BEIJING and BOSTON, Dec. 23, 2020 (GLOBE NEWSWIRE) -- 1Globe Capital LLC (“1GlobeCap”), a principal and long-term shareholder of Sinovac Biotech (NASDAQ: SVA) (“Sinovac”), has reached agreement with the Securities and Exchange Commission (“SEC”) to end investigation of its 13D form compliance.
During this critical phase of vaccine and therapeutics development for the ongoing pandemic, 1GlobeCap felt it was important to focus on its many projects, which include the development of COVID-19 therapeutics and vaccines. For this reason, 1GlobeCap decided to accept a SEC settlement offer, in which 1GlobeCap neither admitted nor denied SEC findings.
Following Sinovac’s annual general meeting (“AGM”) on February 6th in 2018, the SEC investigated the reporting compliance of Sinovac shareholders. 1GlobeCap’s 13D/13G forms, prepared by legal experts at top US law firms, disclosed that: (1) 1GlobeCap held 22.4% of Sinovac shares; and (2) 1GlobeCap intended to support the dissident shareholder of Sinovac Beijing which proposed a competing offer to the insider-led buyout. 1GlobeCap also communicated to Sinovac additional shares being held by its related parties. The SEC investigation staff on 13D compliance concluded that: (1) 1GlobeCap ’s ownership should also be inclusive of shares held by its related parties (in aggregate ~32.3% of all Sinovac shares); and (2) its 13D form should have been amended in a timely manner to include its participation in voting for an alternative slate of directors organized and nominated by other shareholders to replace the incumbent board. Before and since the settlement, SEC made no comments on the legitimacy of either the old or new boards and has not been involved in Sinovac’s internal corporate conflicts.
1GlobeCap has unequivocally protected all shareholder interests through its refusal to support any unfair buyout. When an insider buyout group attempted to take over Sinovac at a price below market value against the wishes of the majority of shareholders and adopted a “poison pill” strategy to preclude competing offers, 1GlobeCap felt an obligation to adhere to its principles despite having been invited by the insider group to join them.
After over 90% of shareholders attending the AGM voted for a new board to prevent the takeover, the insider buyout group induced the outgoing board to "swallow" the poison pill to wrestle control at the expense of the company. This unprecedented move would have jeopardized years of progress and caused significant turmoil at the company. 1GlobeCap’s success in obtaining injunctions in courts has prevented the retaliatory and unlawful implementation of the “poison pill” targeted all shareholders who voted against the re-election of the old board. Moreover, the “Status Quo Order” issued by the Delaware Court of Chancery against the “poison pill” effectively protected Sinovac’s normal operations regarding vaccine development.
In January 2020, 1GlobeCap’s Chairman had a productive meeting with Sinovac’s CEO at the company’s headquarters concerning paths forward for the company, importance of focusing on product development and offered its support to develop a vaccine against the novel coronavirus. Subsequently, there have been several follow up collaborative meetings between the two teams.
1GlobeCap, as the principal shareholder of Sinovac, calls on all Sinovac stakeholders to put aside their differences and work together to support Sinovac’s COVID-19 vaccine, which is a front-runner among global COVID-19 vaccine programs. Sinovac’s vaccine, if successful, could play a role in ending the pandemic, which transcends all the issues previously preventing collaboration among Sinovac shareholders.
About 1Globe Capital and Its Investment in Sinovac Biotech (Nasdaq: SVA)
1Globe Capital LLC focuses on investment in private and public companies in the healthcare and high-tech sectors.
1GlobeCap started to invest in Sinovac about 10 years ago. Previously, 1GlobeCap always voted to support Sinovac management and developed an amicable and collaborative relationship. The saga began in 2016 when Sinovac finally achieved success in developing its first major revenue generating product after many years of R&D financial loss. Certain venture capital funds together with certain Sinovac executives (“Insider Buyer”) proposed to privatize Sinovac. Another buyout group, led by PKV Sinobioway (“PKV”), offered a higher bid. 1GlobeCap, invited to join by both buyout groups, attempted to promote collaboration between the two buyout groups and requested a transparent and fair sale process. However, the board and management adopted a “poison pill” strategy to prevent competing offers and accepted a $7.0/share offer from the Insider Buyers while rejecting a $8.0/share offer from PKV. Frustrated investors, representing over 90% shareholders in attendance at the AGM, voted for a new board organized by PKV and nominated by OrbiMed Advisor LLC. Instead of a peaceful transition, the management used company funds (more than $20M according to company’s fillings) to hire US lawyers and consultants to litigate and retaliate against all shareholders voting against the re-election of the incumbent board. Since the AGM in February 2018, there has been no board elected by the majority of shareholders to protect their interests and the trading of Sinovac has been kept suspended by Sinovac.