Articles

RSS

After nearly eight months and repeated failures to gain control of Patheon Inc. ("Patheon" or "the Company") , it is time for JLL Patheon Holdings LLC ("JLL") to either abandon its prolonged and unsuccessful hostile insider offer ("the Offer") or amend it to provide fair value to Patheon shareholders, the Special Committee of Independent Directors of Patheon said recently.

Late yesterday, the Ontario Superior Court of Justice rejected JLL's previously disclosed application which sought to overturn the election of Directors at the Company's April 29, 2009, shareholders meeting. Patheon's current Board of Directors, including the additional Independent Directors elected by shareholders at the April 29 meeting, remains in office. The Special Committee believes that JLL initiated this litigation to disrupt and undermine the actions properly being undertaken by the Special Committee to protect shareholders in the face of JLL's hostile Offer. Patheon intends to seek an order for costs against JLL in connection with these court proceedings. The Court's reasons will be released shortly.

JLL first announced the Offer in December 2008 and has now extended it for the seventh time. Earlier recently, JLL announced that it would extend its offer again after only approximately 4,000 Patheon Restricted Voting Shares (the "Shares") were tendered to the Offer during the last extension. Since May 20, 2009 JLL has taken up only approximately 250,000 additional Patheon Shares or less than 0.3% of the outstanding Shares.

Despite being opposed by shareholders owning more than 60% of Patheon's Shares, JLL has refused to alter its offer of US$2.00 per Restricted Voting Share. JLL's offer price is well below the range of an independent valuation of the Company. Both the Special Committee and the Board of Directors have recommended that shareholders reject the Offer as inadequate, unfair and coercive.

"The JLL Offer is increasingly irrelevant. Patheon's shares have traded well above the offer price for a prolonged period. Equity and credit markets have improved since the Offer was first announced and Patheon management continues to execute its strategy," said Paul Currie, Chairman of the Special Committee. "The Company and its shareholders would benefit from the removal of the distraction of the Offer. The Special Committee believes JLL should either terminate its Offer or make a new offer than reflects the substantially higher true value of the Company."

Mr. Currie noted that JLL continues to state that it has convertible preferred shares that could be converted into a significant number of Restricted Voting Shares, but JLL does not state clearly that converting those shares would not be economic for JLL in the current share price range.

Patheon's legal action against JLL and its nominees to Patheon's Board, which was announced on May 26, is proceeding on an expedited basis. On July 10, 2009, the Ontario Superior Court of Justice substantially rejected motions by JLL and its nominees challenging Patheon's claims against them. Patheon has issued an amended Statement of Claim, providing certain particulars required by the Court's decision and will continue to pursue these claims to the full extent permitted by law. JLL and its nominees to Patheon's Board are required to file their Statements of Defence by July 31. A trial date has not yet been set, but the Court has targeted mid- to late October 2009 for the trial of this matter.

On May 26, 2009, the Special Committee called a Special Meeting of Shareholders to be held on September 11, 2009, in response to the previously announced requisition by Joaquín Viso and Olga Lizardi. Among the factors that the Special Committee considered in setting that date was the need to resolve the current litigation, which may, among other things, affect the voting of JLL's shares, before the meeting is convened so that shareholders will have access to all relevant information. In light of the current timing for the resolution of Patheon's action, which has been delayed by the unsuccessful motions by JLL and its nominees, the Special Committee has determined to postpone the Special Meeting of Shareholders to October 30, 2009.

The Special Committee continues to believe, based on all information provided to it to date, that an independent Patheon, successfully implementing on its strategy, remains the best available alternative for shareholders. Patheon shareholders can help maintain the independence of their company simply by continuing to refuse to tender their shares to the JLL bid.

About Patheon
Patheon Inc. is a leading global provider of contract development and manufacturing services to the global pharmaceutical industry. Patheon prides itself in providing the highest quality products and services to more than 300 of the world's leading pharmaceutical and biotechnology companies. Patheon's services range from preclinical development through commercial manufacturing of a full array of dosage forms including parenteral, solid, semi-solid and liquid forms. Patheon uses many innovative technologies including single-use disposables, Liquid-Filled Hard Capsules and a variety of modified release technologies.

Patheon's comprehensive range of fully integrated Pharmaceutical Development Services includes pre-formulation, formulation, analytical development, clinical manufacturing, scale-up and commercialization. Patheon can take customers direct to clinic with global clinical packaging and distribution services and Patheon's Quick to Clinic™ programs can accelerate early phase development project to clinical trials while minimizing the consumption of valuable API.

Patheon's integrated development and manufacturing network of 11 facilities, and 6 development centers across North America and Europe, strives to ensure that customer products can be launched with confidence anywhere in the world. For more information, visit: www.patheon.com.

SOURCE: Patheon Inc.