Magistral Biotech sells its cholesterol related assets to Diversified Natural Products, Inc.
Magistral Biotech Inc. announced that it closed the sale of all its cholesterol lowering assets to Diversified Natural Products, Inc. ("DNP"), following the approval of this transaction by the shareholders and debentureholders of Magistral at meetings held March 13th. Magistral had announced before that the US$2 million consideration payable by DNP to Magistral would be paid in cash rather than by the issuance of shares, in order to reassure the public as to the value of the transaction and in order to simplify its structure.
However, contrary to its intended effect, this amendment instead jeopardized the proposed transaction with DNP. As a result of the reactions of FondAction and Société Innovatech du Sud du Québec to this amendment, the shareholders and debentureholders of Magistral informed Magistral that they would reject the proposals relating to the approval of the asset sale transaction with DNP at the meetings held last March 13th.
On March 12, 2005, in order to return to the initial spirit of the transaction, Magistral therefore concluded a second amendment to the terms of the proposed transaction with DNP.
This new amendment provided that the US$2 million consideration payable by DNP to Magistral would again be paid in shares of DNP, exactly in accordance with the initial terms, except that an amount of US$2 million belonging to DNP would be held in trust by a third party in order to guaranty the eventual redemption of the shares of DNP which will be held by Magistral.
This redemption could take place either four years after the date of the transaction, if, at that time, the shares of DNP are not listed on a recognized exchange, as already provided for in the original agreement signed with DNP, or upon the closing by DNP of its current round of financing within the parameters set out in the agreement with DNP, the whole at the discretion of Magistral.
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