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Biovest Corp. I Provides Update on Business Combination with Magor Communications Corp.
(Canada Newswire Via Acquire Media NewsEdge)
OTTAWA, Nov. 23, 2012 /CNW/ - Biovest Corp. I ("Biovest") (BVC.P-TSX Venture Exchange), a Capital Pool Company, is pleased to
provide this update to its press release dated June 13, 2012 wherein it
was announced that Biovest had entered into a letter of intent with
Magor Communications Corp. ("Magor"), a private technology company. Biovest and Magor continue to work
towards the completion of a business combination (the "Transaction") whereby all of the issued and outstanding securities of Magor will be
exchanged for securities of Biovest. In furtherance of the
Transaction, on November 7, 2012, Biovest, Magor and Biovest Sub Corp. (as defined below) entered
into a formal Merger Agreement (as defined below) pursuant to which the
Transaction will be completed. The Transaction is intended to
constitute the Qualifying Transaction of Biovest as such term is
defined in Policy 2.4 of the Corporate Finance Manual of the TSX
Venture Exchange (the "Exchange").
About Magor
Magor was incorporated under Canada Business Corporations Act on June 8, 2007, and maintains its registered head office at 350 Terry
Fox Drive, Suite 300, Ottawa, Ontario, Canada, K2K 2W5.
Magor was founded by Sir Terence Matthews ("Mr. Matthews") in 2007 in Ottawa, Ontario to develop a software-based technology
solution to provide a low cost video collaboration product. Magor's
visual collaboration solution seeks to capitalize on what management
has identified as a significant shift in the videoconferencing market,
driven in part by increasingly powerful communication hardware and the
reduced cost of such hardware combined with a new system architecture
which is software based. Initial sales of the Magor visual
collaboration solution commenced in 2009.
The Magor visual collaboration system is a software based solution that
operates on off-the-shelf hardware, using a system architecture that
does not require a multipoint control unit ("MCU"), and utilizes scalable video coding. These characteristics, when
combined, result in a visual collaboration solution at significantly
less costs than the traditional videoconferencing solutions, which have
typically used proprietary hardware and software with an architecture
that requires a multipoint control unit.
Magor's MCU-less architecture and scalable video coding is a software
solution that Magor's management believes will challenge the
traditional videoconferencing market. Magor is also working with
telecommunication companies towards the development of a cloud based
video collaboration solution, which it anticipates will be commercially
launched during calendar Q1 2013. In addition, Magor is developing
visual collaboration software that will enable it to operate over other
operating systems such as Windows, Apple OSX, Apple OS and Android,
which will allow the Magor solution to be incorporated into third party
device manufacturer's products. Management is in discussions with
potential partners and anticipates being in a position to license this
solution to such partners during calendar Q2 2013.
Magor is now working on commercializing its visual collaboration
solutions.Magor generated sales (unaudited) of $394,194 in the first quarter of
its 2013 fiscal year and annual sales (audited) of $474,928, $1,919,473
and $1,882,772 in 2010, 2011 and 2012 respectively. Magor's total
assets for the fiscal years ended April 30, 2010, 2011 and 2012
(audited) were $3,931,580, $1,605,744 and $1,149,442 respectively, and
Magor's long-term liabilities (audited) for the same fiscal years were
$6,169,431, $3,470,034 and $4,651,901 respectively.
To date, Magor has raised approximately $22.2 millionin order to fund the company through the development phase.
Following the announcement of the proposed Transaction on June 12, 2012,
Magor completed a secured convertible debenture financing issuing $
3,041,850 in new secured convertible debentures (the "Secured Debentures"). The financing closed in four separate tranches on July 17, 2012,
August 10, 2012, September 6, 2012 and October 22, 2012. The Secured
Debentures are convertible into common shares in the capital of Magor
("Magor Shares") at a conversion price of $0.59 per Magor Share. The following
officers and directors of the Corporation and Magor participated in the
Secured Debenture financing, purchasing in the aggregate approximately
$958,130 in Secured Debentures: Dr. Calvin Stiller, Brian Baker,
Michael Mueller, Garrett Herman, Mr. Matthews, John MacDonald and John
Watts. In accordance with their terms, immediately prior to the
completion of the Transaction, the Secured Debentures will
automatically convert into Magor Shares. Upon conversion, along with
each Magor Share, each debentureholder shall be issued one-half of one
(0.5) warrant for the purchase of Magor Shares ("Magor Warrant"), with each whole Magor Warrant entitling the holder thereof to
purchase one (1) Magor Share at an exercise price of $0.59 per share.
The Magor Shares and Magor Warrants will be exchanged for equivalent
securities in Biovest upon completion of the Transaction.
In addition, on October 12, 2012, Magor completed a bridge financing in
the aggregate amount of $300,000 with each of Mr. Matthews (Chairman of
Magor), Dr. Calvin Stiller and Michael Mueller (the "Lenders"). Each Lender was issued a secured promissory demand note with a
principal amount of $100,000 (the "Notes"). The Notes mature on the earlier of a demand for repayment and April
30, 2013 and bear an interest rate of 12% per annum. Interest shall
accrue on the basis of the actual number of days elapsed in a three
hundred and sixty-five (365) day year, compounded monthly. In the event
that the Note has not been repaid by January 11, 2013, Magor shall pay
each Lender an additional fee equal to three percent (3%) of the
principal amount outstanding as at such date. Furthermore, in the
event that the Notes remain unpaid by April 11, 2013, Magor shall pay
each Lender an additional interest payment equal to three percent (3%)
of principal amount outstanding as at April 11, 2013. The Notes have
been secured by a general security agreement covering all of the assets
of Magor.
Magor's outstanding capitalization as of November 23, 2012 consists of:
(i) 18,094,418 Magor Shares (ii) 7,115,391 convertible debenture
warrants; (iii) 2,836,850 common share purchase options; (iv)
$3,041,850 Secured Debentures; and (v) $4,669,297convertible debentures ("Convertible Debentures"). Wesley Clover International Corporation ("WCIC") currently owns 46.4% of the outstanding common shares of Magor and is
beneficially controlled by Mr. Matthews. In accordance with the letter
of intent among the Corporation, Magor and WCIC dated June 12, 2012,
all securities in the capital of Magor currently held by or hereafter
acquired by WCIC are subject to a lock-up agreement between the
Corporation, Magor and WCIC until such time as the Transaction is
completed. Upon completion of the Transaction, Mr. Matthew's will
become a director and Chairman of Biovest.
Pre-Closing Transactions
As a condition precedent to the completion of the Transaction,
immediately prior to the closing of the Transaction, Magor shall have
completed the following capital restructuring transactions (the "Pre-Closing Transactions"):
Pursuant to certain debenture amending agreements having been executed
by substantially all of the holders of outstanding Convertible
Debentures, substantially all outstanding Convertible Debentures,
including all outstanding principal and accrued interest thereon, shall
be converted into Magor Shares immediately prior to the completion of
the Transaction at a conversion price $1.00 per Magor Share. As a
result of the debenture amending agreements, immediately prior to the
closing of the Transaction approximately $4,669,297 in Convertible
Debentures, plus accrued interest at a rate of 10% per annum up to an
including the date of the transaction, shall be converted into Magor
Shares resulting in the issuance of approximately 5,763,809 Magor
Shares immediately prior to the completion of the Transaction.
The debenture amending agreements also provide that the corresponding
convertible debenture warrants, which warrants become effective upon
conversion of the Convertible Debentures, shall, immediately prior to
the completion of the Transaction, be surrendered to Magor for
cancellation in exchange for class A shares in the capital of Magor ("Class A Shares") on a one for one basis. As a result, immediately prior to the
completion of the Transaction approximately 2,012,644 Class A Shares
shall be issued in exchange for the cancellation of the effected
convertible debenture warrants.
Pursuant to certain warrant amending agreements having been executed by
substantially all of the holders of convertible debenture warrants,
immediately prior to the completion of the Transaction, substantially
all outstanding convertible debenture warrants shall be surrendered to
Magor for cancellation in exchange for, on a one for one basis, Class A
Shares. As a result, immediately prior to the completion of the
Transaction approximately 4,895,419 Magor Class A Shares shall be
issued in exchange for the cancellation of Magor's currently
outstanding convertible debenture warrants.
Pursuant to a conversion agreement among Magor and WCIC (the "Conversion Agreement"), WCIC has agreed that, immediately prior to the completion of the
Transaction, an outstanding demand loan to Magor in the amount of
$1,938,898 shall be converted into Magor Shares at a conversion price
of $1.00 per Magor Share. As a result of the Conversion Agreement,
immediately prior to the completion of the Transaction Magor shall
issue 1,938,898 Magor Shares to WCIC.
Immediately prior to the closing of the Transaction and following the
completion of the Pre-Closing Transactions, the capitalization of Magor
shall consist of approximately: (i) 30,808,257 issued and outstanding
Magor Shares; (ii) 6,397,780 issued and outstanding Magor Class A
Shares; (iii) 2,836,350 issued and outstanding Magor Options; and (iv)
3,057,624 outstanding Magor Warrants.
The Qualifying Transaction
Subject to regulatory approval, on November 7, 2012, a wholly-owned
subsidiary of Biovest ("Biovest Sub Corp."), Biovest and Magor entered into a merger agreement (the "Merger Agreement") whereby Biovest Sub Corp. will amalgamate with Magor Communications
Corp. to form an amalgamated company. Pursuant to the Merger
Agreement, the shareholders of Magor will transfer all the issued and
outstanding Magor Shares, Magor Class A Shares, Magor Warrants and
Magor Options to Biovest Sub Corp. in exchange for, on a one for one
basis, Common Shares, Class A Shares, Biovest Warrants, Biovest Broker
Warrants (as defined below) and Biovest Options respectively, in
accordance with the terms and conditions set forth in the Merger
Agreement. Presently 4,100,000 common shares in the capital Biovest
are issued and outstanding. Upon completion of the Transaction, all of
the tangible and intangible assets of Magor will be owned by and held
in Biovest Sub Corp. (the wholly-owned operating subsidiary of
Biovest). Following the completion of the Transaction Biovest will
change its name from Biovest Corp. I to "Magor Corporation". The
proposed change of name was previously approved by Biovest's
shareholders at the corporation's October 17, 2012 annual and special
meeting. It is expected that upon completion of the Qualifying
Transaction the resulting issuer will be a Tier 2 Technology Issuer
pursuant to the policies of the Exchange.
Biovest, a Capital Pool Company, intends for the Transaction to
constitute its Qualifying Transaction under the policies of the
Exchange. The proposed Qualifying Transaction constitutes an arm's
length transaction, and as such, will not require approval by the
shareholders of Biovest. The Transaction is conditional upon, among
other things: (i) receiving all necessary regulatory and third party
approvals and authorizations; (ii) completion of a minimum concurrent
financing of $3,000,000.00 (iii) receipt of an independent valuation of
Magor, if required by the Exchange; (iv) approval of the Transaction by
each of the board of directors of Biovest and Magor; (v) approval of
the amalgamation by the shareholders of Magor and Biovest Sub Corp.;
(vi) confirmation of no material adverse change having occurred for
either entity prior to closing; (vii) completion of a definitive
agreement setting forth the terms and conditions for the closing of the
Transaction; and (viii) completion of due diligence satisfactory to
each party.
Biovest will apply to the Exchange for an exemption from the sponsorship
requirements in connection with the Transaction. There is no assurance
that such exemption will be granted. If such exemption is not granted,
Biovest will be required to engage a sponsor for the Transaction.
Trading of the common shares of Biovest will not resume until all steps
referenced in Policy 2.4 of the Exchange have been completed. Biovest
will issue a further news release when the Exchange has received the
necessary documentation and trading of the common shares of Biovest is
set to resume.
Concurrent Financing
The completion of the Transaction is conditional on the completion of a
minimum concurrent financing of $3,000,000. Pursuant to an engagement
letter dated September 18, 2012, Biovest and Magor have engaged
Macquarie Private Wealth Inc. (the "Agent") on a commercially reasonable basis, to act as exclusive agent in
connection with the concurrent financing to raise a minimum of
$3,000,000 ("Minimum Offering") and up to a maximum of $5,000,000 ("Maximum Offering"). The Agent will be paid a fee in cash equal to 8.0% of the aggregate
gross proceeds of the Offering (the "Agent's Fee"). In addition, the Agent will be granted an option ("Agent's Option") to acquire that number of securities equal to 8.0% of the total
number of securities sold under the Offering, exercisable at the
Offering price for a period of eighteen (18) months from the closing
date of the Offering. Further disclosure about the Offering will be
forthcoming once the terms have been finalized by Biovest, Magor and
the Agent.
The net proceeds from the Offering, after deducting the Agent's Fee and
other expenses of the Offering and the Transaction, which are projected
to be $800,000 in the aggregate, are estimated to be $2,200,000 if the
Minimum Offering is completed and $4,040,000 if the Maximum Offering is
completed.
The Corporation intends to use the fund available from the Offering as
follows:
Proposed UseEstimated portion of available funds (1)Minimum OfferingMaximum Offering
Marketing and Sales
$1,240,000
$2,005,000
Research and Development
$250,000
$730,000
Debt Retirement
$380,000
$380,000
General and Administrative Expenses
$230,000
$825,000
Unallocated Working Capital
$100,000
$100,000
Total$2,200,000$4,040,000
Post -Closing Directors and Officers
Upon completion of the Transaction, the term of Biovest's current
directors will end, the size of the board of directors will be expanded
to 10 member and the following individuals will become the directors of
Biovest: Mr. Matthews, Dr. Calvin Stiller, Michael Mueller, Michael
Pascoe, Dan Rusheleau, Steve Spooner, John Watts, Scott Marshall, Jerry
Edgerton and John MacDonald. In addition, it is anticipated that
following the closing of the Transaction, Mr. Matthews will be
appointed Chairman of Biovest, Michael Pascoe will appointed Chief
Executive Office of Biovest and Brian Baker will be appointed Chief
Financial Officer of Biovest. All members of the board and management
bring tremendous experience in their respective fields.
Sir Terence Matthews
Mr. Matthews is presently director and Chairman of Magor. He is also the
non-executive Chairman of a number of technology companies including
Mitel Networks Corporation and Solace Systems. In 1972 Matthews
co-founded his first technology company, Mitel Networks Corporation. He
served as CEO and Chairman of Newbridge Networks Corporation until
2001, a company he founded in 1986. Mr. Matthews holds an honours
degree in electronics from the University of Wales, and is a Fellow of
the Institute of Electrical Engineers and of the Royal Academy of
Engineering.
Michael Pascoe
Mr. Pascoe is presently President and CEO of Magor Communications Corp.
a position he has held since 2008. Previously Mr. Pascoe was CEO of
Meriton Networks and led its private sale to Xtera Communications. Mr.
Pascoe was also CEO and President of PairGain Technologies, which ADC
acquired in 2000 for $3 billion. Prior to PairGain, Mike was a key
member of the executive management team at Newbridge Networks
Corporation (acquired by Alcatel in 2000 for US $7 billion) as the
president of the U.S. division, as well as the EVP/GM of the North and
South American business regions. Mr. Pascoe holds an electrical
engineering degree from the University of Waterloo.
Brian Baker
Mr. Baker presently serves as CFO of Biovest Corp. I and since 2008 he
has been the CFO of BioQuest Innovations Inc. a company that provides
drug development management advisory services and interim corporate
management services to life science companies. In his capacity as CFO
of BioQuest Innovations Inc. Mr. Baker acts as CFO for several early
stage development companies including Annidis Corporation (trading on
the Exchange). Mr. Baker is a Chartered Accountant and obtained his
Bachelor of Commerce degree from Concordia University and began his
career with Ernst & Young in 1978.
Dr. Calvin Stiller
Dr. Stiller is currently Chairman and CEO of Biovest Corp. I. He is also
Professor Emeritus of the University of Western Ontario in the
Departments of Medicine and Microbiology and Immunology. Dr. Stiller
established the Multi-Organ Transplant Service in London, Ontario and
served as the unit's chief until 1996. Dr. Stiller serves on the Board
of Directors of Revera Inc. and Stem Cell Therapeutics (trading on the
Exchange), and several public endeavours and foundations including,
co-founder and director of MaRS (Medical and Related Sciences Discovery
District), and of the Ontario Institute for Cancer Research (of which
he is also Chair). He is immediate past Chair of Genome Canada and the
Canadian Alliance for Health Innovation (Conference Board of Canada).
He is also the recipient of numerous awards including the MEDEC Award
(1992), the Order of Canada (1995) and the Order of Ontario (2000). Dr.
Stiller received his MD from the University of Saskatchewan and has
been the recipient of honorary doctorates from McMaster University,
University of Saskatchewan and University of Western Ontario.
Michael Mueller
Mr. Mueller is presently a director of Biovest Corp. I. He is also a
member of the board of directors of the Public Service Pension
Investment Board (and Chair of its Human Resources and Compensation
Committee), the Scarborough Hospital (and Chair of its Board), the
Scarborough Hospital Foundation, Budco, AIM Therapeutics and Annidis
Corporation. He also serves as strategic advisor to a number of
Canadian and international companies. From 2003 to 2005, he was
President and Chief Executive Officer of MDS Capital Corporation. Prior
to that, Mr. Mueller held a series of senior positions at TD Bank
Financial Group, including Senior Vice President and Country Head of
its USA Division, Executive Vice President of Global Credit and Vice
Chairman and head of Global Investment Banking. Mr. Mueller holds a
Bachelor of Science from the University of Western Ontario, and a
Master of Business Administration from York University.
Daniel Rusheleau
Daniel Rusheleau founded Magor along with Mr. Matthews in 2007 and is
presently a director of Magor. Mr. Rusheleau has more than 35 years of
experience in the voice and data communications industry. In 1986, Mr.
Rusheleau co-founded Newbridge Networks with Sir Terrence Matthews. He
served as Newbridges' Vice President of Research and Development and
General Manager of the Access Product Business Unit until 1993, and
continued to serve on the company's Board of Directors until 1998.
Prior to Newbridge, Mr. Rusheleau held engineering positions with GTE
Automatic Electric, Bell Northern Research, Norpak and Mitel. Mr.
Rusheleau holds a BASc degree in electrical engineering from the
University of Waterloo.
Steve Spooner
Mr. Spooner is presently a director of Magor and a member of Magor's
audit committee. Mr. Spooner is presently Chief Financial Officer for
Mitel Networks Corporation, a communications solutions company. Mr.
Spooner has global responsibility for Finance, Operations, Legal,
Information Technology, M&A and Investor Relations. Mr. Spooner's past
experience includes roles as CEO, COO and CFO of both emerging and
established industry players including tenures at Digital, Wang, SHL
System house, Cross Keys Systems, Stream Intelligent Networks and
Wisdom Mr. Spooner is a Chartered Accountant (Ontario '82), a graduate
of Carleton University (Commerce '80) and holds the ICD.D professional
director designation from the Institute of Corporate Directors.
John Watts
John Watts is presently a director of Magor and member of Magor's audit
committee. Mr. Watts was President of General Dynamics Canada until
2009. Prior to his appointment as President, Mr. Watts held a series of
progressively senior financial management positions in General Dynamics
Canada and its predecessor, Computing Devices Canada. Mr. Watts served
as Senior Vice President with responsibility for the general management
of the company's Ottawa operations. Mr. Watts holds a CMA and ACIS
designation.
Scott Marshall
Scott Marshall is presently a director of Magor. Most recently Mr.
Marshall held the post of Senior Vice President of Engineering, Product
Management and Business Development with Redback Networks, where he was
responsible for technical and product leadership. He was formerly a
group vice president of Cisco Systems with responsibility for multiple
business units, including Dial Remote Access Servers and
Concentrators, DSL, Cable, Wireless, Multi-service Switching, Voice
over IP and Integrated Access Devices. Mr. Marshall also served as
President and Chief Executive Officer of optical start-up CIBA
Corporation and Executive Vice President of Research and Development of
Newbridge Networks. He also held senior product management and
engineering roles at Newbridge, Mitel and Nortel. Mr. Marshall holds a
BASc in Electrical Engineering from the University of Waterloo.
Jerry Edgerton
Mr. Edgerton is presently a director of Magor. For nearly 20 years, Mr.
Edgerton led the MCI/Verizon Business federal government business unit,
building it from the ground up into a $3 billion enterprise that is
widely regarded a leading federal government telecommunications
organization. Prior to his long career in Telecommunications, Mr.
Edgerton worked as an engineer and management consultant. Mr. Edgerton
holds a Bachelor of Science degree in Electrical Engineering from North
Carolina State University and a Masters of Business Administration,
Professional Management from Pace University in New York.
John MacDonald
Mr. MacDonald is presently a director of Magor. Mr. MacDonald retired
from MTS All stream in December of 2008 where he held the position of
President, Enterprise Division. He joined MTS Allstream, at the time
known as AT&T Canada, in November, 2002. Mr. MacDonald has served on
the boards of a number of companies, including Rogers Cable,
Hummingbird, Stentor, and Leith Technology Corp. He was a member of the
Federal Government's Advisory Council on Science and Technology.
Previously, Mr. MacDonald chaired the National Selection Committee for
the Federal Government's Smart Communities Program and served on the
Federal Government's Information Highway Advisory Council. Mr.
MacDonald holds a Bachelor of Science in electrical engineering from
Dalhousie University and a Bachelor of Engineering from the Technical
University of Nova Scotia.
Biovest and Magor are currently in the process of finalizing the formal
disclosure documentation to be filed with the Exchange in connection
with the Transaction and the Offering and made available publicly on
SEDAR at www.sedar.com.
Completion of the transaction is subject to a number of conditions,
including but not limited to, Exchange acceptance and if applicable
pursuant to Exchange Requirements, majority of the minority shareholder
approval. Where applicable, the transaction cannot close until the
required shareholder approval is obtained. There can be no assurance
that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the preliminary
prospectus 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 a capital pool company should be considered highly
speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of
the proposed transaction and has neither approved nor disapproved the
contents of this press release.
Neither the TSX Venture Exchange nor its Regulations Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
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