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NOTICE TO STOCKHOLDERS OF
INTELLIGENT POLYMERS LIMITED
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This information is disseminated pursuant to Rule 13e-3 of the
Securities Exchange Act of 1934, as amended.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
THE TRANSACTION
Biovail Corporation, an Ontario corporation ("Biovail"), IPL Holdco 2000
Ltd., an Ontario corporation in formation ("Holdco") and IPL Acquireco 2000
Ltd., a corporation in formation ("Acquireco"), wish to advise holders of Common
Stock ("Common Shares"), par value $0.01, of Intelligent Polymers Limited, a
Bermuda corporation ("Intelligent Polymers"), that Amendment No. 3 to Schedule
13e-3 Transaction Statement (the "Statement") was filed on behalf of Biovail and
Acquireco with the Securities and Exchange Commission on September 25, 2000. The
statement relates to the potential exercise by Acquireco of an option to
purchase all issued and outstanding shares of Common Stock of Intelligent
Polymers (the "Purchase Option").
The filing of the Statement and the receipt and of this notice do not
constitute an exercise of the Purchase Option. Exercise of such Purchase Option
must be done pursuant to the Bye-Laws of Intelligent Polymers. Biovail has not
exercised the Purchase Option as of the date of this notice.
The Statement was filed on behalf of Biovail and Acquireco. Notwithstanding
the Statement, Biovail does not believe that the transaction reported herein
(the "Transaction") is subject to Rule 13e-3 under the Securities Exchange Act
of 1934, as amended.
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SUMMARY TERM SHEET
This Summary Term Sheet highlights selected information contained in this
Notice to Stockholders and may not contain all of the information that is most
important to you. We urge you to read this entire Notice to Stockholders
carefully.
o A Schedule 13e-3 Transaction Statement has been filed on behalf of
Biovail, Acquireco and Holdco with the Securities and Exchange
Commission which relates to the potential exercise by Acquireco of an
option to purchase all the Common Stock of Intelligent Polymers. The
Bye-Laws of Intelligent Polymers provide that the holder of a majority
of the Special Shares of Intelligent Polymers has an option to
purchase all the issued and outstanding Common Stock. Biovail is the
holder of all of the Special Shares of Intelligent Polymers and
proposes to transfer them to Acquireco. See "Background and Summary of
Transaction -- Identification of Biovail."
o Acquireco would pay $39.06 per share of Intelligent Polymers Common
Stock. See "Background and Summary of Transaction--Terms of
Transaction."
o The transaction would close on September 29, 2000. See "Background and
Summary of Transaction--Terms of Transaction."
o Acquireco may exercise the option to purchase all the Common Stock of
Intelligent Polymers without seeking the prior approval of the
Intelligent Polymers shareholders. As such, shareholders are not being
asked to vote to approve this purchase. See "Special Factors --
Fairness of the Transaction."
o The exercise of the Purchase Option would be a fully taxable
transaction to the Intelligent Polymers shareholders. See "Certain
Material U.S. Federal Income Tax Consequences."
Following the purchase of the Intelligent Polymers Common Stock,
Intelligent Polymers Common Stock would be de-listed from the American Stock
Exchange and Intelligent Polymers would have its public reporting obligations
suspended. See "Special Factors -- Purposes, Alternatives, Reasons and Effects
of the Transaction."
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SPECIAL FACTORS
The purpose of the Transaction would be for Acquireco to acquire
Intelligent Polymers which would have certain products and product candidates
developed or under development pursuant to the Development Contract dated
September 30, 1997 between Biovail and Intelligent Polymers.
Biovail considered retaining the Special Shares and exercising the Purchase
Option itself prior to October 1, 2000. A 13e-3 Transaction Statement was filed
with the Securities and Exchange Commission on August 31, 2000 and Amendment No.
1 to such 13e-3 Transaction Statement was filed on September 6, 2000 and a
Notice to Stockholders was promptly mailed to that effect. Biovail is proposing
the transaction with Acquireco in order to gain the benefit described in Item 7
(c) below.
The Transaction would be structured pursuant to the terms of the previously
granted Purchase Option as set forth in the Bye-Laws. Acquireco would exercise
the Purchase Option prior to October 1, 2000 to enable it to avoid a 25%
increase in the Purchase Option price which occurs after September 30, 2000. The
Transaction would be structured to allow for Acquireco to exercise the Purchase
Option and hold the Common Shares of Intelligent Polymers. Biovail would have
certain rights granted to it as the holder of the Class A shares and the
non-voting common shares of Acquireco to cause Acquireco to become wholly owned
by Biovail. The Transaction would be structured in this manner to defer
Biovail's exercise of the Purchase Option and give Acquireco or the holder of
its voting common shares a profit for acquiring the Special Shares and taking
the risk that Biovail does not exercise its rights to cause Acquireco to become
a wholly owned subsidiary of Biovail.
Subsequent to the Closing Date, Intelligent Polymers would be wholly owned
by Acquireco. Biovail, Acquireco and Holdco anticipate that Intelligent Polymers
would be delisted from the AMEX and its reporting requirements with the
Securities and Exchange Commission suspended through the filing of a Form 15.
The Transaction would cause each Shareholder to dispose of his or her
Common Shares for the Purchase Option Consideration. This consideration is the
amount specified in the Bye-Laws.
Certain Material U.S. Federal Income Tax Consequences
The following discussion is a summary of certain material U.S. federal
income tax consequences to "U.S. Shareholders" (generally a U.S. citizen or
resident, a corporation under U.S. law or a trust or estate that is considered a
"United States person") if Acquireco exercises the Purchase Option. This
discussion is based upon laws, regulations, rulings and decisions currently in
effect, all of which are subject to change, retroactively or prospectively.
This discussion does not apply to persons other than U.S. Shareholders and
may not apply to certain categories of U.S. Shareholders subject to special
treatment under the Internal Revenue Code of 1986, as amended (the "Code"), such
as passthrough entities, dealers or traders in securities or cur-
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rencies, banks, insurance companies, U.S. Shareholders that do not hold the
Common Shares as capital assets, persons whose "functional currency" is not the
U.S. dollar, tax-exempt entities, and persons that hold Common Shares as a
position in a straddle or as part of a "hedging", "integrated", "constructive
sale" or "conversion" transaction. Moreover, the discussion summarizes only
federal income tax consequences and does not address any state, local or other
tax consequences.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
SPECIFIC TAX CONSEQUENCES OF THE TRANSACTION TO THEM.
Upon Acquireco's exercise of the Purchase Option, a U.S. Shareholder would
recognize a capital gain or loss on each Common Share disposed of equal to the
difference between the amount of (a) the cash received for the Common Share and
(b) his basis in the Common Share. Gain or loss upon the disposition of a Common
Share generally should be long-term if the Common Share has been held for more
than one year at the time of the exercise of the Purchase Option.
To the extent that a U.S. Shareholder has not provided an appropriate
taxpayer identification number on IRS Form W-9 or a substitute therefor, such
U.S. Shareholder may be subject to backup withholding by Acquireco.
The exercise of the Purchase Option will not result in any material U.S.
federal income tax consequences to Intelligent Polymers.
Fairness of the Transaction
Biovail, Acquireco and Holdco reasonably believe that the Transaction would
be fair to Shareholders.
The material factors upon which the belief stated above is based are set
forth below.
The Purchase Option was a feature of the Common Shares from the time of
Intelligent Polymers' inception. The Purchase Option and the Purchase Option
Consideration were set forth in the Bye-Laws and described in the prospectus
dated October 10, 1997, distributed in connection with the initial public
offering of the Common Shares (the "Prospectus"). Both the Bye-Laws and the
Prospectus were publicly filed with the Securities and Exchange Commission.
Pursuant to the Bye-Laws, the stock certificates for the Common Shares were
legended to put the holders thereof on further notice about the Purchase Option.
Intelligent Polymers' Annual Reports on Form 20-F have described the Purchase
Option and the Purchase Option Consideration.
The Purchase Option Consideration of $39.06 is fair because such
consideration for exercise of the Purchase Option prior to October 1, 2000
was a term of the Common Shares from the time of Intelligent Polymers'
inception. The purchase price and trading price of the Common Share
reflected the Purchase Option and the Purchase Option Consideration of
$39.06.
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As a result of the foregoing, the Shareholders received adequate notice as
to the terms of the Purchase Option and the price of the Purchase Option
Consideration prior to making any investment decision with respect to the Common
Shares.
The exercise of the Purchase Option and consummation of the Transaction
would not require the approval of Shareholders.
Biovail, Acquireco and Holdco believe, after making reasonable inquiry of
management of Intelligent Polymers, that no directors of Intelligent Polymers
have retained an unaffiliated representative to act solely on behalf of any
Shareholders, as no action is required by Shareholders to effect the Purchase
Option.
The exercise of the Purchase Option and the consummation of the Transaction
would not require the approval of the Board of Directors of Intelligent
Polymers.
Reports, Opinions, Appraisals and Negotiations
None of Biovail, Acquireco or Holdco nor, to the best of their knowledge
after reasonable inquiry of management of Intelligent Polymers, Intelligent
Polymers has received any report, opinion (other than an opinion of counsel) or
appraisal from an outside party which is materially related to the Transaction.
BACKGROUND AND SUMMARY OF TRANSACTION
Identification of Intelligent Polymers
The issuer of the class of equity security which is the subject of this
filing and the address of its principal executive offices is:
Intelligent Polymers Limited
c/o Conyers Dill & Pearman
Clarendon House
2 Church Street
Hamilton HM 11, Bermuda
The exact title of the class of security which is the subject of this
filing is Common Stock, par value $0.01, of Intelligent Polymers Limited (the
"Common Shares"). The number of Common Shares outstanding as of August 30, 2000,
the most recent practicable date, is 3,737,500. The approximate number of
holders of the Common Shares as of August 1, 2000, the most recent practicable
date, is 521.
Until September 30, 1999 (the "Separation Date"), the Common Shares were
part of a Unit (the "Units") consisting of one Common Share and one warrant to
purchase common shares of Biovail. The Units were traded on the American Stock
Exchange (the "AMEX") under the symbol IXP.u. On the Separation Date, the Units
separated into the two underlying securities. The IPL Common
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Shares now trade on the AMEX under the symbol IXP, and the Biovail Warrants now
trade on the New York Stock Exchange under the symbol BVFw. The following table
sets forth the high and low prices on the AMEX for the Units until the
Separation Date and for the Common Shares after the Separation Date, as reported
by the AMEX.
On September 30, 1999 the closing price of the Units was $46.50.
High Low
Units
Fiscal 1998:
2nd Quarter........................ $22.18 $17.75
3rd Quarter........................ 31.38 20.75
4th Quarter........................ 30.38 19.75
Fiscal 1999:
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1st Quarter........................ 23.13 16.63
2nd Quarter........................ 28.00 16.50
3rd Quarter........................ 30.88 25.63
4th Quarter........................ 41.88 28.00
Fiscal 2000:
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1st Quarter........................ 53.13 42.25
Common Shares
2nd Quarter (1).................... 33.50 30.00
3rd Quarter........................ 34.625 31.50
4th Quarter........................ 37.50 34.00
(1) The Units separated in 2nd Quarter Fiscal 2000.
On September 18, 2000 the Common Shares closed at $38.63.
Intelligent Polymers has not paid any dividends on the Common Shares in the
past two years.
Pursuant to Section 3.9(E) of the Bye-Laws of Intelligent Polymers (the
"Bye-Laws"), until the expiration date of the Purchase Option (as defined
below), no resolution or act of Intelligent Polymers to authorize or permit the
declaration or payment of dividends or the making of another distribution to
shareholders will be effective without the prior written approval of the holders
of a majority of the Special Shares (as defined below).
Identification of Biovail, Holdco and Acquireco
This filing is being made by Biovail, Holdco and Acquireco.
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Biovail's business address and telephone number are:
Biovail Corporation
2488 Dunwin Drive
Mississauga, Ontario
Canada L5L 1J9
(415) 285-6000
In October 1997, Intelligent Polymers issued special shares, par value
$1.00 per share ("Special Shares"). Pursuant to the Bye-Laws, the Special Shares
confer on the holder of a majority of the Special Shares (the "Special
Shareholder") certain limited rights, including the right to purchase all, but
not less than all, of the outstanding Common Shares of Intelligent Polymers at
the time such right is exercised (the "Purchase Option"). The Special Shares do
not entitle the Special Shareholder to vote at any meeting of holders of Common
Shares ("Shareholders") and do not entitle the Special Shareholder to receive
any dividend or any other distribution, or any right or interest in the profits
or assets of Intelligent Polymers.
Pursuant to the Bye-Laws, until the expiration of the Purchase Option, no
resolution or act of Intelligent Polymers to authorize or permit any of the
following will be effective without the prior written approval of the holder of
the majority of the Special Shares: (i) the allotment or issue of shares or
other securities of Intelligent Polymers or the creation of any right to such
allotment or issue; (ii) the reduction of Intelligent Polymers' authorized share
capital; (iii) outstanding borrowings by Intelligent Polymers in excess of an
aggregate of $1.0 million; (iv) the sale or other disposition of, or the
creation of any lien or liens on, the whole or a part of Intelligent Polymers'
undertaking or assets; (v) the declaration or payment of dividends or the making
of any other distributions to shareholders; (vi) the amalgamation of Intelligent
Polymers; and (vii) any alteration of the Purchase Option. Biovail, as the
holder of a majority of the outstanding Special Shares, could preclude the
holders of a majority of the outstanding Common Shares and the Board of
Directors of Intelligent Polymers from taking any of the forgoing actions during
such period.
The terms of the Purchase Option are set forth in the Bye-Laws. Pursuant to
the Bye-Laws, the Special Shareholder may at any time exercise the Purchase
Option by giving an Exercise Notice to the Board of Directors of Intelligent
Polymers stating the Special Shareholder's intention of acquiring all of the
Common Shares for the time being in issue; the Exercise Notice may be given at
any time up until September 30, 2002.
The Exercise Notice shall state
(i) the consideration (expressed as an amount in cash in Dollars to
be given for each Common Share), which shall be as follows:
If the Common Shares are acquired pursuant
to the Purchase Option
Purchase Option: Exercise Price
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Before October 1, 2000 US $ 39.06
On or after October 1, 2000 and on or
before September 30, 2001 US $ 48.83
On or after October 1, 2001 and on or
before September 30, 2002 US $ 61.04
(ii) the form in which such consideration shall be discharged shall be
cash in Dollars save that, if securities of the Special
Shareholder are listed on a national securities exchange in the
United States of America or admitted to unlisted trading
privileges or listed on NASDAQ, it may be wholly or partially
satisfied in the securities of the Special Shareholder at the
election of the Special Shareholder;
(iii) to the extent that such consideration is in the form of the
securities of the Special Shareholder the amount expressed in
cash in Dollars represented thereby;
(iv) the name or names (if any) into which the Common Shares are to be
transferred; and
(v) the repurchase date.
Biovail has been the holder of all the issued and outstanding Special
Shares since October 1997. Biovail proposes to transfer the Special Shares
to Acquireco in consideration for Acquireco's issuance of non-voting common
shares of Acquireco to Biovail.
Biovail is an international, fully-integrated pharmaceutical company that
specializes in the development, manufacture, marketing and licensing of drugs
utilizing advanced controlled-release, rapid dissolve, enhanced absorption and
taste masking technologies.
Holdco is a company in formation, the business of which would be to own the
common shares of Acquireco.
Acquireco is a company in formation, the business of which will be to
exercise the Purchase Option on September 29, 2000 and to hold the Common
Shares.
During the past five years none of Biovail, Holdco or Acquireco has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the past five years none of Biovail, Holdco or Acquireco
has been a party to any judicial or administrative proceeding (except for
matters that were dismissed without sanction or settlement) 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 violation
of such laws.
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Information Regarding Biovail's Officers and Directors
Eugene N. Melnyk
Chelston Park Building 2
Colleymore Rock
St. Michael BH1
Barbados, West Indies
Mr. Melnyk has been the Chairman of the Board and a Director since March
29, 1994, the effective date of the amalgamation (the "Amalgamation") of
Biovail's predecessor entities, Biovail Corporation International ("BCI") and
Trimel Corporation ("Trimel"). Prior to that time, he had been the Chairman of
the Board of BCI since October 1991 and was instrumental in acquiring, financing
and organizing the companies or businesses that comprised BCI. Mr. Melnyk also
founded Trimel and served as its President and Chief Executive Officer from 1983
through July 1991. Mr. Melnyk is Chairman of the Board of Directors of
Intelligent Polymers. Mr. Melnyk is a citizen of Canada.
Bruce D. Brydon
2488 Dunwin Drive
Mississauga, Ontario
Canada, L5L 1J9
Mr. Brydon has been the Chief Executive Officer since November 1997. He
joined Biovail as the Chief Executive Officer and President in January 1995 and
has been a Director since May 1995. Prior to that time and since 1990 he had
been President, Managing Director and Chairman of the Board of the Canadian
Operations of Boehringer Mannheim. In the late 1980s, Mr. Brydon served as
President and CEO of Beiersdorf Canada. Mr. Brydon is a citizen of Canada.
Robert A. Podruzny
2488 Dunwin Drive
Mississauga, Ontario
Canada, L5L 1J9
Mr. Podruzny has been the President and Chief Operating Officer since
November 1997. He joined Biovail as Vice President, Finance and Chief Financial
Officer in January 1996. Mr. Podruzny is a Director of Biovail. He came to
Biovail from Browning-Ferris Industries Ltd. where he served as the Chief
Financial Officer and as a Director of the Canadian operations from 1993 to
1995. From 1987 to 1992, Mr. Podruzny served as General Manager of the U.S.
Health Promotion Division of MDS Health Group, a Toronto-based medical services
company. Mr. Podruzny is a citizen of Canada.
Kenneth C. Cancellara, Q.C.
2488 Dunwin Drive
Mississauga, Ontario
Canada, L5L 1J9
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Mr. Cancellara joined Biovail as Senior Vice President and General Counsel
in March 1996, was appointed Secretary in April 1996, and has been a Director
since May 1995. Prior to that time, Mr. Cancellara was a partner with the law
firm of Cassels, Brock and Blackwell since 1980 where he held many positions,
including Chairman of the Executive Committee and managing partner. Mr.
Cancellara is a citizen of Canada.
Rolf K. Reininghaus
2488 Dunwin Drive
Mississauga, Ontario
Canada, L5L 1J9
Mr. Reininghaus has been a Senior Vice President and a Director since the
Amalgamation and has been President of Crystaal since November 1997. Prior to
that time, he had been the President, Chief Operating Officer and a Director of
BCI since October 1991 and Executive Vice President and a Director of Trimel or
its affiliates since November 1987. Prior to his employment by Trimel, Mr.
Reininghaus was the Marketing Manager of the Canadian operations of Miles
Pharmaceuticals, a division of Bayer AG. Mr. Reininghaus is a citizen of Canada.
Brian H. Crombie
2488 Dunwin Drive
Mississauga, Ontario
Canada, L5L 1J9
Mr. Crombie joined Biovail as Senior Vice President, and Chief Financial
Officer in May 2000. Mr. Crombie came to Biovail from The Jim Pattison Group,
one of Canada's largest private holding companies where he served as Managing
Director Corporate Finance from 1998 to 2000 where he was responsible for
corporate development and treasury. Prior to that time, he spent 7 years in
finance and general management positions with The Molson Companies most recently
as SVP Corporate Finance and Treasurer responsible for planning, accounting and
control, corporate development, treasury and investor relations. Mr. Crombie is
a graduate of The Harvard School of Business where he received his Masters in
Business Administration. Mr. Crombie is a citizen of Canada.
Kenneth S. Albert, Ph.D.
3701 Concorde Parkway
Chantilly, VA 20151
Dr. Albert joined Biovail as Vice President, Chief Scientific Officer in
January 1999. Dr. Albert came to Biovail from Schein Pharmaceutical Inc., where
he had been the Vice President, Research and Development from 1995 to 1998.
Prior to his tenure at Schein, Dr. Albert was Corporate Director, Research and
Development at Forest from 1988 to 1995 and prior to that time he spent 14 years
in senior Research and Development positions at the Upjohn Company and Merck,
Sharp and Dohme. Dr. Albert is a citizen of the United States.
Wilfred G. Bistrow
467 Mountsberg Rd
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RR#2
Campbellville, ONT
Canada, LOP IRO
Mr. Bristow has been a Director since the Amalgamation. Prior to that time,
he was a Director of BCI since January 1993. Mr. Bristow is and has been a
senior investment advisor at Nesbitt Burns Inc., a Canadian investment banking
firm, since December 1991. From September 1975 to December 1991, he served as
vice president and director of Richardson Greenshields of Canada, an investment
banking firm. Mr. Bristow is a citizen of Canada.
Paul W. Haddy
68 Durants
"Daydreams Christ Church" Building
Barbados, West Indies
Mr. Haddy was elected to the Board of Directors in June 2000. Mr. Haddy has
been Chairman and Chief Executive Officer of London Life Bank and Trust Company
since 1991. Mr. Haddy is a citizen of Canada.
Roger Rowan
53 Buckingham Avenue
Toronto, ONT
Canada M4N 1R3
Mr. Rowan was elected to the Board of Directors in June 1997. Mr. Rowan has
been President and Chief Operating Officer of Watt Charmichael Inc., a private
investment firm, since May 1994. Prior thereto, Mr. Rowan was the Executive Vice
President and Chief Operating Officer of Watt Charmichael Inc. since 1991. Mr.
Rowan is a citizen of Canada.
Robert Vujea
1030 Carpenter Ave.
Grand Rapids, Michigan 49504-3727
Mr. Vujea was elected to the Board of Directors in June 1997. Mr. Vujea has
been President of R & D Chemical Corporation, a chemical manufacturer and
distributor, since 1974. Prior thereto, Mr. Vujea has held senior management
positions within a number of companies including American Greeting Card
Corporation, Cole National Corporation and Diverco Incorporated. Mr. Vujea is a
citizen of the United States.
During the past five years, none of the foregoing individuals has 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 which
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 violation of such laws.
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Information Regarding Acquireco
Acquireco is a company in formation. In the event that Biovail and Holdco
reach a mutually satisfactory agreement prior to the closing of the transaction,
Holdco would be the holder of all the voting common shares of Acquireco. In the
event that Biovail and Holdco do not reach a mutually satisfactory agreement
prior to the closing of the transaction, Biovail will be the holder of all the
voting common shares of Acquireco.
Biovail has been the holder of all the issued and outstanding Special
Shares since October 1997. Biovail proposes to transfer the Special Shares to
Acquireco in consideration for Acquireco's issuance of non-voting common shares
of Acquireco to Biovail.
Information Regarding Holdco
Holdco will be a corporation incorporated under the laws of the Province of
Ontario to hold the voting common shares of Acquireco.
Andrew P. Gaspar will be the sole shareholder, director and officer of
Holdco. Mr. Gaspar is president of APG Consulting a private consulting firm.
George Vesely, Joseph Shier, Thomas Higgins and 495414 Ontario Limited, an
Ontario corporation, owned by David Roffey (the "Investor Group") will provide a
loan to Holdco in the amount of US$6.5 million to enable Holdco to acquire the
common shares of Acquireco. The loan will be secured by a pledge of the shares
of Acquireco and guaranteed by Andrew Gaspar, the sole shareholder of Holdco who
will pledge the shares of Holdco to the Investor Group as security for the
guarantee. The loan will bear interest at 14% per annum to December 31, 2000 and
thereafter bears interest at 34% per annum and will be repaid from the proceeds
to be received by Holdco from the purchase or redemption of the common shares of
Acquireco.
David Roffey has served as President and Chief Executive Officer of Maple
Partners Financial Group Inc, Chairman of Maple Partners Bankhaus AG and
Chairman of Maple Trust Compnay since October 1997. From 1987 through 1997 Mr.
Roffey served as Managing Partner, Derivitive Investment Group and Director of
First Marathon Inc. (Canada). He is a citizen of Canada.
George Vesely has served as Managing Partner, Private Client Services of
Maple Partners Financial Group Inc. since January 1999. Prior to 1999, Mr.
Vesely was a partner at Osler, Hoskin & Harcourt. Mr. Vesely is a citizen of
Canada.
Joseph Shier has been Vice President of Maple Partners Financial Group Inc.
since August 1999. Prior to that, from August 1997 to August 1999 he was a
senior officer of a private investment company, M. Shier & Associates Limited,
and from January 1991 to 1999 was Chairman of Dor-Seal Inc. Mr. Shier is a
citizen of Canada
Thomas Higgins has served as Executive Vice President of Maple Partners
Financial Group Inc. since 1997. From 1989 through 1997 he served as Vice
President and Director, Derivative Instrument Group of First Marathon Securities
Limited. Mr. Higgins is a citizen of Canada.
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The business address of the forgoing individuals is:
Maritime Life Tower
Toronto Dominican Centre
Suite 3500
PO Box 328
Toronto, ONT, Canada
M5K 1K7
During the past five years, none of the foregoing individuals has 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 which
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 violation of such laws.
Past Transactions and Agreements Between Biovail and Intelligent Polymers
The nature and approximate amount in dollars of any transaction which has
occurred since the commencement of Intelligent Polymers' second full fiscal year
preceding the date of the Statement between Biovail and Intelligent Polymers are
as follows:
(i) Since the commencement of Intelligent Polymers' second full fiscal
year preceding the date of the Statement, Intelligent Polymers paid
approximately $46.3 million to Biovail pursuant to a development and
license agreement (the "Development Contract") between Biovail and
Intelligent Polymers dated September 30, 1997 whereby Biovail has
agreed to use diligent efforts to conduct toxicity, formulation,
development and clinical studies for, and pursue U.S. regulatory
approval of, Intelligent Polymers' products, as defined and as added
to and modified by mutual agreement.
(ii) Since the commencement of Intelligent Polymers' second full fiscal
year preceding the date of the Statement, Intelligent Polymers paid
approximately $400,000 to Biovail pursuant to a services agreement
(the "Services Agreement") between Biovail and Intelligent Polymers
dated September 30, 1997, whereby Biovail has agreed to provide
management and administrative services to Intelligent Polymers for a
quarterly fee of $100,000.
(iii) Pursuant to the Development Contract and subject to the Biovail
Option (defined below), Biovail granted Intelligent Polymers a license
(the "License") to manufacture or obtain manufacturing for (subject to
an exclusive manufacturing period granted to Biovail, a right of first
refusal and a right of approval), sell and otherwise market and
sublicense other to market, through the world, (other than Canada),
products developed under the Development Contract or, as to products
for which Intelligent Polymers and Biovail fail to reach agreement as
to necessary additional funding, under other arrangement.
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(iv) In December 1999, Biovail paid Intelligent Polymers $25.0 million to
acquire a generic version of Procardia XL (the "Additional Product")
developed by Biovail on behalf of Intelligent Polymers. This
acquisition was pursuant to an exercise of the Biovail Option granted
under the Contract Agreement. The Biovail Option grants Biovail a
right to purchase the Additional Product for a price of either a one
time cash fee of $25 million or base royalties equal to 10% of the net
sales of such product.
Terms of Transaction
In order for Acquireco to purchase the Common Shares pursuant to the
Purchase Option prior to October 1, 2000, it must acquire the Special Shares and
the Purchase Option must be exercised by delivering an exercise notice (the
"Exercise Notice") to the Board of Directors of Intelligent Polymers. The terms
of the Purchase Option are set forth in the Bye-Laws. Pursuant to the Bye-Laws,
the Special Shareholder may at any time exercise the Purchase Option by giving
the Exercise Notice to the Board of Directors of Intelligent Polymers stating
the Special Shareholder's intention of acquiring all of the Common Shares for
the time being in issue; the Exercise Notice may be given at any time up until
September 30, 2002.
The Exercise Notice shall state
(i) the consideration (expressed as an amount in cash in Dollars to be
given for each Common Share), which shall be as follows:
If the Common Shares are acquired pursuant
to the Purchase Option
Purchase Option: Exercise Price
---------------------------- --------------
Before October 1, 2000 US $ 39.06
On or after October 1, 2000 and on or before
September 30, 2001 US $ 48.83
On or after October 1, 2001 and on or before
September 30, 2002 US $ 61.04
(ii) the form in which such consideration shall be discharged shall be cash
in Dollars save that, if the securities of the Special Shareholder,
are listed on a national securities exchange in the United States of
America or admitted to unlisted trading privileges or listed on
NASDAQ, it may be wholly or partially satisfied in securities of such
other Special Shareholder at the election of the Special Shareholder;
(iii) to the extent that such consideration is in the form of securities of
the Special Shareholder the amount expressed in cash in Dollars
represented thereby;
<PAGE>
-15-
(iv) the name or names (if any) into which the Common Shares are to be
transferred; and
(v) the repurchase date.
Pursuant to the Bye-Laws, if the Common Shares are acquired for cash
pursuant to the Purchase Option before October 1, 2000, the cash purchase price
(the "Purchase Option Consideration") would be $39.06 per share. The closing
date of the purchase (the "Closing Date") would be September 29, 2000, and the
Purchase Option Consideration of $39.06 per share would be deposited with
ChaseMellon Shareholder Services LLC, as payment agent (the "Payment Agent"), on
or prior to the Closing Date. Following the Closing Date, and upon receipt of
stock certificates for the Common Shares, as instructed by the Payment Agent,
the Payment Agent would distribute the Purchase Option Consideration to each
person or entity who was a holder of the Common Shares at the close of business
on the Closing Date.
The purpose of the Transaction would be to acquire Intelligent Polymers,
which would have certain products and product candidates developed or under
development pursuant to the Development Contract dated September 30, 1997
between Biovail and Intelligent Polymers.
Acquireco would exercise the Purchase Option prior to October 1, 2000 to
enable it to avoid a 25% increase in the Purchase Option price which occurs
after September 30, 2000. The Transaction would be structured to allow for
Acquireco to exercise the Purchase Option and hold the Common Shares of
Intelligent Polymers. Biovail would have certain rights granted to it as the
holder of the Acquireco Class A Shares and the non-voting common shares to cause
Acquireco to become wholly owned by Biovail. The Transaction would be structured
in this manner to defer Biovail's exercise of the Purchase Option and give
Acquireco or the holder of its voting common shares a profit for acquiring the
Special Shares and taking the risk that Biovail does not exercise its rights to
acquire Acquireco.
In the event that Holdco would be the holder of all the voting common
shares of Acquireco, Biovail would pay a fee to the Investor Group, and
reimburse the expenses of Holdco (the "Holdco Fee"). In the aggregate, Biovail
would pay $1.5 million pursuant to the Holdco Fee. Additionally, Biovail would
pay a $500,000 advisory fee to Maple Partners Financial Group Inc. for its role
as arranger of the Transaction.
In accordance with the terms of the Bye-Laws, Shareholders would not need
to take any steps to approve the purchase upon Acquireco's exercise of the
Purchase Option. Title to the Common Shares would automatically vest in
Acquireco on the Closing Date and the Purchase Option Consideration would be
paid to Shareholders, upon tender of the stock certificates directly or through
their brokers, in accordance with their respective interests.
Subsequent to the purchase of the Common Shares, Intelligent Polymers would
become a wholly-owned subsidiary of Acquireco. The Transaction would cause each
Shareholder to dispose of his or her Common Shares for the Purchase Option
Consideration.
<PAGE>
-16-
It is expected that Acquireco will follow purchase accounting for the
Transaction.
The terms of the Transaction would be the same for all Shareholders.
Appraisal rights would not be afforded under either applicable law or the
Bye-Laws to Shareholders in respect of the exercise of the Purchase Option and
none will be afforded by either Biovail, Acquireco, Holdco or Intelligent
Polymers. Each of Biovail, Acquireco and Holdco are unaware of any rights
available to objecting Shareholders under applicable law.
None of Biovail, Acquireco or Holdco is aware, after making reasonable
inquiry of management of Intelligent Polymers, of any grant of access to
unaffiliated security holders to the corporate files of any of Biovail,
Acquireco Holdco or Intelligent Polymers or the appointment of counsel or
appraisal services for unaffiliated security holders at the expense of either
Biovail, Acquireco, Holdco or Intelligent Polymers.
Plans or Proposals
Subsequent to the Closing Date, Intelligent Polymers would be wholly owned
by Acquireco. Acquireco anticipates that Intelligent Polymers would be delisted
from the AMEX and its reporting requirements with the Securities and Exchange
Commission would be suspended through the filing of a Form 15.
While Biovail, Acquireco and Holdco have no commitment or definitive plans,
Biovail would, in the future, have certain rights granted to it as holder of the
Class A and non-voting common shares of Acquireco to cause Acquireco to become
wholly owned by Biovail. If Biovail would not exercise this option by February
1, 2001, Holdco would have the right, as holder of the voting common shares, to
cause the sale of any or all of the property and assets of Acquireco or
Intelligent Polymers.
Biovail and Holdco would enter into a voting trust agreement whereby the
holder of the Class A Shares and non-voting common shares of Acquireco would
agree that the holder of the Acquireco voting common shares would be entitled to
cast all the votes attaching to the Acquireco Class A and non-voting common
shares in connection with any vote required for a liquidation, dissolution or
bankruptcy of Acquireco or Intelligent Polymers or in respect of any sale of all
or substantially all of the assets of Acquireco or Intelligent Polymers.
Source and Amounts of Funds
The total consideration to be paid by Acquireco for the purchase of the
Common Shares pursuant to the Transaction would be, in the aggregate,
$145,986,750. The source of these funds would be Acquireco's cash.
Acquireco would raise at least 3% of the capital required in order to
exercise the Purchase Option from the issuance of all the voting common shares
of Acquireco (the "Acquireco Common Shares") to Holdco. In the event that
Biovail and Holdco reach a mutually satisfactory agreement prior to the closing
of the transaction, Holdco would have the capital to enable it to purchase the
Ac-
<PAGE>
-17-
quireco Common Shares as a result of an investment by Andrew Gaspar, the holder
of Holdco's common shares, and the Investor Group of funds.
In the event that Biovail and Holdco do not reach a mutually satisfactory
agreement prior to the closing of the transaction, Biovail would fund, with its
available cash, the funds purchase by a wholly owned subsidiary of the Acquireco
Common Shares.
Acquireco would raise the remaining capital required in order for it to
exercise the Purchase Option from the issuance of Class A and non-voting common
shares of Acquireco to Biovail. Pursuant to the By-Laws of Acquireco, Biovail,
as holder of the Class A and non-voting common shares of Acquireco, would have
certain rights to cause Acquireco to become wholly owned by Biovail.
Acquireco has no alternative financing arrangements or plans to those
discussed above.
The following table sets forth an estimate (except for the filing fee) of
expenses for the Transaction
Filing fee............................ $ 29,198
Accounting fees and expenses.......... 50,000
Legal fees and expenses............... 300,000
Printing expenses..................... 75,000
Fees & expenses for the Investment by 2,000,000
---------
Holdco
Total............... 2,454,198
The expenses set forth in the table above will be paid by Biovail.
Interest in Securities of Intelligent Polymers
As of August 30, 2000, no Common Shares are beneficially owned by either
Biovail or Acquireco, by any pension, profit sharing or similar plan of either
Biovail, Acquireco or, to Biovail's and Acquireco's knowledge after reasonable
inquiry of management of Intelligent Polymers, by Intelligent Polymers, by each
executive officer and director of either Biovail, Acquireco, Intelligent
Polymers, any person controlling either Biovail, Acquireco or Intelligent
Polymers or any executive officer of any corporation ultimately in control of
either Biovail, Acquireco or Intelligent Polymers, or by any associate or
majority owned subsidiary of either Biovail, Acquireco or Intelligent Polymers
except as set out on the following table:
<TABLE>
<CAPTION>
Direct Indirect
Name Position Ownership Ownership
--------------------------- -------------------------- ------------- --------------
<S> <C> <C> <C>
Eugene Melnyk Chairman of the Board 17,500 20,000(1)
and Director of Biovail
Roger Rowan Director of Biovail 16,500
<PAGE>
-18-
Wilfred Bistrow Director of Biovail -- 10,000(1)
</TABLE>
(1) owned by spouse
Financial Statements
Enclosed please find Intelligent Polymers' Annual Report on Form 20-F for
the year ended June 30, 1999 and Intelligent Polymers' Transition Report on Form
20-F for the period ended June 30, 1998. Financial statements for those periods
are contained therein.
Intelligent Polymers is not required to file quarterly reports.
Intelligent Polymers has no material fixed charges for the two most recent
fiscal years and the appropriate interim period.
Intelligent Polymers' book value per share as of June 30, 1999 was $6.31.
No pro forma disclosure has been provided because Intelligent Polymers
would terminate upon giving effect to the Transaction.
CONCLUSION
If you have any questions with respect to this transaction, please contact
Biovail Investor Relations at (416) 285-6000.
