On April 23, 2021 iCo Therapeutics Inc. ("iCo" or the "Company") (TSXV: iCo) (OTCQB: iCoTF) reported that, in connection with its proposed business combination with Satellos Bioscience Inc. ("Satellos") by way of a plan of arrangement (the "Arrangement"), as previously announced on March 22, 2021, it intends to offer on a private placement basis (the "Financing") 85,294,117 subscription receipts (the "Subscription Receipts") at a price of $0.085 per Subscription Receipt for aggregate gross proceeds of approximately C$7.25 million, representing an upsize from the C$6 million financing announced on March 22, 2021 (Press release, iCo Therapeutics, APR 23, 2021, View Source [SID1234578391]). Each Subscription Receipt will entitle the holder thereof to receive, upon satisfaction of certain escrow release conditions, and without payment of additional consideration, one common share in the Resulting Issuer (as described below). The proceeds from the Financing are to be placed in escrow and, upon satisfaction of the release conditions and completion of the Arrangement, will be used for research, development, and general corporate expenses of the Resulting Issuer.
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The common shares underlying the Subscription Receipts are subject to a lock-up agreement and the Subscription Receipts and the underlying common shares of the Resulting Issuer will be subject to a hold period expiring 4 months and one day from the date of issuance in accordance with applicable Canadian securities laws. The Financing is anticipated to close on or about April 27, 2021, subject to approval by the TSX Venture Exchange (the "Exchange").
The Financing is led by Bloom Burton Securities Inc. ("Bloom Burton") and includes Richardson Wealth Ltd. (together the "Agents"). In connection with the Financing and in accordance with the policies of the Exchange, the Agents will receive: (i) a cash fee equal to 6.0% of the gross proceeds raised in connection with the Financing; and (ii) warrants equal to 6.0% of the number of Subscription Receipts issued in connection with the Financing (the "Broker Warrants"). Each Broker Warrant shall entitle the holder thereof to buy one common share of the Resulting Issuer at the issue price in connection with the Arrangement. The term of the Broker Warrants shall be 24 months from the expected closing date of Financing. 51254637.6
Completion of the Arrangement is subject to, among other things, the approval of the Exchange, the Supreme Court of British Columbia and the shareholders of iCo and Satellos (collectively, the "Shareholders"). iCo shares will remain halted for trading pending the approval of the Arrangement by the Supreme Court of British Columbia, the Shareholders and the permission of the Exchange. Upon closing of the Arrangement, Satellos will become a wholly owned subsidiary of iCo, and the parties expect to complete an amalgamation of iCo and Satellos, with the resulting entity named "Satellos Bioscience Inc" (the "Resulting Issuer"). Upon the conclusion of the Financing, the holders of the Subscription Receipts will represent approximately 14% of the issued and outstanding common shares of the Resulting Issuer.
William Jarosz, the CEO of iCo noted, "We are very pleased by the success and expansion of the private placement. Following the private placement and Arrangement, the Company will be better capitalized around a more diverse set of clinical programs in various stages of development with very bright prospects for the future under the leadership of Satellos, a company addressing unmet needs in muscle wasting diseases, including Duchenne Muscular Dystrophy. We are also grateful for the support of existing investors participating in this financing who recognized the value of this new strategic direction for the Company."
Frank Gleeson, the CEO of Satellos, added: "We view the Financing as an extremely encouraging endorsement of the proposed business combination of iCo and Satellos and the potential for its new technology platform which aims to attack and treat a devastating series of muscle wasting diseases. Together with iCo management, we are focused on completing the Arrangement so that we can begin to execute on what we believe is an exciting plan for the future."