<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. 20549
-------------------
SCHEDULE 13E-3
(RULE 13e-100)
TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 13e-3 THEREUNDER
RULE 13e-3 TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _______)
CliniChem Development Inc.
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(Name of the Issuer)
BioChem Pharma Inc.
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(Name of Person(s) Filing Statement)
Class A Common Shares
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(Title of Class of Securities)
186-906-102
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(CUSIP Number of Class of Securities)
Charles-A. Tessier, Esq.
Vice President, Legal Affairs and General Counsel
275 Armand Frappier Boulevard
Laval, Quebec, Canada H7V 4A7
(450) 978-7768
With a copy to:
Lance C. Balk, Esq.
Kirkland & Ellis
Citigroup Center
153 East 53rd Street
New York, New York 10022
(212) 446-4800
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(Name, Address and Telephone Numbers of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
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This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or Rule
13e-3(c) under the Securities Exchange Act of 1934
b. [ ] The filing of a registration statement under the Securities
Act of 1933.
c. [ ] A tender offer.
d. [x] None of the above.
<PAGE> 2
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
Check the following box if the filing is a final amendment reporting
the results of the transaction: [ ]
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CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Transaction Amount of
Valuation(1)(3) Filing Fee(2)(3)
<S> <C>
US $25,985,430 US $5,197
--------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the filing fee. The
transaction valuation is based upon the aggregate exercise price of the
stock purchase option granted to BioChem under CliniChem's amended
Articles of Incorporation of Cdn $50,000,000 or Cdn $18.43 per share
for all issued and outstanding shares of Class A Common Stock of
CliniChem Development Inc. As of October 26, 2000, BioChem beneficially
owned 559,674 Class A common shares. The transaction valuation
indicated above was calculated by multiplying (a) the per-share
exercise price of Cdn $18.43 by (b) 2,153,586 which represents the
number of Class A common shares not owned by BioChem.
(2) The amount of the filing fee, calculated in accordance with Section 13
of the Securities Exchange Act of 1934, as amended, equals 1/50th of
one percent of the exercise price to be paid by BioChem Pharma Inc.
pursuant to the stock purchase option granted to BioChem under
CliniChem's amended Articles of Incorporation.
(3) The exchange rate of US $.6547 used to calculate the Transaction
Valuation and the Amount of the Filing Fee, was based on the noon
buying rate on October 27, 2000 for cable transfers in Canadian dollars
for one United Sates dollar as certified for customs purposes by the
Federal Reserve Bank of New York.
Check the box if any part of the fee is offset as provided by Exchange
Act Rule 0-ll(a)(2) and identify the filing with which the offsetting
fee was previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
[ ]
Amount Previously Paid: ____________________ Filing Party __________________
Form or Registration No. ___________________ Date Filed: ___________________
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INTRODUCTION
This Schedule 13E-3 Transaction Statement relates to the intended exercise by
BioChem Pharma Inc., a Canadian corporation, of the option granted to it under
the amended Articles of Incorporation of CliniChem Development Inc., a Canadian
corporation, to purchase all of the issued and outstanding Class A common shares
of CliniChem. The option granted to BioChem under CliniChem's amended Articles
of Incorporation is referred to in this Transaction Statement as the purchase
option. Notwithstanding the filing of this Transaction Statement, BioChem
disclaims application of Rule 13e-3 of the Securities Exchange Act of 1934 to
the transaction described herein.
In this Transaction Statement, references to "U.S. dollars" or "US $" are to
United States currency, and references to "Canadian dollars" or "Cdn $" are to
Canadian Currency. UNLESS OTHERWISE NOTED, ALL REFERENCES TO FINANCIAL
TRANSACTIONS IN THIS TRANSACTION STATEMENT ARE TO CANADIAN DOLLARS.
ITEM 1. SUMMARY TERM SHEET.
The information set forth under the caption "Summary of Terms" in the notice to
shareholders of CliniChem attached hereto as Exhibit 99(a)(1) is hereby
incorporated by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) CliniChem is the issuer of the class of equity that is the subject of
this filing. The address of CliniChem's principal executive office is
275 Armand Frappier Boulevard, Laval, Quebec, Canada H7V 4A7. The
telephone number of CliniChem's principal executive office is
(450) 681-1744.
(b) The exact title of the class of equity security that is the subject
of this filing is Class A common shares of CliniChem. As of
October 26, 2000, there were 2,713,260 Class A common shares issued and
outstanding.
(c) CliniChem's Class A common shares are traded on the Nasdaq National
Market under the symbol "CCHE" and are traded in Canada on The Toronto
Stock Exchange under the symbol "BCC.A". The following table sets
forth, for the periods indicated, the range of high and low closing
sales prices of the CliniChem Class A common shares on the Montreal
Exchange (CliniChem's principal non-United States exchange until
December 3, 1999), The Toronto Stock Exchange and the Nasdaq National
Market.
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<TABLE>
<CAPTION>
The Montreal Exchange(1) The Toronto Stock Exchange Nasdaq National Market
--------------------- -------------------------- ----------------------
Cdn $ Cdn $ US $
Quarter Ending High Low High Low High Low
-------------- ---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
12/31/98 8.35 6.60 8.35 6.50 5.50 4.13
03/31/99 11.00 7.05 11.00 7.00 6.91 4.50
06/30/99 10.65 9.50 10.75 9.50 7.50 6.38
09/30/99 11.50 9.40 11.50 9.50 8.13 6.38
12/31/99 15.00 11.00 14.50 11.05 9.88 7.25
03/31/00 -- -- 17.00 12.50 11.88 8.75
06/30/00 -- -- 17.75 16.05 11.88 11.38
09/30/00 -- -- 18.00 15.75 12.00 10.00
</TABLE>
(1) The CliniChem Class A common shares ceased trading on the Montreal
Exchange on December 3, 1999.
(d) To the best of BioChem's knowledge after making a reasonable inquiry,
CliniChem has paid no dividends on its Class A common shares during the
past two years.
(e) Not applicable.
(f) Between January 28, 2000 and July 28, 2000, BioChem purchased a total
of 559,674 Class A common shares in both open market and privately
negotiated transactions. These shares represent approximately 20.6% of
the issued and outstanding Class A common shares.
Between January 28, 2000 and June 30, 2000, BioChem purchased a total
of 163,400 Class A common shares in open market transactions. The
following table shows the high and low prices, as well as the average
price, paid by BioChem for Class A common shares during each fiscal
quarter between January 28, 2000 and June 30, 2000.
<TABLE>
<CAPTION>
The Toronto Stock Exchange Nasdaq National Market
-------------------------- ----------------------
Cdn $ US $
Quarter Ending High Low Average High Low Average
-------------- ---- --- ------- ---- --- -------
<S> <C> <C> <C> <C> <C> <C>
03/31/00 16.75 16.00 16.67 11.625 11.625 11.625
06/30/00 17.25 16.50 16.86 11.75 11.625 11.64
</TABLE>
In addition, in a private transaction dated July 28, 2000, BioChem
purchased 396,274 Class A common shares from Glaxo Wellcome Inc. See
Item 5(a)(6) of this Transaction Statement.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON
(a) This filing is being made by BioChem Pharma Inc. BioChem's principal
business address is 275 Armand Frappier Boulevard, Laval, Quebec,
Canada H7V 4A7, and its business telephone number is (450) 978-7771. As
the sole holder of CliniChem's issued and outstanding Class B common
shares, BioChem has the right to appoint one member of CliniChem's
board of directors. BioChem also beneficially owns approximately 20.6%
of the issued and outstanding Class A common shares.
(b) BioChem is an international biopharmaceutical company organized under
the laws of Canada whose principal business is the research,
development, manufacturing and
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marketing of innovative products for the prevention, detection and
treatment of human diseases.
During the past five years, BioChem has not been convicted in a
criminal proceeding and has not been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction that resulted
in a judgement, decree or final order enjoining further violations of,
or prohibiting activities subject to, federal or state securities laws
or finding any violation of such laws.
(c) BUSINESS AND BACKGROUND OF BIOCHEM'S DIRECTORS AND EXECUTIVE OFFICERS
Frederick J. Andrew
Chief Financial Officer
275 Armand Frappier Boulevard
Laval, Quebec, Canada H7V 4A7
Frederick J. Andrew joined BioChem in 1997 as Chief Financial Officer.
Prior to joining BioChem, he was Vice-President and Treasurer of BCE
Inc., located at 1000 de la Gauchetiere, Montreal, Quebec, Canada, from
1991 to 1997, Corporate Treasurer of Bell Canada from 1984 to 1991 and
occupied various positions within the BCE Inc. group of companies from
1964 to 1984. Mr. Andrew received a B.A. in economics from York
University in 1964. Mr. Andrew is a citizen of Canada.
Francesco Bellini
Chief Executive Officer and Chairman of the Board
275 Armand Frappier Boulevard
Laval, Quebec, Canada H7V 4A7
Francesco Bellini, O.C., Ph.D., a co-founder of BioChem, joined BioChem
as President and Chief Executive Officer in September 1986. From 1984
to September 1986, Dr. Bellini was the Director of the Biochemicals
Division at the Institut Armand-Frappier and, from 1968 to 1984, he was
a research scientist with Ayerst Laboratories. Dr. Bellini is a
director of Molson Inc. and Industrial Alliance Life Insurance Co. Dr.
Bellini received a B.Sc. in chemistry from Loyola College in Montreal
in 1972 and a Ph.D. in organic chemistry from the University of New
Brunswick in 1977. Dr. Bellini is a citizen of Canada.
Gervais Dionne
Chief Scientific Officer and Director
275 Armand Frappier Boulevard
Laval, Quebec, Canada H7V 4A7
Gervais Dionne, Ph.D., a co-founder of BioChem, joined BioChem as
Vice-President of Research and Development in 1986 and was recently
appointed Chief Scientific Officer. From 1985 to 1986, he was the
Chemical Products Director at the Institut Armand-Frappier, and from
1984 to 1985, he was a Group Leader Research Scientist with Bio-Mega
Inc. From 1976 until 1984, Dr. Dionne was a research scientist with
Ayerst Laboratories. Dr. Dionne received a B.Sc. in chemistry from the
Universite de Montreal in 1971 and a Ph.D. in organic chemistry from
Laval University in 1976. Dr. Dionne is a citizen of Canada.
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<PAGE> 6
Jean-Louis Fontaine
Director (BioChem)
Bombardier Inc.
800 Rene-Levesque Boulevard West
29th Floor
Montreal, Quebec, Canada H3B 1Y8
Jean-Louis Fontaine has been a director of BioChem since 1986 and was
the Chairman of BioChem's Board of Directors until May 20, 2000. Mr.
Fontaine serves as the Vice-Chairman of Corporate Affairs of Bombardier
Inc. He was a Vice-President with Bombardier Inc. from June 1977 until
August 1988. Bombardier Inc. is engaged in the design, development,
manufacturing and marketing of transportation equipment, civil and
military aerospace products and motorized consumer products. Mr.
Fontaine is a director of AXA Insurance Inc. and Heroux Inc. Mr.
Fontaine received a B.Sc. in mechanical engineering from the Universite
de Sherbrooke in 1963, and an M.B.A. from the University of Western
Ontario in 1977. Mr. Fontaine is a citizen of Canada.
Jean-Francois Formela
Director (BioChem)
General Partner of Atlas Venture Fund III, L.P.
222 Berkeley Street
Boston, Massachusetts 02116
Jean-Francois Formela, M.D., has been a director of BioChem since 1997.
He has been the General Partner of Atlas Venture Fund III, L.P. since
1993 and was previously the Senior Director, Medical Marketing and
Scientific Affairs for Schering-Plough U.S., which he joined in 1989.
Mr. Formela graduated in 1984 as a medical doctor from the Ecole de
medecine de l'Universite de Paris and received an M.B.A. in 1989 from
the Columbia Business School. Mr. Formela is a citizen of the United
States.
James A. Grant
Director (BioChem)
Stikeman Elliott
1155 Rene-Levesque Boulevard West
Suite 4000
Montreal, Quebec, Canada H3B 3V2
The Honorable James A. Grant, P.C., Q.C., has been a director of
BioChem since 1986. He is a partner with the law firm of Stikeman
Elliott and has been with that firm since 1962. He is a director of
United Dominion Industries Ltd., CAE Industries Ltd., and a Canadian
bank. Mr. Grant received a B.A. in arts in 1958 and a B.C.L. in law in
1961, both from McGill University. Mr. Grant is a citizen of Canada.
Roderick L. Henry
Director (BioChem)
Henrod Investments Inc.
297 Lakeside, P.O. Box 148
Knowlton, Quebec, Canada J0E 1V0
Roderick L. Henry has been a director of BioChem since 1991. He is a
director and Chairman of Atlas Copco Canada Inc., a wholesaler of
equipment and machinery located at 745 Montreal-
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Toronto Boulevard, Dorval, Quebec, and is also the President of Henrod
Investments Inc., 297 Lakeside, P.O. Box 148, Knowlton, Quebec, Canada
JOE 1V0 an investment company. Until 1997 Mr. Henry was the Chairman
and Chief Executive Officer of Wire Rope Industries, a manufacturer of
wire rope located at 1800 McGill College Avenue, Suite 2400, Montreal,
Quebec, Canada, H3A 3J6. He also serves as a director of CAE Industries
Ltd., Atlas Copco Canada Ltd., Westroc Industries Ltd. and Brome Lake
Ducks Ltd. Mr. Henry is a citizen of Canada.
Jacques R. Lapointe
President and Chief Operating Officer and Director
275 Armand Frappier Boulevard
Laval, Quebec, Canada H7V 4A7
Jacques R. Lapointe joined BioChem on May 4, 1998 as President and
Chief Operating Officer. Prior to joining BioChem, he was with Glaxo
Wellcome Inc., since 1986 as President and Chief Executive Officer of
Glaxo Canada Inc., then from 1994 as Managing Director and Chairman of
Glaxo Wellcome UK Ltd., then for Glaxo Wellcome p1c as Regional
Director with responsibilities for Australia, New Zealand and South
Africa until October 1996, when he took over as Business Development
and Information Systems Director with responsibilities for Global
Commercial Development, OTC and Information Systems worldwide. Glaxo
Wellcome is located at Glaxo Wellcome House, Berkeley Avenue,
Greenford, Middlesex, UB6 0NN, United Kingdom. Mr. Lapointe has a B.
Commerce and an M.B.A. (Finance) from Concordia University. Mr.
Lapointe is a citizen of Canada.
Francois Legault
Executive Vice-President of Corporate Development and Investments
275 Armand Frappier Boulevard
Laval, Quebec, Canada H7V 4A7
Francois Legault joined BioChem in 1987 as Vice-President, Finance and
Treasurer, then became the Executive Vice-President, Finance,
Administration and Treasurer until September 1997, when he was named
Executive Vice-President, Investments and Subsidiaries. In 1998 he was
appointed Executive Vice-President Corporate Development and
Investments. Prior to joining BioChem, he was Finance Director of
Societe Quebecoise des Transports from 1984 to 1987, and was a
chartered accountant with Coopers & Lybrand from 1978 to 1984. He
received a B.A.A. in business and accounting from Ecole des Hautes
Etudes Commerciales in Montreal in 1978 and was admitted as a Chartered
Accountant to the Ordre des Comptables Agrees du Quebec in 1980. Mr.
Legault is a citizen of Canada.
Guy Lord
Senior Vice-President of Corporate Affairs and Secretary
275 Armand Frappier Boulevard
Laval, Quebec, Canada H7V 4A7
Guy Lord was a director of BioChem from 1989 to 1999. In March 1999 he
was appointed Senior Vice-President, Corporate Affairs and Secretary of
BioChem. Until this appointment, he was a partner with the law firm of
Desjardins Ducharme Stein Monast, located at 600 de la Gauchetiere
Street West, Suite 2400, Montreal, Quebec, Canada H3B 4L8, since 1993
and was with the law firm of Clark Lord Rochefort Fortier from 1989 to
1993. Prior to that, Mr. Lord was a partner and National Director of
Research in
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Taxation with the accounting firm of Samson Belair/Deloitte & Touche
from 1986 to 1989. Mr. Lord received a B.A. in 1959 and a law degree in
1962 from the Universite de Montreal, and a D. Phil, from Oxford
University in 1969. He is a member of the Barreau du Quebec and the
Canadian Bar Association. Mr. Lord is a citizen of Canada.
Michel Perron
Director (BioChem)
Somiper Inc.
2080 Rene-Levesque Boulevard West
Montreal, Quebec, Canada H3H 1R6
Michel Perron has been a director of BioChem since 1993. He is Chairman
and Chief Executive Officer of Somiper Inc., an investment company. Mr.
Perron was Chairman and Chief Executive Officer of Uniforet Inc., a
lumber business, and was also President and Chief Executive Officer of
Normick Perron Inc., a lumber business, until 1990. Mr. Perron is a
director of Natcan Trust and The National Bank of Canada. Mr. Perron
received a degree in Commerce from St-Jerome College, Kitchener,
Ontario. Mr. Perron is a citizen of Canada.
J. Robert S. Prichard
Director (BioChem)
Plavelle House - Room 208
78 Queen's Park Crescent
Toronto, Ontario, Canada M5S 2C5
J. Robert S. Prichard, O.C., has been a director of BioChem since July
1999. He is Professor of Law and President Emeritus at the University
of Toronto. Professor Prichard was appointed President of the
University of Toronto in 1990 after having served as dean of the
Faculty of Law of that university from 1984 to 1990. He has been
associated with the University of Toronto in various academic
capacities since 1979. Mr. Prichard received a Bachelor's degree in Law
from the University of Toronto and a Master's from the Yale Law School.
He also holds an M.B.A. from the University of Chicago Graduate School
of Business. Mr. Prichard is a director of numerous public and private
organizations. Mr. Prichard is a citizen of Canada.
Guy Savard
Director (BioChem)
Merrill Lynch Canada Inc.
1250 Rene-Levesque Boulevard West
Suite 3100
Montreal, Quebec, Canada H3B 4W8
Guy Savard, C.M., has been a director of BioChem since 1995. Mr. Savard
is Vice-Chairman, Chairman Quebec Operations and Director of Merrill
Lynch Canada Inc. since 1998. In February 1995, he was appointed
Vice-Chairman, President Quebec Operations, and Director of Midland
Walwyn Capital Inc., which is located at 1250 Rene-Levesque Boulevard
West, Suite 3100, Montreal, Quebec, Canada H3B 4W8. From 1990 to
January 1995, he was President, Chief Operating Officer and Director of
Caisse de depot
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et placement du Quebec. Mr. Savard is also a director of
Industrial-Alliance Life Insurance Company, Reno-Depot Inc. and Ritvik
Toys Inc. Mr. Savard is a Fellow of l'Ordre des Comptables Agrees du
Quebec. He graduated from Universite Laval with a Bachelor of Commerce
and a Master's degree in Commercial Sciences and Accounting Sciences.
He perfected his management training at Harvard University in Boston.
Mr. Savard is a citizen of Canada.
Charles-A. Tessier
Vice-President of Legal Affairs and General Counsel
275 Armand Frappier Boulevard
Laval, Quebec, Canada H7V 4A7
Charles-A. Tessier is Vice-President Legal Affairs and General Counsel
of BioChem. He joined BioChem as Vice-President, Legal Affairs and
Corporate Secretary in 1996. Prior to joining BioChem, he practiced
commercial law in his own law firm from 1980 to 1988, and from 1988
until 1996, he was Vice-President, Secretary and General Counsel of DMR
Group Inc., a multinational company in information technology located
at 1000 Sherbrooke Street West, Suite 1600, Montreal, Quebec, Canada
H3A 3RZ. Mr. Tessier received a B.A. in Administration in 1976 and a
law degree in 1979 from the University of Ottawa. He is a member of the
Barreau du Quebec and the Canadian Bar Association. Mr. Tessier is a
citizen of Canada.
Gerard Veilleux
Director (BioChem)
Power Communications Inc.
751 Square Victoria
Montreal, Quebec, Canada H2Y 2J3
Gerard Veilleux, O.C., has been a director of BioChem since July 1999.
He has been President of Power Communications Inc. and Vice-President
of Power Corporation of Canada, a diversified management and holding
company, since June 1994. He served as President and Chief Executive
Officer of the Canadian Broadcasting Corporation from 1989 to 1993.
From 1986 to 1989, he was Secretary of the Treasury Board, an agency of
the Federal Government of Canada, and from 1982 to 1986 he served as
Secretary to the Cabinet for Federal-Provincial Relations and Deputy
clerk of the Privy Council. From 1963 to 1982, Mr. Veilleux worked in
various capacities in the public service of the Federal Government of
Canada. Mr. Veilleux has a Master's degree in Public Administration
from Carleton University in Ottawa and a Bachelor of Commerce from
Laval University. Mr. Veilleux is director of several public and
private companies as well as a member of the Board of Governors of
McGill University. Mr. Veilleux is a citizen of Canada.
During the past five years, none of BioChem's Directors or Executive
Officers has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors), and none has been a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction that resulted in a judgment, decree or final order
enjoining further violations of, or prohibiting activities subject to,
federal or state securities laws, or finding any violations of such
laws.
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ITEM 4. TERMS OF THE TRANSACTION.
(a) As of October 26, 2000, BioChem holds 559,674 CliniChem Class A common
shares.
On January 10, 2000, BioChem disclosed in a press release that it
intended to exercise the purchase option provided by CliniChem's
amended Articles of Incorporation. The purchase option gives BioChem,
as the sole holder of CliniChem's issued and outstanding Class B
common shares, the right to acquire all, but not less than all, of the
issued and outstanding Class A common shares. BioChem has exercised the
option to purchase the Class A common shares on or about December 15,
2000 and to pay the aggregate exercise price of Cdn $50 million in
cash. The exercise price was calculated according to a predetermined
formula set out in CliniChem's amended Articles of Incorporation, which
are incorporated by reference in this Transaction Statement. As a
result of BioChem's exercise of the purchase option, each Class A
common share will be exchanged for Cdn $18.43 in cash. BioChem may
extend the date on which it completes the purchase of the issued and
outstanding Class A common shares pursuant to the purchase option by
delivering a notice to CliniChem of its decision to do so, if in its
judgment an extension is necessary:
(1) to obtain any governmental or third party consent to purchase
the Class A common shares;
(2) to permit the expiration prior to the date BioChem completes
its purchase of the issued and outstanding Class A common
shares, of any statutory or regulatory waiting period; or
(3) to fulfill any other applicable requirements.
On or about November 23, 2000, CliniChem will mail or deliver to each
registered shareholder notice of BioChem's intention to acquire the
Class A common shares on or about December 15, 2000. A copy of the form
of notice that will be distributed to holders of Class A common shares
is included as Exhibit 99(a)(1) to this Transaction Statement. BioChem
will deposit the funds with General Trust of Canada, as payment agent,
on or prior to the date of BioChem's purchase. BioChem will irrevocably
instruct General Trust of Canada to distribute the purchase option
exercise price pro rata to each person or entity who was a holder of
Class A common shares at the close of business on the date of BioChem's
purchase. In accordance with the terms of CliniChem's amended Articles
of Incorporation, the holders of Class A common stock do not need to
take any steps to approve BioChem's exercise of the purchase option.
Transfer of title to all the issued and outstanding Class A common
shares will be deemed to occur automatically on the date of BioChem's
purchase, and thereafter CliniChem will treat BioChem as the sole
holder of Class A common shares and the exercise price will be paid to
holders of Class A common shares on the date of BioChem's purchase in
accordance with their respective interests.
(c) The terms of the transaction reported on this Transaction Statement
will be the same for all holders of Class A common shares, provided,
however, that registered shareholders who hold physical share
certificates must submit their certificates to General Trust of Canada
in order to receive the pro rata exercise price. Holders of Class A
common shares who hold their shares in a brokerage account will have
the relevant account automatically credited by the broker.
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(d) No appraisal rights are afforded under either applicable law or
BioChem's notice to holders of Class A common shares of its intention
to exercise the purchase option, and neither BioChem nor CliniChem will
afford such rights. BioChem is not aware of any rights available to
objecting holders of Class A common shares under applicable law.
(e) BioChem is unaware, after making reasonable inquiry of CliniChem, of
any grant of access to unaffiliated security holders to the corporate
files of either CliniChem or BioChem or the appointment of counsel or
appraisal services for unaffiliated security holders at the expense of
either CliniChem or BioChem.
(f) Not Applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(a) The nature and approximate dollar amount of all the transactions
between BioChem and CliniChem that have occurred during the past two
years are as follows:
In June 1998, BioChem entered into a series of agreements with
CliniChem. These agreements are described below in (1) - (6)
and in section (b) of this Item 5.
(1) On June 8, 1998, BioChem made a Cdn $150 million cash
contribution to CliniChem's capital. The shares issued by
CliniChem that were held by BioChem were exchanged for Class A
and Class B common shares of CliniChem. On June 26, 1998, each
holder of record of BioChem common shares received one Class A
common share for each 40 common shares of BioChem held on June
22, 1998. The fair value of the Class A common shares
distributed to BioChem's shareholders was approximately Cdn
$24 million.
(2) Under the terms of a technology license agreement, BioChem
and its affiliates granted to CliniChem an exclusive perpetual
license to use BioChem and affiliate technology to conduct
certain research programs and related activities, and to
manufacture and commercialize products worldwide. CliniChem
pays a fee to BioChem and its affiliates in exchange for the
exclusive perpetual technology license. The technology license
fee is payable monthly at a rate of Cdn $352,000 per month
over a period of 48 months. From June 10, 1998 to October 26,
2000, CliniChem paid or incurred an aggregate amount of Cdn
$10,102,000 to BioChem and its affiliates pursuant to the
technology license contract.
(3) Under the terms of a research and development agreement,
BioChem conducts various research activities on behalf of
CliniChem. CliniChem is required under the terms of the
research and development agreement to use available funds, as
defined in the contract, to repay BioChem for its research and
development expenses. From June 10, 1998 to October 26, 2000,
CliniChem paid or incurred an aggregate amount of Cdn
$131,645,000 to BioChem pursuant to the research and
development agreement.
(4) Under the terms of a product option agreement, CliniChem
granted BioChem and certain of its affiliates an option to
acquire all rights to certain or all products developed by
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CliniChem. This option is exercisable on a country-by-country
basis for each product developed by CliniChem. From June 10,
1998 to October 26, 2000, BioChem paid or incurred an
aggregate amount of Cdn $19,000 to CliniChem pursuant to the
product option agreement.
(5) Under the terms of a services agreement, BioChem agreed to
provide CliniChem with administrative services, including
accounting, legal and other services for an annual fee of
$400,000. From June 10, 1998 to October 26, 2000, CliniChem
paid or incurred an aggregate amount of Cdn $1,133,000 to
BioChem pursuant to the services agreement.
(6) On July 28, 2000, BioChem purchased 396,274 Class A common
shares from Glaxo Wellcome Inc., pursuant to a privately
negotiated share purchase agreement dated July 27, 2000
between BioChem and Glaxo. At the time BioChem purchased these
Class A common shares from Glaxo, Glaxo, by virtue of the
number of Class A common shares it beneficially owned before
the sale to BioChem, may have been an affiliate of CliniChem.
The aggregate price that BioChem paid Glaxo for the shares was
US $3,816,119, or US $9.63 per share.
(b) See Item 5(a)(4) above.
(c) See Item 5(a)(6) above.
(e) In January 1998, BioChem incorporated CliniChem under the Canada
Business Corporations Act to conduct research and development of
potential human therapeutic products, primarily for the treatment of
cancer and HIV infection, and vaccine products, for the prevention of
certain bacterial infectious diseases.
CliniChem's amended Articles of Incorporation grant BioChem, as the
holder of all of the issued and outstanding Class B common shares, the
right to acquire all, but not less than all, of the issued and
outstanding Class A common shares and the right to appoint one of
CliniChem's Directors.
The purchase option is exercisable by written notice given at any time
from and after June 26, 1998 and ending on the earlier of (i) March 31,
2003 or (ii) the 90th day after the date CliniChem provides BioChem (as
the holder of the majority of the outstanding Class B common shares)
with quarterly financial statements of CliniChem showing cash or cash
equivalents of less than Cdn $5.0 million, although BioChem may, at its
election, extend such period by providing additional funding, including
through loans, for the continued conduct of any or all of CliniChem's
research (but in no event beyond March 31, 2003).
The amount payable upon the exercise of the purchase option, which is
referred to in this Transaction Statement as the purchase option
exercise price, is the greatest of:
(a) 25 times the aggregate of:
(1) all worldwide payments made by and all
worldwide payments due to be made by BioChem
and certain of its affiliates with respect
to all products for which the product option
(as such term is defined in CliniChem's
amended Articles of Incorporation)
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was exercised, for the four calendar
quarters immediately preceding the quarter
in which the purchase option is exercised;
and
(2) all payments that would have been made and
all payments due to be made by BioChem and
certain of its affiliates to CliniChem
during the base period (as such term is
defined in CliniChem's amended Articles of
Incorporation) if the option to buy out
CliniChem's right to receive payments with
respect to acquired products (as such term
is defined in CliniChem's amended Articles
of Incorporation) had not previously been
exercised for any acquired product on a
country-by-country or global basis pursuant
to the product option agreement (as such
term is defined in CliniChem's amended
Articles of Incorporation) with respect to
any product;
less any amounts previously paid to exercise any
payment buy-out option for any CliniChem product (as
such term is defined in CliniChem's amended Articles
of Incorporation).
(b) the fair market value of 420,000 BioChem common
shares as of the date BioChem elects to purchase the
issued and outstanding Class A common shares pursuant
to the purchase option;
(c) Cdn $175 million plus any additional funds
contributed to CliniChem by BioChem less the
aggregate amount of all technology fee payments,
research and development costs and services agreement
payments paid or incurred by CliniChem as of the date
BioChem elects to purchase the issued and outstanding
Class A common shares pursuant to the purchase
option; and
(d) Cdn $50 million.
Not later than 20 business days following the date BioChem elects to
purchase the issued and outstanding Class A common shares pursuant to
the purchase option, CliniChem shall deliver to BioChem a balance sheet
prepared by CliniChem and dated as of the date BioChem elects to
purchase the issued and outstanding Class A common shares pursuant to
the purchase option, together with (i) a statement and brief
description of all the liabilities of CliniChem as of such date not
reflected on such balance sheet; (ii) a statement of the amount of
available funds remaining as of such date; and (iii) a statement of the
total amounts paid by and due from CliniChem pursuant to the research
and development agreement through date BioChem elects to purchase the
issued and outstanding Class A common shares pursuant to the purchase
option.
Following receipt of the balance sheet referred to in the preceding
paragraph and any investigation required by BioChem, but prior to the
closing date for BioChem's purchase of the issued and outstanding Class
A common shares pursuant to the purchase option, which date is referred
to in this Transaction Statement as the closing date, BioChem shall
determine the final purchase option exercise price and shall notify
CliniChem of such determination.
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<PAGE> 14
The final purchase option exercise price is an amount equal to the
purchase option exercise price minus the amount by which the
liabilities of CliniChem existing at the purchase option exercise price
(other than liabilities under the research and development agreement,
the service agreement and the technology license agreement and any debt
owed to BioChem (which agreements are identified in CliniChem's amended
Articles of Incorporation)) exceed the aggregate of CliniChem's then
existing cash, cash equivalents and short term and long term
investments (but excluding the amount of available funds under the
research and development agreement remaining at such time).
On the next business day following receipt by CliniChem of the
determination of the final purchase option exercise price, CliniChem
shall mail or deliver to each registered shareholder notice of the
intention of BioChem to acquire the issued and outstanding Class A
common shares on the closing date.
This notice shall set out the final purchase option exercise price, the
closing date and instructions as to the surrender to the certificates
representing the issued and outstanding Class A common shares and with
respect to the collection of the final purchase option exercise price
by the holders of issued and outstanding Class A common shares.
On or before the closing date, BioChem shall deposit, in trust for the
benefit of the holders of issued and outstanding Class A common shares,
the full amount of the final purchase option exercise price.
BioChem shall provide irrevocable instructions to the payment agent to
pay, on or after the closing date, the final purchase option exercise
price to registered holders of issued and outstanding Class A common
shares on presentation and surrender of the certificates representing
the issued and outstanding Class A common shares.
Transfer of title of all the issued and outstanding Class A common
shares will be deemed to occur automatically on the closing date and
thereafter CliniChem will treat BioChem as the sole holder of the
issued and outstanding Class A common shares.
At the time of the exercise of the purchase option, BioChem must elect
to pay the purchase option exercise price in cash, common shares of
BioChem or a combination of cash and common shares of BioChem.
On January 10, 2000, BioChem disclosed in a press release that it
intended to exercise the purchase option when CliniChem's funding ran
out, which BioChem estimated was likely to occur before the end of
calendar year 2000. BioChem has elected to purchase the shares on or
about December 15, 2000 and to pay the exercise price for the purchase
option, which was calculated according to a predetermined formula
contained in CliniChem's amended Articles of Incorporation, in cash.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(b) Following BioChem's purchase of all of the outstanding Class A common
shares, CliniChem will be amalgamated with BioChem.
(c) As noted in Item 6(b) above, following BioChem's purchase of all of the
outstanding Class A common shares, CliniChem will be amalgamated with
BioChem. BioChem anticipates de-listing CliniChem from the Nasdaq
National Market and The Toronto Stock Exchange,
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<PAGE> 15
filing a Form 15 with the Securities and Exchange Commission to suspend
CliniChem's reporting requirements under the Securities Exchange Act of
1934, and taking the required steps to revoke its status as a reporting
issuer in Canada. BioChem also intends to replace CliniChem's board of
directors with BioChem employees.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
(a) The purpose of this transaction is to regain control over research and
development activities conducted by and on behalf of CliniChem and to
avoid the administrative costs relating to the operation of CliniChem.
BioChem believes that it is in the best interests of BioChem and its
stockholders to exercise the purchase option at this time.
(b) Because BioChem is exercising a previously granted right, no
alternatives to the exercise of the purchase option were considered.
(c) The transaction is structured pursuant to the terms of the previously
granted purchase option as set forth in CliniChem's amended Articles of
Incorporation. BioChem is undertaking the transaction at this time
because CliniChem's funding is expected to run out before the end of
calendar year 2000, and BioChem does not wish to provide additional
operating funds to CliniChem. Therefore, for the reasons described in
Item 7(a) above, BioChem has determined that the exercise of the
purchase option at this time was in the best interests of BioChem and
its shareholders.
(d) Because CliniChem will be amalgamated with BioChem, BioChem will
directly own all of the assets of CliniChem upon completion of the
amalgamation. See Item 6(c) of this Transaction Statement.
TAX CONSIDERATIONS
THE FOLLOWING SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED
TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY
PARTICULAR HOLDER OF CLINICHEM CLASS A COMMON SHARES. HOLDERS ARE
ADVISED AND EXPECTED TO CONSULT WITH THEIR OWN TAX ADVISORS FOR ADVICE
REGARDING THE INCOME TAX CONSEQUENCES TO THEM OF DISPOSING OF THEIR
CLINICHEM CLASS A COMMON SHARES TO BIOCHEM IN EXCHANGE FOR CASH, HAVING
REGARD TO THEIR OWN PARTICULAR CIRCUMSTANCES AND ANY OTHER CONSEQUENCES
TO THEM OF SUCH TRANSACTION UNDER CANADIAN FEDERAL, PROVINCIAL, LOCAL
AND FOREIGN TAX LAWS.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income
tax considerations to a United States holder arising from the purchase
by BioChem of the CliniChem Class A common shares. A United States
holder is a beneficial owner of CliniChem Class A common shares that
is:
- an individual citizen or resident of the United States;
- a corporation created or organized in or under the laws of
the United States or any of its political subdivisions; or
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<PAGE> 16
- an estate or trust the income of which is subject to
United States federal income taxation regardless of its
source.
This summary deals only with a United States holder that holds
CliniChem Class A common shares as a capital asset and does not address
tax considerations applicable to United States holders that may be
subject to special tax rules, such as:
- dealers or traders in securities or currencies;
- financial institutions or other United States holders that
treat income in respect of CliniChem Class A common shares
as financial services income;
- insurance companies;
- regulated investment companies;
- tax-exempt entities;
- United States holders that acquired CliniChem Class A
common shares upon the exercise of an employee stock
option or otherwise in connection with the performance of
services;
- United States holders that hold CliniChem Class A common
shares as a part of a straddle or conversion transaction
or other arrangement involving more than one position;
- United States holders that own, or are deemed for United
States tax purposes to own, ten percent or more of the
total combined voting power of all classes of the voting
stock of CliniChem;
- United States holders that have a principal place of
business or "tax home" outside the United States; or
- United States holders whose "functional currency" is not
the United States dollar.
This summary is based upon the provisions of the United States Internal
Revenue Code of 1986, as amended, and regulations, rulings and judicial
decisions as of the date of this Transaction Statement; any such
authority may be repealed, revoked or modified, perhaps with
retroactive effect, so as to result in federal income tax consequences
different from those discussed below. This summary has no binding
effect or official status of any kind; we cannot assure you that the
conclusions reached below would be sustained by a court if challenged
by the Internal Revenue Service (the "Service"). We will not seek a
ruling from the Service with respect to any aspect of the tax
considerations described below.
Because United States tax consequences may differ from one holder to
the next, this summary does not purport to deal with all of the federal
income tax considerations that might be relevant to you in light of
your personal investment circumstances or status. In addition, this
summary does not address the application of other United States taxes,
such as the federal estate tax or alternative minimum tax, or state or
local tax laws. Accordingly, you are advised to consult your own tax
advisor in determining the specific tax consequences to you of
BioChem's purchase of your CliniChem Class A common shares, including
the application to your particular situation of the tax considerations
discussed below, as well as the application of state, local or other
tax laws. The statements of United States tax law set out below are
based on the laws and
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<PAGE> 17
interpretations in force as of the date of this Transaction Statement,
and are subject to any changes occurring after that date.
Sale of CliniChem Class A Common Shares
The receipt of cash in exchange for CliniChem Class A common shares
will be treated as a taxable transaction for United States federal
income tax purposes. Accordingly, subject to the discussion below of
the passive foreign investment company rules, you will recognize a gain
or loss in an amount equal to the difference between the amount of cash
that you receive, translated from Canadian dollars to United States
dollars by reference to the spot currency exchange rate on the closing
date, and the adjusted tax basis in your hands of the CliniChem Class A
common shares surrendered in exchange therefor. Subject to the
discussion below of the passive foreign investment company rules, the
gain or loss that you recognize will be a capital gain or loss, and
will be a long-term capital gain or loss if you have held the CliniChem
Class A common shares for more than one year. You will recognize
separate foreign currency gain or loss only to the extent that gain or
loss arises on the actual disposition of Canadian dollars received. Any
foreign currency gain or loss generally will be treated as ordinary
income or loss.
If you received CliniChem Class A common shares in the June 1998
distribution by BioChem of such shares, then your initial tax basis in
the CliniChem Class A common shares was equal to the fair market value
of those shares on the date of the distribution (US$6.00 or Cdn$8.82).
In other cases, your initial tax basis in CliniChem Class A common
shares generally will be equal to the cost to you of those shares.
Under the passive foreign investment company rules discussed below, if
you acquired CliniChem Class A common shares from a decedent, then, in
some circumstances, your initial tax basis in those shares will be
equal to the lower of their fair market value and the basis of those
shares in the hands of the decedent.
Gain realized by a United States holder on the purchase of CliniChem
Class A common shares by BioChem generally will be treated as United
States source gain, and loss realized by a United States holder on the
purchase generally will be treated as United States source loss, for
United States foreign tax credit purposes.
Passive Foreign Investment Company Considerations
In General. A special and adverse set of United States tax rules
applies to a United States holder that holds an interest in a passive
foreign investment company. In general, a passive foreign investment
company is any foreign corporation, if (1) 75 percent or more of the
gross income of the corporation for the taxable year is passive income
or (2) the average percentage of assets held by the corporation during
the taxable year that produce passive income or that are held for the
production of passive income is at least 50 percent. Because
essentially all of the income derived by CliniChem since its formation
has been interest income, which is treated as passive income for
passive foreign investment company purposes, we believe that CliniChem
will be treated as a passive foreign investment company for its current
taxable year and has been so treated for all of its prior taxable
years.
Because CliniChem is and has been treated as a passive foreign
investment company, if you are not fully subject either to the
qualified electing fund rules described below or to the mark-to-market
rules described below, then you will be subject to a special and
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<PAGE> 18
adverse tax and interest-charge regime with respect to any gain that
you recognize in the purchase of your CliniChem Class A common shares
by BioChem. In particular, (1) you will be required to allocate that
gain ratably to each day during your holding period for the CliniChem
Class A common shares, (2) you will be required to include in income as
ordinary income the portion of the gain that is allocated to your
current taxable year and (3) you will be taxable at the highest rate of
taxation applicable to ordinary income on the portion of the gain that
is allocated to prior taxable years, without regard to your other items
of income and loss for such prior taxable years (deferred tax). The
deferred tax for each prior year will be increased by an interest
charge for the period from the due date for tax returns for the prior
year to the due date for tax returns for the current taxable year
(without regard to extensions), computed at the rates that apply to
underpayments of tax; the interest charge generally will not be
deductible by an individual taxpayer.
Qualified Electing Fund Election. You may be able to avoid or mitigate
the effect of the unfavorable tax and interest-charge regime described
above if you make or have made a qualified electing fund election with
respect to CliniChem. A qualified electing fund election effectively
requires you to include in income currently your pro rata share of the
ordinary earnings and net capital gain of CliniChem, without regard to
the amount of any distributions made by CliniChem. Your tax basis in
the CliniChem shares is increased by the amount that is included in
your income pursuant to the qualified electing fund election.
In general, a qualified electing fund election must be made by the due
date, taking into account extensions, for the filing of your income tax
return for your first taxable year to which the qualified electing fund
election will apply. The effect of the qualified electing fund election
is to treat CliniChem as a qualified electing fund for each of its
taxable years ending with or within a taxable year of yours for which
the qualified electing fund election is effective. If you have had a
qualified electing fund election in effect as to CliniChem for each of
CliniChem's taxable years that is included in your holding period for
the CliniChem Class A common shares, then you will not be subject to
the adverse tax and interest-charge regime described above, and any
gain that you recognize on the purchase of your shares by BioChem will
be treated as capital gain under the non-passive foreign investment
company rules described above. If you make or have made a qualified
electing fund election for CliniChem, but that election has not been in
effect for each of CliniChem's taxable years that is included in your
holding period for the CliniChem Class A common shares, then the
adverse tax and interest-charge regime described above will apply,
notwithstanding your qualified electing fund election, to gain that you
recognize on the purchase of your shares by BioChem, unless you make or
have made a so-called "purging" election to recognize gain as if you
sold and reacquired your CliniChem Class A common shares as of the
first day of CliniChem's first taxable year to which your qualified
electing fund election applies (the deemed sale date). If you make or
have made the purging election, then any gain that you recognize on the
deemed sale, based on the fair market value of the CliniChem Class A
common shares on the deemed sale date, will be subject to the tax and
interest-charge regime, but your CliniChem Class A common shares
thereafter will be fully subject to the qualified electing fund
provisions. You may make the purging election in an original or amended
return for the taxable year that includes the deemed sale date. You are
urged to consult your own tax advisor as to the advisability and
effects of making a qualified electing fund election or a purging
election.
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Mark-to-Market Election. We believe that the CliniChem Class A common
shares should be treated as "marketable" stock, as defined in
applicable Treasury regulations, for each calendar year since the
distribution. As a consequence, you may be able to avoid the
unfavorable tax and interest-charge regime described above if you have
elected, under Section 1296 of the Internal Revenue Code, to mark the
CliniChem shares to market as of the close of each taxable year. A
mark-to-market election requires you to include in income each year as
ordinary income an amount equal to the increase in value of the
CliniChem Class A common shares for that year, regardless of whether
you actually sell the CliniChem shares. You generally are allowed a
deduction for the decrease in value of the CliniChem Class A common
shares for the taxable year, to the extent of the amount of gain
previously included in income under the mark-to-market rules, reduced
by prior deductions under the mark-to-market rules. The tax basis of
the CliniChem Class A common shares in your hands is increased by the
amount of any mark-to-market gain, and reduced by the amount of any
mark-to-market deductions, included in your income. If you have made
this mark-to-market election with respect to the CliniChem Class A
common shares, and (1) the mark-to-market election has been in effect
for all taxable years in your holding period for the CliniChem Class A
common shares or (2) the taxable year of the purchase of your shares by
BioChem is not the first taxable year for which your mark-to-market
election is effective or (3) prior to your mark-to-market election, you
had a qualified electing fund election in effect as to CliniChem for
each of CliniChem's taxable years that is included in your holding
period for the CliniChem Class A common shares, then any gain that your
recognize on the purchase of your shares by BioChem will not be subject
to the unfavorable tax and interest-charge regime described above. In
such a case, any gain that you recognize on the purchase of your shares
will be treated as ordinary income, and any loss will be treated as
ordinary loss to the extent of net mark-to-market gains previously
included in income.
CANADIAN TAX CONSEQUENCES
The following is a summary of the principal Canadian federal income tax
considerations generally applicable to holders of CliniChem Class A
common shares in respect of the sale of such Class A common shares to
BioChem in exchange for cash. This summary is not applicable to holders
who are "financial institutions" for the purposes of the mark-to-market
rules contained in the Income Tax Act (Canada) (the "Tax Act") or to
holders who are "specified financial institutions" for the purposes of
the Tax Act.
This summary is based upon the current provisions of the Tax Act, the
regulations thereunder (the "Regulations"), and counsel's understanding
of the current published administrative practices of the Canada
Customs and Revenue Agency. This summary also takes into account
specific proposals to amend the Tax Act and Regulations publicly
announced by or on behalf of the Minister of Finance (Canada) prior to
the date hereof (the "Proposed Amendments") and assumes that all
Proposed Amendments will be enacted substantially as proposed. However,
no assurances can be given that the Proposed Amendments will be enacted
as proposed, or at all. This summary does not otherwise take into
account or anticipate any changes in the law, whether by way of
legislative, judicial or governmental action or decision, nor does it
take into account provincial, territorial or foreign tax legislation or
considerations.
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Resident Shareholders
The following applies only to holders who, for the purposes of the Tax
Act, are resident or deemed to be resident in Canada, hold their Class
A common shares as capital property and deal at arm's length with
BioChem and CliniChem (a "Resident Shareholder"). CliniChem Class A
common shares will generally be considered to be capital property to a
holder unless the holder either holds such Class A common shares in the
course of carrying on a business or acquired such Class A common shares
in a transaction or transactions considered to be an adventure in the
nature of trade. Certain Canadian resident holders whose CliniChem
Class A common shares might not otherwise be considered capital
property may be entitled to have them treated as capital property by
making the election permitted by subsection 39(4) of the Tax Act.
A Resident Shareholder who is required to dispose of CliniChem Class A
common shares to BioChem in exchange for cash will realize a capital
gain (or a capital loss) to the extent that the price paid by BioChem
for such Class A common shares, net of any reasonable costs of
disposition, exceeds (or is less than) the adjusted cost base (for the
purposes of the Tax Act) to the Resident Shareholder of such CliniChem
Class A common shares. If a holder received a CliniChem Class A common
share in the June 1998 distribution, the holder's initial adjusted cost
base in such share was equal to the fair market value of such share at
the date of distribution (Cdn $8.82 or US $6.00).
A Resident Shareholder is required, under Proposed Amendments, to
include in income one half of the amount of any resulting capital gain
as a "taxable capital gain" for the taxation year in which such
Resident Shareholder's CliniChem Class A common shares are purchased
and paid for by BioChem and will generally be entitled to deduct one
half of the amount of any resulting capital loss as an "allowable
capital loss" against taxable capital gains realized in such taxation
year. Any excess of allowable capital losses over taxable capital gains
of the holder for the year of disposition may be carried back up to
three taxation years or forward indefinitely and deducted against net
taxable capital gains in those other years to the extent and under the
circumstances described in the Tax Act and Proposed Amendments.
A capital loss otherwise arising on the disposition of CliniChem Class
A common shares by a Resident Shareholder may in certain circumstances
be reduced by the amount of any dividends, including deemed dividends,
which have been received by a Resident Shareholder on such Class A
common shares. A Resident Shareholder that is a "Canadian-controlled
private corporation" (as defined for the purposes of the Tax Act) may
be subject, in addition to tax otherwise payable under the Tax Act, to
a refundable tax of 6 2/3% on any taxable capital gains arising on the
disposition of CliniChem Class A common shares. Capital gains realized
by an individual or a trust, other than certain specified trusts, may
give rise to alternative minimum tax under the Tax Act. Resident
Shareholders should consult their own tax advisors with respect to the
alternative minimum tax provisions.
Non-Resident Shareholders
The following applies to holders of CliniChem Class A common shares
who, at all relevant times, are neither resident, nor deemed to be
resident, of Canada for the purposes of the Tax Act and any applicable
tax treaty or convention, who hold their Class A common shares as
capital property, who deal at arm's length with BioChem and
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<PAGE> 21
CliniChem, who do not use or hold, and are not deemed to use or hold,
the Class A common shares in carrying on a business in Canada and who
are not non-resident insurers (a "Non-Resident Holder").
A Non-Resident Holder of CliniChem Class A common shares that are not
taxable Canadian property will not be subject to tax under the Tax Act
on the disposition of such Class A common shares to BioChem. Generally,
CliniChem Class A common shares will not be taxable Canadian property
to a Non-Resident Holder at a particular time provided that such shares
are listed on a prescribed stock exchange (which currently includes The
Toronto Stock Exchange and the Nasdaq National Market) at that time and
at no time during the five-year period immediately preceding the
disposition of CliniChem Class A common shares did the holder, either
alone or with persons with whom the holder does not deal at arm's
length, own or have an interest in or an option to acquire shares in
respect of 25% or more of the issued shares of any class or series of
CliniChem.
If CliniChem Class A common shares constitute or are deemed to
constitute taxable Canadian property to a particular Non-Resident
Holder, on the disposition thereof to BioChem, such holder will realize
a capital gain (or capital loss) generally computed in the manner
described above under "Resident Shareholders". Any such capital gain
may be exempt from tax under the terms of an income tax treaty or
convention between Canada and the country in which the Non-Resident
Holder resides.
If the CliniChem Class A common shares constitute or are deemed to
constitute taxable Canadian property and the disposition of such Class
A common shares by a Non-Resident Holder gives rise to a capital gain
which is not exempt from Canadian tax under the terms of an applicable
income tax treaty or convention, the tax consequences as described
above under "Resident Shareholders" will generally apply. NON-RESIDENT
HOLDERS WHOSE CLASS A COMMON SHARES ARE TAXABLE CANADIAN PROPERTY
SHOULD CONSULT THEIR OWN TAX ADVISORS FOR ADVICE HAVING REGARD TO THEIR
PARTICULAR CIRCUMSTANCES.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) BioChem reasonably believes that the transaction is fair to the holders
of Class A common shares. BioChem, as the holder of all the CliniChem
Class B common shares, is entitled to elect one of CliniChem's
directors. Dr. Francesco Bellini, Chairman of the Board and Chief
Executive Officer of BioChem, was elected by BioChem to CliniChem's
board of directors. Therefore, Dr. Bellini abstained from all the
voting by BioChem's board of directors on matters related to
BioChem's exercise of its purchase option.
(b) The material factors upon which BioChem bases its belief stated in Item
8(a) above are as follows:
BioChem's purchase option was disclosed to the holders of
Class A common shares at the time the Class A common shares
were distributed to the holders of BioChem common shares as a
dividend-in-kind, and the prospectus distributed at the time
of the distribution described the purchase option and its
mechanics. BioChem's purchase option is also set forth in
CliniChem's amended Articles of Incorporation, which were
publicly filed with the Securities and Exchange
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Commission before the distribution of the CliniChem Class A
common shares. Pursuant to CliniChem's amended Articles of
Incorporation, the share certificates for the Class A common
shares were legended to provide notice of the purchase option
to holders of Class A common shares. Furthermore, each Annual
Report on Form 20-F filed by CliniChem since the distribution
has also advised holders of the Class A common shares of the
purchase option. As a result, every holder of Class A common
shares received substantial notice of the terms of the
purchase option prior to making any investment decision with
respect to the Class A common shares, and subsequently.
BioChem's planned exercise of the purchase option will be
consistent with the terms set forth in CliniChem's amended
Articles of Incorporation. As required by CliniChem's amended
Articles of Incorporation, the notice that BioChem will send
to the holders of the Class A common shares upon the exercise
of the purchase option will provide all of the relevant
information relating to its exercise of the purchase option.
The holders of Class A common shares have no choice under the
terms of the Purchase Option as to whether to accept or reject
BioChem's acquisition, because the terms specifically provide
for the automatic transfer of title of the Class A common
shares to BioChem on the closing date without any action on
the part of the holder of Class A common shares.
In accordance with the terms of the purchase option, all
holders of Class A common shares excluding BioChem, regardless
whether they are affiliates of CliniChem or BioChem, will
receive the same consideration from BioChem per Class A common
share.
(c) CliniChem's amended Articles of Incorporation do not require any
approval of holders of the Class A common shares for the exercise of
the purchase option.
(d) After making reasonable inquiry, BioChem believes that no directors of
CliniChem have retained an unaffiliated representative to act solely on
behalf of any security holders of CliniChem as no action is required by
either CliniChem's directors or CliniChem's security holders to effect
the purchase option.
(e) Not applicable.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.
(a) Neither BioChem, nor to the best of BioChem's knowledge after
reasonable inquiry of Clinichem, CliniChem or its affiliates, has
received any report, opinion or appraisal from an outside party that
is materially related to the transaction described in this
Transaction Statement.
(b) Not applicable.
(c) Not applicable.
22
<PAGE> 23
ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) BioChem intends to pay the exercise price for the purchase option in
cash from its working capital.
(b) None.
(c) BioChem's estimated expenses for the exercise of the purchase option
include:
<TABLE>
<S> <C>
Filing fees US $5,197
Printer fees US $35,000
Accounting fees US $5,000
Legal fees US $100,000
</TABLE>
CliniChem will not be responsible for any of the fees incurred by
BioChem in connection with the exercise of the purchase option.
(d) Not applicable.
ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) As of October 26, 2000, BioChem beneficially owned 559,674 Class A
common shares.
As of October 26, 2000, to BioChem's knowledge after reasonable
inquiry, no shares of Class A common shares are beneficially owned by
BioChem's officers and directors except as set forth below.
<TABLE>
<CAPTION>
Percentage of Class A
Common Shares
Total Share Ownership Outstanding
--------------------- -----------
<S> <C> <C>
Frederick J. Andrew 17,458 *
Francesco Bellini 133,090 5%
Gervais Dionne 21,944 *
Jean-Louis Fontaine 6,844 *
James A. Grant 50 *
Roderick L. Henry 100 *
Francois Legault 2,082 *
Guy Lord 4,000 *
Michel Perron 1,550 *
</TABLE>
* = less than 1%
(b) None.
23
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ITEM 12. THE SOLICITATION OR RECOMMENDATION.
(d) Not applicable.
(e) Not applicable.
ITEM 13. FINANCIAL STATEMENTS.
(a) CliniChem's financial information is incorporated herein by reference
from CliniChem's Annual Report on Form 20-F for the year ended December
31, 1999 (Commission File No. 000-24345). CliniChem had no material
fixed charges for its two most recent fiscal years. Book value per
share of CliniChem Class A common shares was Cdn $21.55 per share at
December 31, 1999.
(b) Not applicable.
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) Not applicable.
(b) Not applicable.
ITEM 15. ADDITIONAL INFORMATION.
(a) BioChem does not believe that any additional information is necessary
to make the required disclosures in this Transaction Statement, in
light of the circumstances under which they are made, not materially
misleading.
ITEM 16. EXHIBITS.
99(a)(1) Form of notice of BioChem Pharma Inc. of its Exercise of
Option to Purchase All Class A Common Shares of CliniChem
Development Inc.
99(d)(1) Amended Articles of Incorporation of CliniChem Development
Inc., incorporated by reference to Exhibit 3.1 to Joint
CliniChem Form F-1 (Registration No. 333-45871)/BioChem Form
F-3 (Registration No. 333-48521)
24
<PAGE> 25
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Guy Lord
Senior Vice President,
Corporate Affairs and Secretary
BioChem Pharma Inc.
/s/ Guy Lord
--------------------------------------
(Signature)
Date: October 30, 2000
25
