In connection with the transaction, Pacgen would acquire all of the issued and outstanding shares of Medigen by way of share purchase or through such other transaction structure as may be determined by the mutual agreement of Medigen and Pacgen. It is anticipated that each issued and outstanding share of Medigen would be exchanged for 2.77 common shares of Pacgen issued from treasury.
Following the business combination, the current shareholders of Medigen would own majority interest of the combined company. Upon entering into a definitive agreement, Pacgen and Medigen would apply to list the combined company’s common shares for trading on a TSX Group exchange. The transaction remains subject to the negotiation of a definitive agreement between Pacgen and Medigen and certain other conditions.
The board of directors of Pacgen has unanimously approved the execution of the letter of intent. The companies have agreed to an exclusivity period that will expire November 20, 2008 in which to complete due diligence, work toward a definitive agreement and during which they shall not solicit other proposals.
The transaction is expected to complete in February 2009, following receipt of all necessary shareholder and regulatory approvals. Closing of the transaction will include a share consolidation, name change, the appointment of officers, and the election of persons nominated by Medigen to the board of directors of Pacgen that are acceptable to Pacgen and satisfaction of regulatory requirements.
In connection with this proposed transaction, Duffy DuFresne, the current president and CEO of Pacgen, will depart the company to pursue other interests, effective as of October 31, 2008. Mr DuFresne will be retained as a consultant to Pacgen.
Chung-Yu Wang, chairman of Pacgen, said: “Pacgen has been evaluating several strategic options to leverage Pacgen’s assets and resources. This process has led the board of directors to conclude that this proposed business combination with Medigen is the best opportunity available to Pacgen to maximize our shareholder value. We are particularly pleased that the combined company will provide a business platform to leverage expertise and business networks in both the North American and Asian regions.”