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FIT Biotech Oy: RESOLUTIONS OF EXTRAORDINARY GENERAL MEETING OF FIT BIOTECH OY FEBRUARY 6, 2018

(February 06, 2018)

Company release February 6, 2018 at 12:15 EET

RESOLUTIONS OF EXTRAORDINARY GENERAL MEETING OF FIT BIOTECH OY FEBRUARY 6, 2018

The EGM of FIT Biotech Oy ("FIT Biotech", "Company") has made the following resolutions today:

  1. Approval of the funding programme between FIT Biotech Oy and European High Growth Opportunities Securitization Fund and authorising the Board of Directors to resolve upon the issuance of K shares as well as on the granting of options and other special rights entitling to K shares

Background



In accordance with the company release published on December 23, 2017, FIT Biotech Oy's CEO has on December 22, 2017, in accordance with the approval and authorisation of the Company's Board of Directors ("Board"), executed the "Agreement for the issuance of and subscription to notes convertible into new and/or existing shares and/or partially redeemable in cash with share subscription warrants attached" between the Company and European High Growth Opportunities Securitization Fund ("EHGOSF"), a fund managed by European High Growth Opportunities Manco SA, member of the Alpha Blue Ocean Investment Group ("Agreement") concerning a convertible and/or partially redeemable notes with share subscription warrants attached funding programme of up to EUR 10,000,000 ("Programme").

The loan note instrument issued under the Agreement constitutes a capital loan as referred to in Chapter 12 of the Finnish Companies Act.

The Programme is conditional, inter alia, upon the Company's Extraordinary General Meeting ("EGM") approving the Programme and granting the Company's Board all requisite authorisations in order to implement the Programme. The proposals included in EGM notice form an entirety that requires the adoption of all its individual items by a single resolution.

Pursuant to the Programme, convertible notes will be drawn down automatically in 20 sequential tranches of EUR 500,000 (each, a "Tranche") so that a Tranche will consist of 500 loan notes with a nominal value of EUR 1,000 each. The automatic drawdown of Tranches may be suspended and/or reactivated by the Company at any time during the Agreement. A period of a maximum of 30 trading days will follow each drawdown of a Tranche during which the Company may only issue a new Tranche of loan notes at EHGOSF's discretion. The conversion price of the K-shares is 85% of the lowest closing volume weighted average price over a 15 trading days period preceding a conversion.

The convertible notes corresponding to each Tranche drawn down will carry the right to be converted into the Company's Class K shares at a fluctuating conversion price depending on the market value of the Company's K shares or to be fully or entirely redeemed in cash, at the Company's option, as detailed in the Agreement. The final total number of the Company's K shares to be subscribed upon conversion of the notes will remain unknown and will depend on the Company's willingness to drawdown Tranches, to deliver shares or redeem the notes as well as on the value of the shares of the Company in public trading from time to time as stipulated in the Agreement.

Upon the subscription for each Tranche, EHGOSF will also receive share subscription warrants that entitle, but not obligate, it to subscribe for a number of Company's K shares at a fluctuating subscription price depending on the market value of the K shares prior to the date of the drawdown of the Tranche they have been attached to. The number of share subscription warrants attached to each Tranche will be determined in order for the Company, if all those share subscription warrants are exercised, to receive proceeds for a total amount equal to 75% of the nominal amount of the notes they have been attached to. The final total number of the Company's K shares to be subscribed upon exercise of the share subscription warrants will remain unknown and will depend on the Company's willingness to drawdown Tranches they will be attached to and also on EHGOSF's willingness to subscribe for and invest in the Company's shares as well as on the value of these shares in public trading from time to time as stipulated in the Agreement. The subscription for the Company's shares upon exercise of the share subscription warrants by EHGOSF would have a positive effect to the Company's equity and cash flow. Warrants may be used to subscribe Company K shares at the price defined at the time of subcription, which is 110% of the respective lowest closing weighted average price during 15 trading days preceding the subscription date.

The Board may use either newly issued shares or treasury shares to satisfy any of the conversion of notes and/or exercise of the share subscription warrants.

The Company may terminate the Programme without cause after the 6th closing date i.e. when the 6th Tranche has been drawn down corresponding to a total of EUR 3,000,000 financing drawn.

The Programme contains also a Share Lending Agreement pursuant to which the Company has lent to EHGOSF (as the borrower) a total of 41,666,667 K shares as a share loan ("Lent Shares"). This share loan has been provided in exchange for the drawdown of the first Tranche on December 28th, 2017. The share loan may be terminated and Lent Shares returned at the Company's will. If EHGOSF as the borrower has used any of the Lent Shares, it may satisfy the obligation to redeliver equivalent shares, as the case may be, by making market purchases of the Company's K shares.

Under the Agreement, EHGOSF is entitled to a commitment fee of EUR 400,000 paid in two equal EUR 200,000 instalments with Class K shares and notes giving access to Class K shares upon conversion ("Commitment Fee"). The Commitment Fee has been paid by delivering 16,666,667 K shares held in treasury and 200 notes each with nominal value of EUR 1,000 to EHGOSF upon the execution Agreement and the drawdown of the first Tranche. The total number of shares to be received by EHGOSF in form of the Commitment Fee will depend on the market value of the Company's K shares upon the conversion of the 200 loan notes received by EHGOSF. With the current share price, the total Commitment Fee corresponds to approximately 46,000,000 K shares.

The purpose of the Programme is to ensure the continuity of the Company's business operations and sufficiency of its working capital in the long-term. Thus, there are weighty financial reasons for the implementation of the Programme and for the issuance of the special rights entitling to shares. The Programme replaces similar loan note and share warrants funding programme entered into with Bracknor Investment Group which was confirmed and authorised by the EGM of September 15th, 2016 with additional Board authorisations approved by the EGM of December 14th, 2017.   

Therefore, the Board proposed to the EGM that the general meeting (i) approves the Programme and authorises the Board to take all measures required for the implementation of the Programme, including the approval of the terms and conditions of the 10,000 loan notes (each with a nominal value of EUR 1,000 and an aggregate principal amount of EUR 10,000,000 in total) convertible into new and/or existing Company's K shares (or partially redeemable in cash) as detailed in the "Characteristics of the Notes" document attached to the EGM notice as Appendix 1; and the terms and conditions of the share subscription warrants entitling the holder thereof to subscribe for new and/or existing Company's K shares as detailed in the "Characteristic of the Warrants" document attached to the EGM notice as Appendix 2. each without regard to the pre-emptive rights of the shareholders.

The EGM resolved in accordance with the proposal of the Board that it (i) approves the Programme and authorises the Board to take all measures required for the implementation of the Programme, including the approval of the terms and conditions of the 10,000 loan notes (each with a nominal value of EUR 1,000 and an aggregate principal amount of EUR 10,000,000 in total) convertible into new and/or existing Company's K shares (or partially redeemable in cash) and the terms and conditions of the share subscription warrants entitling the holder thereof to subscribe for new and/or existing Company's K, each without regard to the pre-emptive rights of the shareholders.

The Board further proposed to the EGM that the general meeting (ii) authorises the Board to resolve upon the issuance and granting of options and special rights entitling to shares, as prescribed in Chapter 10 section 1 of the Companies Act, for the purpose of implementing the Programme without regard to the pre-emptive rights of the shareholders; as well as (iii) authorises and approves the issuance of 200 notes each with a nominal value of 1,000 EUR, with no share warrants attached, as payment of the 50 % instalment of the Commitment Fee to EHGOSF and convertible into the Company's K shares in accordance with Appendix 1.; and (iv) authorises and approves the issuance of 500 notes each with a nominal value of 1,000 EUR, with share warrants attached, to EHGOSF against the drawdown of the first Tranche of EUR 500,000 and convertible into the Company's K shares in accordance with Appendix 1.

The EGM further resolved in accordance with the proposal of the Board that it (ii) authorises the Board to resolve upon the issuance and granting of options and special rights entitling to shares, as prescribed in Chapter 10 section 1 of the Companies Act, for the purpose of implementing the Programme without regard to the pre-emptive rights of the shareholders; as well as (iii) authorises and approves the issuance of 200 notes each with a nominal value of 1,000 EUR, with no share warrants attached, as payment of the 50 % instalment of the Commitment Fee to EHGOSF and convertible into the Company's K shares in accordance with Appendix 1.; and (iv) authorises and approves the issuance of 500 notes each with a nominal value of 1,000 EUR, with share warrants attached, to EHGOSF against the drawdown of the first Tranche of EUR 500,000 and convertible into the Company's K shares in accordance with Appendix 1.

Finally, the Board proposed to the EGM that the general meeting (v) authorises and approves the directed issuance of 41,666,667 of K shares held in treasury to EHGOSF as the Lent Shares under the Share Lending Agreement.

Finally, the EGM resolved in accordance with the proposal of the Board that it (v) authorises and approves the directed issuance of 41,666,667 of K shares held in treasury to EHGOSF as the Lent Shares under the Share Lending Agreement.

In connection to item (ii) above the Board proposed that the EGM authorises the Board to resolve upon granting special rights entitling to shares, as referred to in Chapter 10, section 1 of the Companies Act, in one or more tranches for the purpose of implementing the Programme entitling to a maximum of (a) 250,000,000 new or old Class K shares under the convertible notes and (b) 250,000,000 new or old Class K shares under the share warrants.

In connection to item (ii) above the EGM resolved in accordance with the proposal of the Board that it authorises the Board to resolve upon granting special rights entitling to shares, as referred to in Chapter 10, section 1 of the Companies Act, in one or more tranches for the purpose of implementing the Programme entitling to a maximum of (a) 250,000,000 new or old Class K shares under the convertible notes and (b) 250,000,000 new or old Class K shares under the share warrants.

The Board is entitled to decide on all other terms and conditions of these special rights entitling to shares, and the granting of such rights can be carried out as a directed issue in deviation from the shareholders' pre-emptive right. The Board is also authorised to amend the terms of the special rights at any time. The authorisations are valid until further notice. These authorisations, similarly as the funding, will replace the authorisations relating to the funding received from Bracknor Investment Group, and the Board will eventually proceed to remove all Bracknor related authorisations the from the Trade Register as futile. 

The aggregate number a new K shares to be issued pursuant to the Programme and its convertible loan notes during the Programme (i.e. 20 Tranches) is expected to amount to a maximum of 1,471,000,000 shares based on the current average price of the Company's K shares in public trading, which number correspond to approximately 654 per cent of the Company's current shares and votes. The aggregate number of warrants to be issued pursuant to the Programme based on the current average price of the Company's K shares is calculated to amount 937,500,000 warrants for the same number of shares.

The final number of Class K shares required for the implementation of the Programme as a whole is unknown and will be determined, inter alia, based on the number of Tranches and number of convertible loan notes to be drawn down, the fluctuation and development of the Company's Class K share in trading, number of share subscription warrants exercised by EHGOSF, and possible future adjustments as agreed during the validity of the Programme.

Recorded that if necessary, the Board will seek additional authorisations from the general meeting in order to implement the Programme.

 

Minutes of EGM

The minutes of the EGM are published by February 13, 2018 on FIT Biotech's website www.fitbiotech.com.

FIT BIOTECH OY

Board of directors

For further information:
Chairman of the Board of Directors Rabbe Slätis
Tel: +358 40 840 6749
E-mail: [email protected]

Certified Advisor: Aalto Capital Partners Oy, tel. +358 40 587 7000

About FIT Biotech

FIT Biotech Oy is a biotechnology company established in 1995. The company develops and licenses its patented GTU® (Gene Transport Unit) vector technology for new-generation medical treatments. GTU® is a gene transport technology that meets an important medical challenge in the usability of gene therapy and DNA vaccines.

FIT Biotech applies GTU® technology in its drug development programmes. Application areas include cancer (gene therapy) and infectious diseases such as HIV and tuberculosis, as well as animal vaccines.

FIT Biotech shares are listed on the First North Finland marketplace maintained by Nasdaq Helsinki Oy.

DISTRIBUTION:
NASDAQ OMX Helsinki
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