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Liberty Biopharma Signs Letter of Intent to Acquire HooXi

HooXi, which means “Breathe” in Chinese - is a leading global healthcare, green and clean technology and related asset digitization company

Vancouver, British Columbia - Liberty Biopharma Inc. (TSXV – LTY.V) (“Liberty” or the “Company”) is pleased to announce that it has entered into a letter of intent with HooXi, known as CTC Life Sciences Inc. (“HooXi”) dated June 28, 2018 whereby Liberty proposes to acquire 100% of the issued and outstanding shares of HooXi in an arm’s length transaction with the shareholders of HooXi (“the “Vendors”) retaining an earnings before interest, taxes, depreciation and amortization (“EBITDA”) royalty of 45% on the HooXi operations (the “Transaction”). It is proposed that at the completion of the Transaction, Liberty will appoint Dr. Bruno Wu and Avis Zhu as Directors, with Dr. Wu assuming the role of Chairman and Avis Zhu assuming the role of CEO. Liberty’s current CEO, Norman Tsui will remain with the Company as President and Vice-President, Finance. Alan Tam will remain as Liberty’s CFO.

HooXi, with its head office in New York, New York, is a privately held medical, health, green and clean technology and related asset digitization company. In Chinese, “HooXi” means breathe for the individual and for the earth, reflecting the corporate objectives of healthcare and green businesses. HooXi has various joint venture and intellectual properties and licensing agreements with companies such as Capture Stroke (Silverlink Software Limited), the Fischer Institute of Physical Therapy and Performance and Aflofarm Farmacja Polska Sp. z o.o. Additionally, it has operations in medical, healthcare and green technology and related asset digitization through technology from Seven Stars Cloud Group, Inc.

“We are very pleased to have signed the letter of intent with HooXi,” commented Norman Tsui, CEO of Liberty. “We believe that HooXi is a strong company with great growth potential and that our proposed transaction will be accretive, complimentary in the medical and green space including, but not limited to, new energy and environmental protection, and beneficial for Liberty and our shareholders.”

“We are looking forward to the next stages of growth for Liberty leveraging the public markets – including seeking a future NASDAQ listing and executing an aggressive vertically-integrated business model to quickly become one of the leading medical, health and green technology and asset digitization companies internationally,” stated Dr. Wu. Through partnerships and strategic relationships across all channels, we look to become the most trusted source for our products and services.

The Transaction

Shareholder approval of the Transaction will be sought at a Special Meeting of the shareholders. A meeting date will be scheduled as early as possible in accordance with applicable laws and regulations. Further details about the Transaction will be provided in a management information circular to be prepared and filed in respect of the Special Meeting.

Subject to receipt of approvals of the TSX Venture Exchange (the “TSXV”) and the Company's shareholders, Liberty will consolidate all its issued and outstanding common shares based on a consolidation ratio (15-to-1) that will result in the reduction of the Company’s issued and outstanding common shares to not more than 10,770,284 common shares on a non-diluted basis (the “Consolidation”). There are a further 1,333,333 post-consolidation performance shares that would be issued on attaining a pro-rata audited reporting of CAD$10,000,000 in revenue and 226,197 post-consolidation share purchase warrants.

As a condition of the Transaction, Liberty will complete a non-brokered private placement for 1,173,333 post-consolidation common shares at $2.25 (the “Private Placement”) for total consideration of CAD$2,640,000.

The Vendors of the Transaction will retain a royalty of 45% of the EBITDA derived from the HooXi operations. Liberty has the option to acquire the Vendor’s 45% EBITDA royalty at Liberty’s posted market price for Liberty common shares (at the maximum allowable discount share price), subject to Liberty having CAD$30,000,000 in cumulative audited EBITDA by December 31, 2020 prior to netting the Vendor’s 45% royalty. The option, if not exercised, shall expire on June 30, 2021.

Pursuant to the Transaction, 5,250,000 post-consolidation common shares will be issued to the shareholders of HooXi in exchange for all of the then issued and outstanding securities of HooXi. On closing of the Transaction, there will be a total of 17,193,618 post-consolidation common shares issued and outstanding, including the shares issued in the Private Placement. The common shares issued to the HooXi shareholders under the Transaction will be subject to a three-year escrow period. The initial 10% of such common shares will be released on the close of the Transaction and the remaining 90% will be released in 6 equal tranches every 6 months thereafter. After the first two months following the closing of the Transaction, any remaining common shares in escrow may become subject to an accelerated release from escrow should Liberty’s post-consolidation common share price trade at or above CAD$7.50 per common share for a minimum of 10 trading days. Up to 5,250,000 post-consolidation common shares of Liberty may be earned out by the Vendors upon the achievement of audited EBITDA of CAD$30,000,000 by December 31, 2020 prior to netting the Vendor’s 45% royalty. These post-consolidation common shares would be released on a pro-rata basis of 0.3181818 post-consolidation common shares for each CAD$1.00 of audited EBITDA to a maximum of CAD$16,500,000 of EBITDA. Where EBITDA is positive for the year, common shares will be released following receipt of the Company's audited financial statements confirming audited EBITDA. Any common shares allotted but not issued after December 31, 2020 shall expire and be cancelled by the Company.

Completion of the Transaction is subject to a number of conditions. Such conditions include the execution of a definitive agreement; completion of mutually satisfactory due diligence; completion of the Private Placement; renaming of the Company to HooXi; approvals of the shareholders of Liberty and HooXi; and receipt of all required regulatory, corporate and third party approvals and fulfilment of all applicable regulatory requirements and conditions necessary to complete the Transaction, including approvals by the TSXV as the proposed transaction may be a “Reviewable Transaction” under Policy 5.3 “Acquisitions and Dispositions on Non-Cash Assets” of the TSXV. As a result of such conditions, there can be no assurance that the Transaction will be completed as proposed or at all.

Dr. Bruno Wu

In addition to being the CEO of HooXi, Dr. Wu is the Chairman and CEO of Seven Stars Cloud Group, Inc. (NASDAQ: SSC), the leading global next-generation artificial intelligence and blockchain-powered financial technology company that offers supply chain and digital finance solutions for the energy and commodities industries. Additionally, since 2007, Dr. Wu has been the founder, co-chairman and CEO of Sun Seven Stars Media Group Limited, a private media and investment company in China. Its predecessor is Sun Media Group Holdings Limited, which was established by Dr. Wu and his spouse in 1999. Dr. Wu served as Chairman of Sun Media Group from 1999 to 2007 and was former director of Shanda Group, a private investment group, from 2006 to 2009. Dr. Wu was co-chairman of Sina Corporation (NASDAQ: SINA), a Chinese media and Internet services company, from 2001 to 2002. Additionally, Dr. Wu served as the chief operating officer for ATV, a free-to-air television broadcaster in Hong Kong, from 1998 to 1999. Dr. Wu served as a director of Semir Garment Co. Ltd (SHE:00256) between 2008 and 2012. Dr. Wu received a Ph.D. from the School of International Relations and Public Affairs at Fudan University in 2001 and prior to that received an M.A. in International Relations from Washington University, a B.A. in Business Management from Culver-Stockton College of Missouri and a diploma in Superior Studies in French Literature from the School of French Language and Literature at the University of Savoie in Chambery, France.

Avis Zhu

Ms. Avis Zhu is the Chairman and CEO of Sun Medical Group and has close to 20 years of successful experience in media, public relations and brand management. She served as the Vice President of Sun Media Group Holdings Limited responsible for brand PR and publication before joining Sun Seven Stars Entertainment & Media Group Ltd. She was once the editor-in-chief of the Chinese version of Madame Figaro, a female magazine with top circulation in France, and the editor-in-chief of the Chinese version of Figaro Girl. Before that she worked as a chief editor for iLOOK Metropolis. Ms. ZHU is an active thinker. She loves innovation, and is accustomed to working in a cross-cultural environment.

Update on Appointment of Dr. Michael McNamara to Liberty’s Board of Directors

Dr. Michael McNamara is currently on Liberty’s medical advisory committee. He was elected to Liberty’s Board of Directors at Liberty’s last annual general meeting in February 2018, subject to TSXV approval, which approval is expected shortly.

Dr. McNamara is a world leader in preventive health practices using the most sophisticated modalities of diagnostic imaging and blood analysis and medical asset digitization. He founded the first hospital-based MRI department in Europe in 1986 at the Princess Grace Hospital in Monaco. Dr. McNamara developed the world’s first preventive Total Body Scanning program for the early detection of cardiovascular and autoimmune diseases, cancer, and degenerative abnormalities. He has prior experience implementing regenerative medical treatment programs. He has served on the Medical Advisory Boards of General Electric Medical Systems, Bristol-Meyers Squibb, Nycomed Laboratories, Bracco Diagnostics, Akloma Biosciences, The Angiogenesis Foundation, and uBiome, Inc. Dr. McNamara received his M.D. at the University of Michigan in Ann Arbor, USA.

Board of Directors

At the close of the transaction, the new Liberty Board of Directors will consist of Dr. Bruno Wu, Bohdan Romaniuk, Avis Zhu, Dr. Michael McNamara, Dennis Nerland and Norman Tsui. Dr. Peter Neweduk, meanwhile, will retire from the Board The Board of Directors wishes to thank Dr. Neweduk for his invaluable contributions to Liberty since its inception and wish him all the best.

About Liberty Biopharma Inc.

Liberty Biopharma is a medical digital technology and biopharmaceutical company active in global strategic partnerships and in-licensing of technologies and assets for rapid growth and high value solutions.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

The securities to be issued in connection with the Transaction have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons (as defined in Regulation S promulgated under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Forward Looking Statements:

Forward-looking statements relate to future events or future performance and reflect the expectations or beliefs regarding future events of management of Liberty. This information and these statements, referred to herein as “forwardlooking statements”, are not historical facts, are made as of the date of this news release and include without limitation, statements regarding discussions of future plans, estimates and forecasts and statements as to management’s expectations and intentions with respect to the agreements with HooXi. These statements generally can be identified by use of forward-looking terms such as “may”, “will”, “expect”, “estimate”, “anticipate”, “intends”, “believe” or “continue” or the negative thereof or similar variations. These forwardlooking statements involve numerous risks and uncertainties and actual results might differ materially from results anticipated in any forward-looking statements. Important factors that may cause actual results with respect to the Transaction to differ from anticipated results include the ability of the parties to fulfill conditions precedent to the Transaction, the willingness of the shareholders of Liberty and HooXi to approve the Transaction, and whether or not the TSXV and other regulators approve the Transaction. In making the forwardlooking statements in this news release, Liberty has applied several material assumptions, including without limitation that the terms of the agreement with HooXi will be acceptable to the TSXV and the shareholders of the Company and HooXi. Liberty does not assume any obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements, other than as required by applicable securities laws.

For further information, please contact:

Alan Tam, CPA, CA

CFO, Liberty Biopharma Inc.


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