BOSTON and BEIJING, March 11, 2019 (GLOBE NEWSWIRE) -- In a court order dated March 6, 2019, the Honorable J. Travis Laster of the Delaware Court of Chancery ordered Sinovac Biotech Ltd. (the “Company”) to maintain the “status quo” under its Rights Agreement dated March 28, 2016 (as amended, the “Rights Agreement”, also known as the “Poison Pill”) by not effecting or causing an exchange of any of the rights issued under the Rights Agreement until final disposition of the litigation in Delaware between the Company, on the one hand, and 1Globe Capital LLC (“1Globe”) and certain other shareholders of the Company (together with 1Globe, the “Defendant Shareholders”), on the other hand. In addition, on March 7, 2019, after an initial hearing on 1Globe’s pending application for injunction relief, the Eastern Caribbean Supreme Court (in the Court of Appeal) also ordered the Company to give an undertaking in broad terms, including not taking any steps to operate the Rights Agreement in any way that affects 1Globe’s shareholding or affects any of 1Globe’s rights as shareholder or reduces the proportion of 1Globe’s shareholding in the Company.
The Rights Agreement was adopted by the board of directors of the Company controlled by the Disputed Directors as defined below (the “Disputed Board”) on March 26, 2016 to entrench themselves after the buyout group affiliated with the Disputed Directors (the “Management Buyout Group”) proposed to take the Company private given an anticipated higher valuation of the Company in China’s markets. 1Globe, a major shareholder which was invited to roll over its shares with the Management Buyout Group in such proposed privatization, requested that the Disputed Board run a fair and transparent sale process with consideration of the minority shareholders. The Disputed Board nevertheless approved the Management Buyout Group’s offer of $7.00 per share and rejected a competing offer of $8.00 per share. At the Company’s annual meeting held on February 6, 2018 (the “2018 AGM”), over 90% of the shareholders in attendance in person or by proxy, including 1Globe, voted against the re-election of Weidong Yin, Kenneth Lee, Meng Mei and Simon Anderson (the “Disputed Directors”) as directors of the Company and for a new slate of directors nominated by OrbiMed Advisors LLC. The newly elected board subsequently removed Weidong Yin as its CEO for a convicted bribery charge and Nan Wang as its CFO for breach of fiduciary duties (the “Former Management”).
Since the 2018 AGM, the Disputed Board has refused to transfer management control to the elected new board and has brought multiple frivolous lawsuits using Company resources to retaliate against all shareholders who voted against the re-election of the Disputed Directors, including the pending litigation against the Defendant Shareholders in the Delaware Court of Chancery (the “Pending Delaware Case”) which seeks to determine whether the Defendant Shareholders who voted against the Disputed Directors had triggered the Rights Agreement. 1Globe, together with other Defendant Shareholders, continues to defend against these litigations.
The Disputed Directors and Former Management have taken a series of further actions to entrench themselves since the 2018 AGM, including issuing 11,800,000 Company common shares to Vivo Capital, LLC and Prime Success, L.P. on July 2, 2018 for consideration payable in promissory notes at a discounted price compared to an existing cash offer price by PKV-Sinobioway (“PKV”). Mr. Shan Fu, a partner at Vivo Capital, purportedly joined the Disputed Board in conjunction with such private placement.
On February 18, 2019, the Disputed Board purportedly determined that 1Globe and all other shareholders that voted against the Disputed Directors at the 2018 AGM (representing about 50% of all shares outstanding) constituted “Acquiring Persons” and therefore triggered the Poison Pill. The Disputed Board did not establish a legitimate basis for such determination or explain why it made such determination over a year after the purported trigger event had occurred without waiting for the result of the Pending Delaware Case which the Company initiated. The intent of the Disputed Board and Former Management is to greatly dilute all shareholders who voted against their re-election through the Poison Pill and to gain control of more than 50% of the Company shares in order to remove any resistance to their goal of acquiring the Company at a discount.
1Globe welcomes the orders from both the Delaware Court of Chancery and the Eastern Caribbean Supreme Court (the Court of Appeal), which stop, pending further proceedings in each jurisdiction, the Disputed Board’s plan to unilaterally dilute all shareholders who voted against the Disputed Directors. We will continue to contest through appeal and other legal channels the validity of the election of the Disputed Directors as directors of the Company at the 2018 AGM and consequentially the validity of the corporate actions taken by the Disputed Board thereafter.
About 1Globe Capital LLC
1Globe Capital LLC, an investment company wholly owned by 1Globe Holdings, is dedicated to investment in healthcare and high-tech sectors through its public and private divisions.
CONTACT: Contact Information Stella Wang +86 15210767318 stellawang@1globe-china.com