (IASB). However, given the carve-out, certain assumptions are required for determining which assets and liabilities, income and expenses as well as cash flows are to be assigned to the Acquired interests as described below under basis for allocation. Furthermore, the carve-out financial statements have been prepared on a historical cost basis, except for currency swap derivatives that have been recognised at fair value.
Basis for allocation
The specific purpose carve-out financial statements reflect assets, liabilities, revenue and expenses directly attributable to the operations included. However, the specific purpose carve-out financial position, results of operations and cash flows of the Acquired Interest may differ from those that would have been achieved had the Acquired Interest operated as an autonomous entity for all the years presented, as the Acquired Interest may have had, for example, additional administrative expenses, including legal, accounting, treasury and regulatory compliance and other costs normally incurred by an autonomous entity. No such expenses have been allocated, or added, for the purpose of the specific purpose carve-out financial statements.
Total revenue comprises of revenue from external B2B customers and allocated revenue from sale of finished goods from Acquired Interests to Weifa AS under a contract manufacturing (CMO) agreement. Historically, CMO was not a separate business area and historical transactions between the Acquired Interests and Weifa AS have therefore not been recorded. To incorporate these sales for the purpose of the special purpose carve- out financial statements, revenue from the sales to Weifa AS from the Acquired Interests has been allocated based on an allocation key considering the revenue base at a cost plus model (i.e. direct costs and allocated overhead plus a manufacturing margin of 8%). The Company has entered into a CMO agreement with Weifa AS for the production and supply of finished dose tablets currently being produced internally in Weifa AS by the Acquired Interests. The allocation key used for the purpose of the special purpose carve-out financial statements is consistent with the future agreement for sales to Weifa AS by the Company and is considered to represent a reliable and representative allocation method for the prior periods. Sales are recognised by the Company at the time of shipment to the external customer of Weifa AS.
Departments with joint functions (IT, HR, Finance etc.) have been allocated based on employees transferred and on estimated time consumed in the Acquired Interest.
Income tax expense has been calculated based on these specific purpose carve-out profit before tax adjusted for permanent differences attributable to the Acquired Interest. 9 Deferred tax assets have been calculated based on the temporary differences on property plant equipment instruments in the Acquired Interest. Note 2 Summary of significant accounting policies
Invested Capital (Equity): The Acquired Interest did not exist as a separate legal entity controlled by a separate legal entity, and had no defined capital structure. Therefore, it is not meaningful to show share capital or an analysis of reserves. Invested capital represents the difference between the cumulative investment in the interest in the assets and liabilities, which form the Acquired Interest.
Segment reporting The Acquired Interest has organised its activities in one operating unit, B2B (business-to-business), which includes both production and sale of API and the production and sale of finished dose tablets to other pharmaceutical companies.
Foreign currency translation Functional and presentational currency The Acquired Interest's presentational and functional currency is NOK.
Transactions and balances Foreign currency transactions are translated into the functional currency of the Acquired Interest using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in the specific purpose carve-out statement of profit and loss. Monetary assets and liabilities are translated at the closing rate at the reporting date.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The Acquired Interest recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met, as described below.
Sales of goods The Acquired Interest manufactures and sells a range of pharmaceutical products to the consumer and industrial markets. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of goods and when there is no unfulfilled obligation that could affect the customer's acceptance of the products. Delivery is governed by the sales contacts, but usually occurs when the products have been shipped from the warehouse. However, in some instances, at the request of customers, goods are invoiced and held in the Acquired Interest's warehouse, at the customers' risk, for shipment at a later date.
Balance sheet classification The Acquired Interest presents assets and liabilities in specific purpose carve-out statement of financial position on current/non-current classification. An asset is current when it is expected to be realised or intended to sold or consumed in normal operating cycle, held primarily for the purpose of trading, expected to be realised within twelve months after the reporting period, or cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when it is expected to settle in normal operating cycle, it is held for primarily for the purpose of trading, it is due to be settled within twelve months after the reporting period, or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
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Note 2 Summary of significant accounting policies
Property, plant and equipment Land, buildings and fixtures comprise mainly of production facilities in Kragerø.
Other equipment is mainly made up of machines used in production, as well as office related equipment and vehicles.
Property, plant and equipment is stated at historical cost, less depreciation and/or impairment losses, if any. Such cost includes expenditures that are directly attributable to the acquisition of the items. Costs accrued for major replacements and upgrades to equipment are added to cost if it is probable that the costs will generate future economic benefits and if the costs can be reliably measured. All other repairs and maintenance are charged to the income statement when incurred.
Land is not depreciated. Depreciation on other assets is calculated on a straight-line method to allocate their cost to their residual values over their estimated useful lives as follows:
Buildings and fixtures: 20 - 25 years Vehicles and machinery: 7 - 10 years Furniture, fittings and equipment: 3 - 7 years
The residual values, useful lives and methods of depreciation of production and lab equipment and other equipment are reviewed at each financial year-end and adjusted, if appropriate.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. The recoverable amount is the higher of an asset's net sales value and its value in use.
An item of equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
Financial assets Classification
Financial assets within the scope of IAS 39 have been classified as financial assets at fair value through profit and loss or loans and receivables. The Acquired Interest determines the classification of its financial assets at initial recognition. The Acquired Interest's financial assets include trade and other receivables.
The Acquired Interest's financial assets have mainly been classified as loans and receivables. These are non- derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.
Financial assets at fair value through profit or loss would include financial assets held for trading. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the short term. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.
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Note 2 Summary of significant accounting policies
Recognition and measurement All financial assets are initially recognised at fair value plus transaction costs, except financial assets carried at fair value through profit and loss. Financial assets carried at fair value through profit and loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables are after initial measurement carried at amortised cost using the effective interest rate method, less impairment. The effective interest rate amortisation is included in finance income in the income statement. The losses arising from impairment are recognised in the income statement as finance cost for loans and in other operating expenses for receivables.
Impairment of financial assets The Acquired Interest assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired
For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. The loss is recognised in the specific purpose carve-out income statements.
Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Gains or losses on financial instruments not designated as a hedging instrument is recognised in the income statement. The Acquired Interest has no financial instruments designated as hedging instruments for the current financial year.
Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in-first- out (FIFO) method. The cost of finished goods and work in progress comprises materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). Net realisable value is the estimated selling price in the ordinary course of business, less variable selling expenses.
Trade receivables Trade receivables are amounts due from customers for products sold in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.
Financial liabilities - recognition and subsequent measurement Financial liabilities within the scope of IAS 39 have been classified as financial liabilities measured at amortised cost using the effective interest method. The Acquired Interest determines the classification of its financial liability at initial recognition. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, net of direct attributable transactions costs. The Acquired Interest's financial liabilities include trade and other payables and currency swap derivatives. Financial liabilities are derecognised when the obligation under the liability is discharged or cancelled or expires.
Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at the original invoice amount, with the addition of any accrued interest.
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Note 2 Summary of significant accounting policies
Current and deferred income tax Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity or taxation authority.
Employee benefits Pension obligation The Acquired Interest has defined contribution plans for all employees. In addition, they operate unfunded defined benefit plans for a one employee.
A defined contribution plan is a pension plan under which the Acquired Interest pays fixed contributions to pension insurance plans. The Acquired Interest has no legal or constructive obligations to pay further contributions in the fund does not hold sufficient assets to pay all employees the benefit relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or reduction in future payments is available.
Defined benefit plans typically defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. As the Acquired Interest operates an unfunded defined benefit plan, they have no plan assets. The pension obligation is funded through the Acquired Interests operations.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
The current service cost of the defined benefit plan, recognised in the income statement in employee benefit expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes and curtailments and settlements.
Past service costs are recognised immediately in the statement of profit and loss.
The interest cost is calculated by applying the discount rate to the balance of the defined benefit obligation. This cost is included in employee benefit expense in the income statement.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to OCI in other comprehensive income in the period in which they arise. 13
Note 2 Summary of significant accounting policies
Share-based compensation The Acquired Interest operates an equity-settled compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Acquired Interest. The fair value of the employee services received in exchange for the grant of the option is recognised as an expense (payroll expenses) over the vesting period. The total amount to be expensed is determined by reference to the fair value of the options granted: - Including any market performance conditions (e.g., an entity's share price). - Excluding the impact of any service and non-market performance vesting conditions. - Including the impact of any non-vesting conditions.
At the end of each reporting period, the Acquired Interest revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. The fair value of the options have been estimated at grant date and is not subsequently changed.
When the options are exercised, and the Acquired Interest elects to issue new shares, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
Provisions and contingent liabilities General Provisions are recognised when the Acquired Interest has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of the money and the risks specific to the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Restructuring provisions
Restructuring provisions are recognised only when the recognition criteria for provisions are fulfilled. The Acquired Interest has a constructive obligation when a detailed formal plan identifies the activities concerned, the location and number of employees affected, a detailed estimate of the associated costs, and an appropriate timeline. Furthermore, the employees affected have been notified of the plans main features.
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line-basis over the period of the lease.
Events after the balance sheet date New information on the Acquired Interest's positions at the balance sheet date is taken into account in the annual financial statements. Events after the balance sheet date that do not affect the Acquired Interest's position at the balance sheet date, but which will affect the Acquired Interest's position in the future, are stated if significant.
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Note 2 Summary of significant accounting policies
Changes in accounting policies and disclosures New standards, amendments and interpretations adopted by the group The following standards have been adopted by the Acquired Interest for the first time for the financial year beginning on or after 1 January 2014:
IAS 36 Impairment of assets The amendments removed certain disclosures of the recoverable amount of CGUs which had been included in IAS 36 by the issue of IFRS 13. The amendments will only affect the presentation and disclosure, and has no effect on the Acquired Interest's financial position or profit or loss.
IFRS 10 Consolidated Financial Statements IFRS 10 replaced the portion of IAS 27 Consolidated and Separate Financial Statements that addressed the consolidated financial statements. The changes introduced by IFRS 10 require management to exercise significant judgement to determine which entities are controlled, and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27. The implementation of IFRS 10 did not have any effect for the Acquired Interest.
IFRS 12 Disclosure of Interests in Other Entities
IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28 Investments in Associates and Joint Ventures. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. The implementation of IFRS 12 will only affect the presentation and disclosure, and has no effect on the Acquired Interest's financial position or profit or loss.
New standards, amendments and interpretations not yet adopted A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these specific purpose carve-out financial statements. None of these are expected to have a significant effect on the specific purpose carve-out financial statements of the Acquired Interest, except the following set out below:
IFRS 8 Operating segments The standard is amended to require disclosure of the judgements made by management in aggregating operating segments. It is also amended to require a reconciliation of segment assets to the entity's assets when segment assets are reported.
IFRS 9 Financial instruments The new standard addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through P&L. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted.
IFRS 15 Revenue from contracts with customers The standard deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2017. The Acquired Interest is assessing the impact of IFRS 15.
IAS 19 Employee benefits The amendment supplies to contributions from employees or third parties to defined benefit plans and clarifies the treatment of such contributions. The amendment distinguished between contributions that are linked to service only in the period in which they arise and those linked to service in more than one period. The amendment is effective for annual periods beginning on or after 1 July 2014.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Acquired Interest. 15
Note 3: Financial risk management objectives and policies
The Acquired Interest's principal financial liabilities comprise trade and other payables. The Acquired Interest has trade and other receivables. The main risks arising from the Acquired Interest’s financial instruments are interest rate risk, credit risk, foreign currency risk and liquidity risk. The Acquired Interest's senior management oversees the management of these risks, which is being reviewed by the Board of Directors.
Interest rate risk The Acquired Interest’s exposure to the risk of changes to market interest is minimal as it does not have interest bearing debt.
Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Acquired Interest is exposed to credit risk from its operating activities (primarily trade receivables).
Customer credit risk is managed by management, subject to established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed on an individual basis, and outstanding customer receivables are regularly monitored. The requirement for an impairment is analysed at each reporting date on an individual basis for major customers. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. At December 2014 the Acquired Interest had total trade receivables of NOK 47.7 million (2013: NOK 45.1 million), which were owed by 33 customers. Six of these customers owed the Acquired Interest more than NOK 2,7 million each, accounting for approx. 70% of total trade receivables at year-end (see note 13 for further information).
Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency rates. The Acquired Interest's exposure to the risk of changes in foreign exchange rates relates primarily the Acquired Interest's operating activities (when revenue or expense is denominated in a different currency from the Acquired Interest's presentation currency).
The Acquired Interest's currency risk mainly relates to the Acquired Interest's B2B operations, where sales and raw material purchases are denominated primarily in USD and EUR. The Acquired Interest uses hedging instruments to manage the foreign currency risk related to future foreign currency denominated cash flows and foreign currency denominated trade receivables and trade payables. As of 31 December 2014 the Acquired Interest had one hedging contract outstanding for the sale of EUR 200k per month for the next 12 months. At 31 December 2014 the Acquired Interest had trade receivables of NOK 20.8 million and trade payables of NOK 27.2 million denominated in foreign currencies, principally USD and EUR.
Liquidity risk Liquidity risk is the potential loss arising from the Acquired Interest's inability to meet its contractual obligations when due. The Acquired Interest monitors its risk to a shortage of funds using cash flow forecasts. The Acquired Interest generates a positive operating cash flow. The Acquired Interest had cash and cash equivalents of NOK 0.0 million at 31 December 2014 (2013: 0.0 million). Following the carve-out the Acquired Interest will received additional funds through a share issue in Vistin Pharma ASA in May 2015, which will give the Acquired Interest a cash balance of approx. NOK 41 million (after transactions costs relating to the equity issue).
The table below summarises the maturity profile of the Acquired Interest’s financial liabilities based on contractual undiscounted payments:
Year ended 31 December 2014 On Less 3 to 12 1 to 5 >5 years Total (NOK 000's) demand than 3 months years months
Trade payables - 39 104 - - - 39 104 Other liabilities - 16 354 10 913 - - 27 267
Total - 55 458 10 913 - - 66 371
Year ended 31 December 2013 On Less 3 to 12 1 to 5 >5 years Total (NOK 000's) demand than 3 months years months
Trade payables - 33 593 - - - 33 593 Other liabilities - 22 498 9 318 - - 31 816
Total - 56 091 9 318 - - 65 409
Capital management The primary objective of the Acquired Interest’s capital management is to ensure that the Acquired Interest maintains a solid capital structure enabling it to develop and build its business to maximise shareholder value. The Acquired Interest’s objective is to maintain a balance of financial assets that reflects the cash requirement of its operations and investments for at least the next 12 - 24 months and also going forward. No changes were made in the objectives, policies or process for managing capital during the year ended 31 December 2014.
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Note 4 Critical accounting estimates and judgements in terms of accounting policies
The preparation of the consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the Acquired Interesting disclosures, and the disclosures of contingent liabilities. It also requires management to exercise its judgement in the process of applying the group's accounting policies. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
4.1 Critical accounting estimates and assumptions The Acquired Interest makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The Acquired Interest based its assumptions and estimates on parameters available when the specific purpose carve-out financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Acquired Interest. Such changes are reflected in the assumptions when they occur. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addresses below.
Deferred tax assets
Deferred tax assets are recognised for unused tax losses only to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, and deferred tax assets have been recognised in the balance sheet. This judgement is based on the 5 year CMO agreement with New Weifa AS for the production and supply of finished dose tablets currently produced by the Acquired Interest and the strategic plan for the Acquired Interest in the period 2015-17. The recognised amount is most sensitive to expected future taxable profits.
Impairment of property, plant and equipment The management assess whether there are any indicators of impairment to property, plant and equipment. Through this assessment the management has identifies such indicators and an impairment loss have been booked to property, plant and equipment based on significant management judgement. See note 10 for further details.
Note 5 Segment Information
For management purposes, the Acquired Interest, is organised as one business unit and the internal reporting is structured accordingly. The Acquired Interest is currently organised as one operating segment. The Acquired Interest has no single external customers which constitutes 10 % or more of the total revenue. Going forward New Weifa AS will constitute for more then 10 % of the total revenue.
Geographic information (NOK 000's) 2014 2013
Norway 119 229 118 373 Germany 77 954 63 298 Algeria 61 081 45 191 Switzerland 31 597 28 167 Great Britain 22 297 25 626 Other countries 49 302 66 598 Total revenue 361 461 347 253
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Note 6: Revenue
(NOK 000's) 2014 2013 Revenue from external customers 242 231 228 880 Revenue from New Weifa AS* 119 229 118 373 Total revenue 361 461 347 253 * See note 2 under section "Basis for allocation" and note 20 for further details
Note 7: Other operating expenses
(NOK 000's) 2014 2013 Marketing and advertising expenses 362 621 Direct and indirect production costs 56 930 51 956 General & admin. expenses 13 078 12 686 Other operating expenses 70 369 65 263
Note 8: Payroll expenses
(NOK 000's) 2014 2013 Salaries 81 885 85 734 Bonus 2 550 1 636 Payroll tax 12 752 13 081 Estimated value of share options granted to employees 1 671 - Pension costs - defined contribution plans 5 329 -7 611 Pension costs - defined benefit plans 1 349 11 006 Other social costs 3 058 3 026 Total payroll and payroll related costs 108 594 106 872
Average number of man-years: 145 140
Note 9: Financial items
(NOK 000's) 2014 2013
Realised foreign currency gain - 1 365 Unrealised foreign currency gain - - Total finance income - 1 365
Realised foreign currency loss 1 835 - Unrealised foreign currency loss 245 - Total finance costs 2 080 -
Net finance -2 080 1 365
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Note 10: Tax Income tax calculation:
(NOK 000's) 2014 2013 Profit/(Loss) before taxes -84 383 12 393 Changes in temporary differences 90 503 1 438 Basis for income tax (P&L) 6 120 13 831 Effect of allocation of basis for income tax to New Weifa AS -6 120 -13 831 Basis for income tax (BS) - -
Income tax payable Income tax expense (P&L) 1 652 3 873 Income tax expense effect of change in net deferred income tax liability/asset -25 125 6 849 Tax effect of permanent differences recognized to OCI 689 -6 714 Income tax expense -22 784 4 008
Reconciliation of income tax (NOK 000's) 2014 2013 Profit before tax -84 383 12 393 Tax assessed at the expected tax rate -22 784 3 470 Effect of change in tax rate - 538 Income tax expense -22 784 4 008
Temporary differences (NOK 000's) 2014 2013 Non-current assets -112 342 -23 256 Current assets -292 - Non-current liabilities -9 325 -5 648 Net income tax reduction temporary differences -121 959 -28 904
Net deferred tax asset -32 929 -7 804 Deferred tax assets capitalised -32 929 -7 804
Deferred tax assets on tax losses have been recognised based on expected future taxable profits. The assessment is based on the estimated future taxable income in Weifa AS, considering a long history of significant earnings related to the Acquired Interests. Tax losses are not time limited, and corporate tax rates used for calculation of net deferred tax assets capitalised are 27 %.
The deferred tax asset of NOK 32.9 million as of December 31, 2014 has been calculated based on timing differences between tax and book values of the assets being carved out. These timing differences are directly linked to the special purpose carve-out financial statements but will not be available to Vistin Pharma going forward, as it cannot be transferred as a part of the net asset transaction of the Acquired Interests taking place in 2015. Vistin Pharma will therefore be in an immediate taxable position if it generates taxable income in its first year of operation.
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Note 11: Property, plant and equipment
Land, buildings Vehicles and Furniture, fittings Total and fixtures machinery and equipment
(NOK 000's) Cost Cost at 1 January 2013 231 330 121 338 7 942 360 609 Additions 1 831 4 520 1 846 8 197 Impairment loss - - -415 -415 Cost at 31 December 2013 233 161 125 858 9 372 368 392
Depreciation and impairment Accumulated depreciation at 1 January 110 039 107 917 5 004 222 960 Depreciation charge for the year 9 734 4 785 1 338 15 857 Accumulated depreciation at 31 December 119 773 112 702 6 342 238 817 Net book value 113 388 13 157 3 030 129 575
(NOK 000's) Cost Cost at 1 January 2014 233 161 125 858 9 372 368 392 Additions 1 581 2 078 5 137 8 797 At 31 December 234 742 127 937 14 510 377 188
Depreciation and impairment Accumulated depreciation at 1 January 119 773 112 702 6 342 238 817 Depreciation charge for the year 9 194 5 004 1 671 15 869 Impairment loss 81 547 7 322 5 355 94 224 Accumulated depreciation and impairment at 31 December 210 514 125 027 13 368 348 910
Net book value 24 228 2 909 1 141 28 278
Useful life 20-25 years 7-10 years 3-7 years
Land is not depreciated
The measurement of impairment loss recognized in 2014 on property, plant and equipment, has been done based on a value in use assessment. This include cash flow projection based on budgets, strategic plans and expectations about market developments, and a discount rate of 12,6 %. Expected useful life for these property, plant and equipment has not been changed.The value in use of these assets are in line with the value of the assets in the sale to Vistin Pharma AS.
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Note 12: Financial assets by category
Set out below is a comparison by class of carrying amounts and fair values of all financial instruments that are carried in the financial statements:
Fair value Carrying amount Fair value (NOK 000's) hierarchy level Category 2014 2013 2014 2013 Financial assets Trade receivables Loans and receivables 47 660 45 128 47 660 45 128 Other receivables Loans and receivables 2 732 - 2 732 0 Total 50 391 45 128 50 391 45 128 Financial liabilities
Other financial liabilities Trade payables* at amortised cost 39 104 33 593 39 104 33 593 Financial liabilities at fair value through profit Currency swaps Level 2 and loss 1 506 998 1 506 998
Other financial liabilities Other payables* at amortised cost 25 761 30 819 25 761 30 819 Total 66 371 65 409 66 371 65 409 * Fair value of these instruments are estimated to have immaterial difference from it's carrying amount
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values: - Trade and other current receivables and trade and other current payables approximate their carrying amounts due to the short-terms maturities of these instruments. - Currency swaps are measured based on observable market prices for similar derivatives with the same time to maturity.
The Acquired Interest uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs that have a significant affect on the recorded fair value are observable, either directly or indirectly Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data
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Note 13: Trade and other receivables
(NOK 000's) 2014 2013 Trade receivables 47 785 45 254 Provision for impairment of trade receivables -126 -126 Trade receivables (net) 47 660 45 128
Trade receivables are non-interest-bearing and are generally on terms of 30 to 45 days.
No trade receivables relating to the sale of finished goods from Acquired Interest to New Weifa AS have been included, as no balances relating to these transactions existed as 31 December 2013 and 2014. Had such balances been included the trade receivables due from New Weifa AS would have been approx. NOK 3.1 million at year-end 2014 and 2013.
As at 31 December, the ageing analysis of trade receivables based on actual age is, as follows
Ageing Current < 30 days 30-60 days 60- 90 days > 90 days 2014 41 512 2 038 1 572 749 1 789 2013 40 998 3 069 887 174 -
For Ageing, less than 3 banking days are defined as current See note 3 on credit risk of trade receivables, which explains how the Acquired Interest manages credit risk.
(NOK 000's) 2014 2013 Prepayments 1 334 - Other receivables 1 397 - Total other receivables 2 732 -
Note 14: Inventories
(NOK 000's) 2014 2013 Raw materials 61 013 49 707 Purchased finished goods - - Produced finished goods 31 062 38 621 Total 92 074 88 328
Obsolescence write-down -167 -
Note 15: Financial assets at fair value through profit and loss
(NOK 000's) 2014 2013 Currency swaps - not designated as hedging instruments -1 506 -998 Total -1 506 -998
Financial assets at fair value through profit and loss are presented within operating activities as part of changes in working capital in the statement of cash flows.
Changes in fair values of financial assets at fair value through profit and loss are recorded in financial items - net in the income statement.
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Note 16: Trade and other payables
(NOK 000's) 2014 2013 Trade payables 39 104 33 593 Withholding tax 3 985 3 442 Social security taxes 3 333 3 241 Allowance for holiday pay 9 569 8 167 Deferred revenue - - Accrued expenses 4 079 16 943 Other liabilities 6 301 23 Total trade and other payables 66 371 65 409
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Note 17: Post-employment benefits
The Acquired Interest operates unfunded defined benefit pension plans for a few management employees. The plans are final salary pension plans, which provide benefits to employees in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on employees' length of service and their salary in the final years leading up to retirement. The pension plan is funded through the Acquired Interest's operations, which means that the Acquired Interest meets the benefit payment obligation as it falls due. Defined benefit pension plans for all employees was terminated as at end of 2013.
The amounts recognised in the balance sheet are determined as follows:
(NOK 000's) 31 Dec 2014 31 Dec 2013 Present value of funded obligations - - Fair value of plan assets - - Deficit of funded plans - - Present value of unfunded obligations 9 325 5 648 Total deficit of defined benefit pension plans 9 325 5 648 Liability in the balance sheet (including local tax) 9 325 5 648
The movement in the defined benefit liability over the year is as follows:
Present value of Fair value of (NOK 000's) obligation plan asset Total At 1 January 2014 5 648 - -5 648 Current service cost 979 - -979 Local tax 139 - -139 Interest expense/(income) 203 - -203 6 969 - -6 969 Remeasurements: - (Gain)/Loss from change in financial assumptions 2 552 - -2 552 2 552 - -2 552 Contributions: Employers Plan participants Payments from plans: Benefit payments -196 - 196 At 31 December 2014 9 325 - -9 325
The present value of the defined benefit obligation was comprised of approximately NOK 9,235k relating to active employees.
Present value of Fair value of (NOK 000's) obligation plan asset Total At 1 January 2013 125 310 94 362 -30 948 Current service cost 7 753 - -7 753 Local tax -53 - 53 Interest expense/(income) 5 102 3 963 -1 139 138 112 98 326 -39 786 Remeasurements: - (Gain)/Loss from change in financial assumptions -129 399 -104 531 24 868 -129 399 -104 531 24 868 Contributions: Employers - 6 205 -6 205 Plan participants - - - Payments from plans: Benefit payments -3 065 - 3 065 Settlements At 31 December 2013 5 648 0 -5 648
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Note 17: Post-employment benefits
The significant actuarial assumptions were as follows:
2014 2013
Discount rate 3,00 % 4,10 % Inflation 1,75 % 1,50 % Salary growth rate 3,25 % 3,75 % Pension growth rate 2,25 % 3,50 %
Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience. These assumptions translate into an average life expectancy in years for a pensioner retiring at age 67.
2014 2013 Retiring at the end of the reporting period: Male - - Female - - Retiring 20 years after the end of the reporting period Male 1 1 Female - -
Note 18: Commitments and contingencies
Operating lease commitments
The Acquired Interest leases vehicles under non-cancellable operating lease agreements. The lease terms are between 3 and 5 years, and the majority of lease agreements are renewable at the end of the lease period. The Acquired Interest leases office space with a contract which expires in 2023. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Lease commitments 2014 (NOK 000's) Next 1 year 1 455 1 to 5 years 3 479 After 5 years 3 550 Future minimum lease payments 8 484
Lease commitments 2013 (NOK 000's) Next 1 year 1 591 1 to 5 years 3 418 After 5 years 3 550 Future minimum lease payments 8 559
Note 19: Transactions with related parties
Related party relationships are those involving control, joint control or significant influence. Related parties are in a position to enter into transactions with the Acquired Interest that would not be undertaken between unrelated parties.
Recognised sales between the Acquired Interest and New Weifa AS are for 2014 and 2013 NOK 119.2 million and MNOK 118.4 million respectively.
The specific purpose carve-out financial statements are based on the sale and purchase agreement for the Acquired Interests entered into between Weifa AS and Vistin Pharma AS. At the time of entered into these contracts both companies were owned by the same ultimate holding company, Weifa ASA. All the contracts were entered into on normal market terms.
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Note 20: Events after the reporting period
In an Extraordinary General Meeting held on 16 April 2015, the share holders of Weifa ASA approved the sale of Weifa AS' B2B business and tablet production to Vistin Pharma AS, a newly established subsidiary of Weifa ASA. A new Norwegian public limited liability company, Vistin Pharma ASA ("Vistin Pharma"), has been established for the purpose of being the holding company for Vistin Pharma AS, and will apply for listing of its shares on Oslo Axess. To finance the acquisition of Weifa’s B2B operations and secure working capital and funds for future growth initiatives, Vistin Pharma will conduct an equity issue of approximately NOK 170 million, which will result in net proceeds of approximately NOK 161 million. Approximately NOK 120 million of the net proceeds from the Equity Issue will be paid to Weifa AS, as consideration for the B2B business. Approximately NOK 41 million will remain in Vistin Pharma following the transaction. The Equity Issue is fully guaranteed primarily by large existing shareholders of Weifa ASA. The sale of the B2B business and tablet production is expected to be carried out on 29 May 2015.
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Appendix D – Subscription Form Rights Offering
APPENDIX D: SUBSCRIPTION FORM FOR THE RIGHTS OFFERING
VISTIN PHARMA ASA SUBSCRIPTION FORM RIGHTS OFFERING MAY/JUNE 2015 Properly completed Subscription Forms must be submitted to the Manager as set out below: Carnegie AS In order for investors to be certain to participate in the Rights Offering, Subscription Forms Grundingen 2, Aker Brygge must be received no later than 4 June 2015 at 16:30 CET. The subscriber bears the risk of NO-0106 Oslo any delay in the postal communication, busy facsimiles and data problems preventing orders Tel: + 47 22 00 93 60 from being received by the Manager. Fax: +47 22 00 99 60 E-mail: [email protected]
NORWEGIAN SUBSCRIBERS DOMICILED IN NORWAY CAN IN ADDITION SUBSCRIBE FOR SHARES AT WWW.CARNEGIE.NO
General information: The terms and conditions for the Rights Offering in Vistin Pharma ASA (the “Company”) of 15,554,935 new shares (the “New Shares”) pursuant to resolution by the Company’s extraordinary general meeting on 16 April 2015 (the “EGM”) are set out in the prospectus dated 22 May 2015 (the “Prospectus”). Terms defined in the Prospectus shall have the same meaning in this Subscription Form. Notice of and minutes from the EGM (with enclosures), the Company’s Articles of Association, interim financial information for the period 6 March 2015 to 31 March 2015 and audited special purpose carve-out financial statements for the Acquired Interests to be acquired by the Company, are available at the Company’s registered office. In case of any discrepancies between the Subscription Form and the Prospectus, the Prospectus shall prevail. New Shares and Subscription Rights: The Rights Offering comprises 15,554,935 tradeable subscription rights (“Subscription Rights”), where each Subscription Right, subject to applicable securities laws, give the right to subscribe for and be allocated one (1) New Share. Over-subscription is allowed. No fractional New Shares will be issued, and the number of Subscription Rights allocated to each Eligible Shareholder will be rounded down to the nearest whole Subscription Right. The Subscription Rights will be tradeable and listed on Oslo Axess from 09:00 CET on 26 May 2015 to 16:30 CET on 2 June 2015 with ticker “VISTIN T”. Subscription without Subscription Rights is not permitted. Subscription Period: The subscription period is from and including 26 May 2015 to 16:30 CET on 4 June 2015 (the "Subscription Period"). Neither the Company nor the Manager may be held responsible for delays in the mail system or for Subscription Forms forwarded by facsimile that are not received in time by the Manager. It is not sufficient for the Subscription Form to be postmarked within the deadline. The Manager has discretion to refuse any improperly completed, delivered or executed Subscription Forms or any subscription which may be unlawful. Subscription Forms that are received too late or are incomplete or erroneous are therefore likely to be rejected without any notice to the subscriber. The subscription for New Shares is irrevocable and may not be withdrawn, cancelled or modified once it has been received by the Manager. Multiple subscriptions are allowed. Subscription without subscription rights is not permitted. Subscription price: The subscription price for one (1) New Share is NOK 10. Right to subscribe: The Subscription Rights will be issued to the shareholders of Weifa ASA as of close of trading on 19 May 2015 (as registered in VPS on 21 May 2015 (the “Record Date”) (“Eligible Shareholders”). Each Eligible Shareholder will be granted one (1) Subscription Right for every 102 shares owned in Weifa ASA as of the Record Date. Subscription Rights not used to subscribe for the New Shares (in full or partly) will lapse without any compensation upon expiry of the Subscription Period and will consequently be of no value. Allocation: The allocation criteria are set out in the Prospectus. All Subscribers being allotted New Shares will receive a letter from the Manager confirming the number of New Shares allotted to the Subscriber. This letter is expected to be mailed on or about 5 June 2015. Payment: The payment for the New Shares falls due on 9 June 2015 (the “Payment Date”). By signing the Subscription Form, each Subscriber having a Norwegian bank account authorises the Manager to debit the bank account specified by the Subscriber below for payment of the allotted New Shares for transfer to the Manager. The Manager reserves the right to make up to three attempts to debit the Subscribers’ accounts if there are insufficient funds on the account on previous debit dates. Subscribers who do not have a Norwegian bank account must ensure that payment with cleared funds for the New Shares allocated to them is made on or before the Payment Date and should contact the Manager in this respect for further details and instructions. DETAILS OF THE SUBSCRIPTION Subscriber’s VPS account Number of Subscription Rights Number of New Shares subscribed (incl. over- (For broker: Consecutive no.) subscription):
Σx Subscription price per New Share Total Subscription amount to be paid 1 SUBSCRIPTION RIGHT GIVES THE RIGHT TO BE ALLOCATED 1 NEW NOK 10 NOK SHARE
SUBSCRIPTION RIGHT’S SECURITIES NUMBER: ISIN NO 0010736952 IRREVOCABLE AUTHORISATION TO DEBIT ACCOUNT (MUST BE COMPLETED) My Norwegian bank account to be debited for the consideration for shares allotted (number of shares allotted x subscription price). (Norwegian bank account no. 11 digits) In accordance with the terms and conditions set out in the Prospectus and this Subscription Form, I/we hereby irrevocably subscribe for the number of New Shares specified above and grant the Manager authorisation to debit (by direct or manual debiting as described above) the specified bank account for the payment of the New Shares allocated to me/us.
Place and date Binding signature. The subscriber must have legal capacity. When signed on behalf Must be dated in the Subscription Period of a company or pursuant to an authorisation, documentation in the form of a company certificate or power of attorney should be attached
INFORMATION ON THE SUBSCRIBER VPS account number In the case of changes in registered information, the account operator Forename must be contacted. Your account operator is: Surname/company
Street address (for private: home address):
Post code/district/country
Personal ID number/Organisation number
Norwegian Bank Account for dividends
Nationality
Daytime telephone number
E-mail address
ADDITIONAL INFORMATION FOR THE SUBSCRIBER
Regulatory Issues: In accordance with the Markets in Financial Instruments Directive (“MiFID”) of the European Union, Norwegian law imposes requirements in relation to business investments. In this respect the Manager must categorize all new clients in one of three categories: eligible counterparties, professional and non-professional clients. All subscribers in the Rights Offering who are not existing clients of the Manager will be categorized as non- professional clients. Subscribers can, by written request to the Manager, ask to be categorized as a professional client if the subscriber fulfils the applicable requirements of the Norwegian Securities Trading Act. For further information about the categorization, the subscriber may contact the Manager on telephone +47 22 00 93 00. The subscriber represents that he/she/it is capable of evaluating the merits and risks of an investment decision to invest in the Company by subscribing for New Shares, and is able to bear the economic risk, and to withstand a complete loss, of an investment in the New Shares.
Selling and Transfer Restrictions: The attention of persons who wish to subscribe for New Shares is drawn to section 15 “Selling and Transfer Restrictions” of the Prospectus. The making or acceptance of the Rights Offering to or by persons who have registered addresses outside Norway or who are resident in, or citizens of, countries outside Norway, may be affected by the laws of the relevant jurisdiction. Those persons should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to subscribe for New Shares. It is the responsibility of any person outside Norway wishing to subscribe for New Shares under the Rights Offering to satisy himself/herself as to the full observance of the laws of any relevant jurisdiction in connection therewith, including obtaining any governmental or other consent which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such territorries. The Subscription Rights and New Shares have not been registered and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or under the securities law of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, delivered or transferred, directly or indirectly, within the United States. There will be no public offer of the Subscription Rights and New Shares in the United States. The Subscription Rights and New Shares have not been and will not be registered under the applicable securities laws of Australia, Canada, Hong Kong, Japan or Switzerland and may not be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan or Switzerland except pursuant to an applicable exemption from applicable securities laws. This Subscription Form does not constitute an offer to sell or a solicitation of an offer to buy New Shares in any jurisdiction in which such offer or solicitation is unlawful. Subject to certain exceptions, the Prospectus will not be distributed in the United States, Australia, Canada, Hong Kong, Japan or Switzerland. Except as otherwise provided in the Prospectus, the Subscription Rights and the New Shares may not be transferred, sold or delivered in the United States, Australia, Canada, Hong Kong, Japan or Switzerland. Exercise of Subscription Rights and subscription of New Shares in contravention of the above restrictions and those set out in the Prospectus may be deemed to be invalid.
Execution Only: The Manager will treat the Subscription Form as an execution-only instruction. The Manager is not required to determine whether an investment in the New Shares is appropriate or not for the subscriber. Hence, the subscriber will not benefit from the protection of the relevant conduct of business rules in accordance with the Norwegian Securities Trading Act.
Information Exchange: The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act and foreign legislation applicable to the Manager there is a duty of secrecy between the different units of the Manager as well as between the Manager and the other entities in the Manager’s group. This may entail that other employees of the Manager or the Manager’s group may have information that may be relevant to the subscriber and to the assessment of the New Shares, but which the Manager will not have access to in its capacity as Manager for the Rights Offering.
Information Barriers: The Manager is a securities firm that offers a broad range of investment services. In order to ensure that assignments undertaken in the Manager’s corporate finance department are kept confidential, the Manager’s other activities, including analysis and stock broking, are separated from the Manager’s corporate finance department by information walls. The subscriber acknowledges that the Manager’s analysis and stock broking activity may act in conflict with the subscriber’s interests with regard to transactions of the Shares, including the New Shares, as a consequence of such information walls.
Mandatory Anti-Money Laundering Procedures: The Rights Offering is subject to the Norwegian Money Laundering Act No. 11 of March 6, 2009 and the Norwegian Money Laundering Regulations No. 302 of March 13, 2009 (collectively the “Anti-Money Laundering Legislation”). Subscribers who are not registered as existing customers with the Manager must verify their identity in accordance with the requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Subscribers who have designated an existing Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested by the Manager. The verification of identity must be completed prior to the end of the Subscription Period. Subscribers that have not completed the required verification of identity may not be allocated New Shares. Further, in participating in the Rights Offering, each subscriber must have a VPS account. The VPS account number must be stated on the Subscription Form. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. Establishment of a VPS account requires verification of identity before the VPS registrar in accordance with the Anti-Money Laundering Legislation. Non-Norwegian investors may, however, use nominee VPS accounts registered in the name of a nominee. The nominee must be authorized by the Financial Supervisory Authority of Norway.
Terms and Conditions for Payment by Direct Debiting - Securities Trading: Payment by direct debiting is a service the banks in Norway provide in cooperation. In the relationship between the payer and the payer’s bank the following standard terms and conditions will apply:
a) The service “Payment by direct debiting – securities trading” is supplemented by the account agreement between the payer and the payer’s bank, in particular Section C of the account agreement, General terms and conditions for deposit and payment instructions. b) Costs related to the use of “Payment by direct debiting – securities trading” appear from the bank’s prevailing price list, account information and/or information given by other appropriate manner. The bank will charge the indicated account for costs incurred. c) The authorization for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to its bank who in turn will charge the payer’s bank account. d) In case of withdrawal of the authorization for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the Norwegian Financial Contracts Act, the payer’s bank shall assist if the payer withdraws a payment instruction that has not been completed. Such withdrawal may be regarded as a breach of the agreement between the payer and the beneficiary. e) The payer cannot authorize payment of a higher amount than the funds available on the payer’s account at the time of payment. The payer’s bank will normally perform a verification of available funds prior to the account being charged. If the account has been charged with an amount higher than the funds available, the difference shall immediately be covered by the payer. f) The payer’s account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorization for direct debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The charge will not, however, take place after the authorization has expired as indicated above. Payment will normally be credited the beneficiary’s account between one and three working days after the indicated date of payment/delivery. g) If the payer’s account is wrongfully charged after direct debiting, the payer’s right to repayment of the charged amount will be governed by the account agreement and the Norwegian Financial Contracts Act.
Overdue and missing payments: Overdue and late payments will be charged with interest at the applicable rate from time to time under the Norwegian Act on Interest on Overdue Payment of 17 December 1976 no. 100, currently 9.25% per annum. If a subscriber fails to comply with the terms of payment, the New Shares will, subject to the restrictions in the Norwegian Public Limited Companies Act and at the discretion of the Manager, not be delivered to the subscriber. The Manager, on behalf of the Company, reserves the right, at the risk and cost of the subscriber to, at any time, cancel the subscription and to re-allocate or otherwise dispose of allocated New Shares for which payment is overdue, or, if payment has not been received by the third day after the Payment Date, without further notice sell, assume ownership to or otherwise dispose of the allocated New Shares on such terms and in such manner as the Manager may decide in accordance with Norwegian law. The subscriber will remain liable for payment of the subscription amount, together with any interest, costs, charges and expenses accrued and the Manager, on behalf of the Company, may enforce payment for any such amount outstanding in accordance with Norwegian law.
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Appendix E – Subscription Form Employee Offering
APPENDIX E: SUBSCRIPTION FORM FOR THE EMPLOYEE OFFERING
VISTIN PHARMA ASA SUBSCRIPTION FORM EMPLOYEE OFFERING MAY/JUNE 2015 Properly completed Subscription Forms must be submitted to the Manager as set out below: Carnegie AS In order for employees to be certain to participate in the Employee Offering, Subscription Grundingen 2, Aker Brygge Forms must be received no later than 4 June 2015 at 16:30 CET. The subscriber bears the NO-0106 Oslo risk of any delay in the postal communication, busy facsimiles and data problems preventing Tel: + 47 22 00 93 60 orders from being received by the Manager. Fax: +47 22 00 99 60 E-mail: [email protected]
General information: The terms and conditions for the Employee Offering in Vistin Pharma ASA (the “Company”) of 1,500,000 employee offer shares (the “Employee Offer Shares”) pursuant to resolution by the Company’s extraordinary general meeting on 16 April 2015 (the “EGM”) are set out in the prospectus dated 22 May 2015 (the “Prospectus”). Terms defined in the Prospectus shall have the same meaning in this Subscription Form. Notice of and minutes from the EGM (with enclosures), the Company’s Articles of Association, interim financial information for the period 6 March 2015 to 31 March 2015 and audited special purpose carve-out financial statements for the Acquired Interests to be acquired by the Company, are available at the Company’s registered office. In case of any discrepancies between the Subscription Form and the Prospectus, the Prospectus shall prevail. Overview of the Employee Offering: The Employee Offering comprises an offering of 1,500,000 Employee Offer Shares split into the following sub tranches; (i) 500,000 shares offered to the Company’s full-time employees as of the date of the transferal of the Acquired Interests, (ii) 500,000 shares offered to the Company’s Executive Management, and (iii) 500,000 shares offered to the Company’s Board of Directors. Minimum subscription per subscriber shall be 500 shares. Subscription Period: The subscription period is from and including 26 May 2015 to 16:30 CET on 4 June 2015 (the "Subscription Period"). Neither the Company nor the Manager may be held responsible for delays in the mail system or for Subscription Forms forwarded by facsimile that are not received in time by the Manager. It is not sufficient for the Subscription Form to be postmarked within the deadline. The Manager has discretion to refuse any improperly completed, delivered or executed Subscription Forms or any subscription which may be unlawful. Subscription Forms that are received too late or are incomplete or erroneous are therefore likely to be rejected without any notice to the subscriber. The subscription for Employee Offer Shares is irrevocable and may not be withdrawn, cancelled or modified once it has been received by the Manager. Multiple subscriptions are allowed. Subscription price: The subscription price for one (1) Employee Offer Share is NOK 10. Allocation: The allocation criteria are set out in the Prospectus. Each employee subscribing for Employee Offer Shares is entitled to a guaranteed allocation of 3,400 shares. Members of the Company’s Executive Management subscribing for Employee Offer Shares are entitled to a guaranteed allocation of 83,300 shares each, and Board members subscribing for Employee Offer Shares are entitled to a guaranteed allocation of 100,000 shares each. All Subscribers being allotted Employee Offer Shares will receive an e-mail from the Manager confirming the number of Employee Offer Shares allotted to the Subscriber and payment instructions. This e-mail is expected to be sent on or about 5 June 2015. Payment: The payment for the Employee Offer Shares falls due 10:00 CET on 9 June 2015, and the entire subscription amount must be transferred to the Manager on or before this date.
DETAILS OF THE SUBSCRIPTION Subscriber’s VPS account Number of Employee Offer Shares subscribed (For broker: Consecutive no.)
Σx Subscription price per Employee Offer Share Total Subscription amount to be paid
NOK 10 NOK
Place and date Binding signature. The subscriber must have legal capacity. When signed on behalf of a Must be dated in the Subscription Period company or pursuant to an authorisation, documentation in the form of a company certificate or power of attorney should be attached
INFORMATION ON THE SUBSCRIBER VPS account number In the case of changes in registered information, the account operator Forename must be contacted. Your account operator is: Surname/company
Street address (for private: home address):
Post code/district/country
Personal ID number/Organisation number
Norwegian Bank Account for dividends
Nationality
Daytime telephone number
E-mail address
ADDITIONAL INFORMATION FOR THE SUBSCRIBER
Regulatory Issues: In accordance with the Markets in Financial Instruments Directive (“MiFID”) of the European Union, Norwegian law imposes requirements in relation to business investments. In this respect the Manager must categorize all new clients in one of three categories: eligible counterparties, professional and non-professional clients. All subscribers in the Employee Offering who are not existing clients of the Manager will be categorized as non- professional clients. Subscribers can, by written request to the Manager, ask to be categorized as a professional client if the subscriber fulfils the applicable requirements of the Norwegian Securities Trading Act. For further information about the categorization, the subscriber may contact the Manager on telephone +47 22 00 93 00. The subscriber represents that he/she/it is capable of evaluating the merits and risks of an investment decision to invest in the Company by subscribing for Employee Offer Shares, and is able to bear the economic risk, and to withstand a complete loss, of an investment in the Employee Offer Shares.
Selling and Transfer Restrictions: The attention of persons who wish to subscribe for Employee Offer Shares is drawn to section 17 “Selling and Transfer Restrictions” of the Prospectus. The making or acceptance of the Employee Offering to or by persons who have registered addresses outside Norway or who are resident in, or citizens of, countries outside Norway, may be affected by the laws of the relevant jurisdiction. Those persons should consult their professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to subscribe for Employee Offer Shares. It is the responsibility of any person outside Norway wishing to subscribe for Employee Offer Shares under the Employee Offering to satisy himself/herself as to the full observance of the laws of any relevant jurisdiction in connection therewith, including obtaining any governmental or other consent which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such territorries. The Employee Offer Shares have not been registered and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or under the securities law of any state or other jurisdiction of the United States and may not be offered, sold, taken up, resold, delivered or transferred, directly or indirectly, within the United States. There will be no public offer of the Employee Offer Shares in the United States. The Employee Offer Shares have not been and will not be registered under the applicable securities laws of Australia, Canada, Hong Kong, Japan or Switzerland and may not be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan or Switzerland except pursuant to an applicable exemption from applicable securities laws. This Subscription Form does not constitute an offer to sell or a solicitation of an offer to buy Employee Offer Shares in any jurisdiction in which such offer or solicitation is unlawful. Subject to certain exceptions, the Prospectus will not be distributed in the United States, Australia, Canada, Hong Kong, Japan or Switzerland. Except as otherwise provided in the Prospectus, the Employee Offer Shares may not be transferred, sold or delivered in the United States, Australia, Canada, Hong Kong, Japan or Switzerland. Subscription for Employee Offer Shares in contravention of the above restrictions and those set out in the Prospectus may be deemed to be invalid.
Execution Only: The Manager will treat the Subscription Form as an execution-only instruction. The Manager is not required to determine whether an investment in the Employee Offer Shares is appropriate or not for the subscriber. Hence, the subscriber will not benefit from the protection of the relevant conduct of business rules in accordance with the Norwegian Securities Trading Act.
Information Exchange: The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act and foreign legislation applicable to the Manager there is a duty of secrecy between the different units of the Manager as well as between the Manager and the other entities in the Manager’s group. This may entail that other employees of the Manager or the Manager’s group may have information that may be relevant to the subscriber and to the assessment of the Employee Offer Shares, but which the Manager will not have access to in its capacity as Manager for the Employee Offering.
Information Barriers: The Manager is a securities firm that offers a broad range of investment services. In order to ensure that assignments undertaken in the Manager’s corporate finance department are kept confidential, the Manager’s other activities, including analysis and stock broking, are separated from the Manager’s corporate finance department by information walls. The subscriber acknowledges that the Manager’s analysis and stock broking activity may act in conflict with the subscriber’s interests with regard to transactions of the Shares, including the Employee Offer Shares, as a consequence of such information walls.
Mandatory Anti-Money Laundering Procedures: The Employee Offering is subject to the Norwegian Money Laundering Act No. 11 of March 6, 2009 and the Norwegian Money Laundering Regulations No. 302 of March 13, 2009 (collectively the “Anti-Money Laundering Legislation”). Subscribers who are not registered as existing customers with the Manager must verify their identity in accordance with the requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Subscribers who have designated an existing Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested by the Manager. The verification of identity must be completed prior to the end of the Subscription Period. Subscribers that have not completed the required verification of identity may not be allocated Employee Offer Shares. Further, in participating in the Employee Offering, each subscriber must have a VPS account. The VPS account number must be stated on the Subscription Form. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. Establishment of a VPS account requires verification of identity before the VPS registrar in accordance with the Anti- Money Laundering Legislation. Non-Norwegian investors may, however, use nominee VPS accounts registered in the name of a nominee. The nominee must be authorized by the Financial Supervisory Authority of Norway.
Overdue and missing payments: Overdue and late payments will be charged with interest at the applicable rate from time to time under the Norwegian Act on Interest on Overdue Payment of 17 December 1976 no. 100, currently 9.25% per annum. If a subscriber fails to comply with the terms of payment, the Employee Offer Shares will, subject to the restrictions in the Norwegian Public Limited Companies Act and at the discretion of the Manager, not be delivered to the subscriber. The Manager, on behalf of the Company, reserves the right, at the risk and cost of the subscriber to, at any time, cancel the subscription and to re- allocate or otherwise dispose of allocated Employee Offer Shares for which payment is overdue, or, if payment has not been received by the third day after the Payment Date, without further notice sell, assume ownership to or otherwise dispose of the allocated Employee Offer Shares on such terms and in such manner as the Manager may decide in accordance with Norwegian law. The subscriber will remain liable for payment of the subscription amount, together with any interest, costs, charges and expenses accrued and the Manager, on behalf of the Company, may enforce payment for any such amount outstanding in accordance with Norwegian law.
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Vistin Pharma ASA Østensjøveien 27 0661 Oslo Norway
Carnegie AS Grundingen 2 PO Box 684 Sentrum 0106 Oslo Norway