ANNUAL FINANCIAL REPORT 2010 2010 - TiGenix

9. Post-balance sheet eventsOn 25 February 2011, it was announced that an agreement hadbeen entered into between the Company’s shareholders andTiGenix, N.V. to combine the activities of the two companiesthrough an exchange of shares.TiGenix is a biomedical company with headquarters in Leuven,which is listed on the Belgian stock market and is exploitingthe power of regenerative medicine to develop effectivetreatments for bone tissues (“Regenerating Motion”) and hastwo products approved for marketing and sale in Europe.The investors in Cellerix have undertaken to carry out a capitalincrease of approximately 18 million euros at Cellerix whichwould be paid up prior to the completion of the transactionand which is subject to the approval by the shareholders ofCellerix at the Company’s Shareholders’ Meeting. This capitalincrease would provide the group with a solid financial base.TiGenix has also announced its intention to raise approximately15 million euros through a public rights offering, of which 10million has already been secured via pre-commitments fromcertain existing shareholders and new investors. Together withan 18 million euros capital increase by Cellerix investors priorto the transaction, the combined group is expected to have aproforma cash position of at least 33 million euros at closing.The contribution is to be effected pursuant to the terms of thecontribution offer as accepted by the shareholders of Cellerixand resulting in a binding contribution agreement. Underthe terms of the contribution agreement, TiGenix will issueapproximately 44.8 million new TiGenix shares as considerationfor the contribution in kind by Cellerix shareholders, holdingall of the outstanding Cellerix shares, into TiGenix at an agreedsubscription price of 1.2977 euros per new TiGenix share,valuing Cellerix at approximately 58 million euros, including thepaid-in capital increase of 18 million euros.As part of this transaction, there are certain liabilities assumedby the Company that will be payable on the date that theaforementioned transaction is formalised and that are relatedto contingent fees of the advisors who took part in thetransaction. These fees are calculated using a mechanismrelated to the final amount of the transaction.If this transaction in not carried out, the Board of Directors ofCellerix has requested payment of tranche 3 of the investmentagreement amounting to at least 8 million euros, which ensuresthe continuity of the business in any event throughout thefollowing year.10. Evolution of the businessCellerix will continue the development of its allogeneicplatform togheteher with its consolidation with TiGenix.If this transaction is not carried out, as it is subject to certainconditions, there is a firm commitment dated 28 February 2011whereby the Board of Directors has requested the Company’sshareholders to pay tranche 3 of the investment agreementamounting to at least 8 million eurosThis contribution wouldbe made, where appropriate, in April 2011 and will ensurethe continuity of the business in any event throughout thefollowing year and through the first quarter of 2012.On the other hand, the Company is also actively seeking newpartners to license those products whose internal developmentit has put on hold.This transaction is subject to the approval of the contributionby TiGenix shareholders at an extraordinary shareholders’meeting to be convened by the Board of Directors of TiGenix.The transaction is also subject to certain other conditions,including the approval by the Belgian Banking, Finance andInsurance Commission (“Commissie voor het Bank-, Financie- enAssurantiewezen”) of the prospectus relating to the subsequentpublic rights offering and the admission to trading of the newTiGenix shares.9 •