Aeterna Zentaris, Ceapro enter agreement for all-stock merger of equals

Aeterna Zentaris and Ceapro announced that they have entered into a definitive agreement to combine operations in an all-stock merger of equals transaction. The combined company is expected to be listed on the Nasdaq Capital Market and the Toronto Stock Exchange, subject to the receipt of all necessary approvals. A new name for the combined company will be announced in the coming weeks and the Transaction is expected to close in the first quarter of 2024. The Transaction is structured as a merger of equals business combination. The terms of the Transaction are set out in a definitive arrangement agreement between Aeterna and Ceapro. The Transaction will be effected by way of a plan of arrangement in respect of Ceapro under the Canada Business Corporations Act pursuant to which, at closing, each outstanding Ceapro common share will be exchanged for 0.09439 of an Aeterna common share with the result that Ceapro will become a wholly-owned subsidiary of Aeterna. Additionally, as part of the Transaction, Aeterna will issue to its shareholders immediately prior to the closing of the Transaction, 0.47698 of a share purchase warrant for each Aeterna common share held as of such date. Each Transaction Warrant will have a term of three years and each whole Transaction Warrant will be exercisable to purchase one common share of Aeterna at a nominal exercise price of US$0.01. Holders of Aeterna’s currently outstanding warrants will also be issued Transaction Warrants in accordance with the anti-dilution provisions of such warrants. The Transaction Warrants will be issued to current Aeterna shareholders in order to reflect the difference between the market capitalizations of Ceapro and Aeterna as of the date of the Arrangement Agreement and to compensate Aeterna shareholders for the value of Aeterna’s cash position which is not fully reflected in Aeterna’s current market capitalization. The Transaction also provides the outstanding options to acquire Ceapro common shares to be replaced by options allowing their holders to acquire common shares of Aeterna on similar terms, as adjusted by the Exchange Ratio. Following the closing of the Transaction, the former shareholders of Ceapro will own 50% of Aeterna and the pre-Transaction securityholders of Aeterna will own the remaining 50%, assuming the exercise of all Transaction Warrants. The Transaction will require the approval of at least 66 2/3% of the votes cast by Ceapro shareholders and 66 2/3% of the votes cast by Ceapro shareholders and Ceapro optionholders, voting together as a single class, at a special meeting of Ceapro’s securityholders. The issuance of common shares, Transaction Warrants and Replacement Options by Aeterna under the Transaction is subject to the approval of a simple majority of the votes cast by Aeterna shareholders at a special meeting of Aeterna shareholders. Moreover, Aeterna shareholders will also be required to approve, by simple majority, the proposed changes to the Aeterna Board described below, as well as, by a majority of at least 66 2/3% of the votes cast by Aeterna shareholders, the proposed change of the name of Aeterna and the proposed consolidation of the Aeterna common shares described below. The Transaction is also subject to closing conditions customary for transactions of this nature, including Alberta court approval and applicable stock exchange approvals. The Arrangement Agreement includes reciprocal non-solicitation provisions and a reciprocal termination fee of C$500,000 payable in certain circumstances. Certain officers and directors of Ceapro have entered into lock-up agreements with Aeterna, agreeing to vote their Ceapro common shares and options in favour of the Transaction. Similarly, certain officers and directors of Aeterna have entered into lock-up agreements with Ceapro, agreeing to vote their Aeterna common shares in favour of the Transaction. it is anticipated that both shareholder meetings and the closing of the Transaction will take place in the first quarter of 2024, subject to the satisfaction of the conditions of the Arrangement Agreement. Following closing of the Transaction, it is expected that the shares of the combined company will continue to trade on the TSX and the Nasdaq, subject to approval or acceptance of each such exchange. As a wholly-owned subsidiary of Ceapro upon closing of the Transaction, Ceapro’s common shares will be de-listed from the TSX Venture Exchange following closing. Following the closing of the Transaction, the board of directors of the combined company will consist of eight directors, comprised of four independent directors from Ceapro, three independent directors from Aeterna and Gilles Gagnon, who currently serves on both boards. Management of the combined operations will include executives from both Ceapro and Aeterna, with Ceapro’s current Chief Executive Officer, Gilles Gagnon, and Aeterna’s current Chief Financial Officer, Giuliano La Fratta, continuing to carry out their respective responsibilities following the closing of the Transaction.