Wize Pharma, Inc. (OTCQB: WIZP), a clinical-stage biopharmaceutical company focused on the treatment of ophthalmic disorders, and Cosmos Capital Limited, a leading digital infrastructure provider based in Sydney, Australia, today announced that they have entered into a bid implementation agreement whereby Wize has agreed to make an off-market takeover offer to acquire all of the outstanding shares of Cosmos, subject to satisfaction of various closing conditions set forth in the BIA, resulting in Cosmos becoming a wholly-owned subsidiary of Wize.
“We are excited about the Wize Cosmos transaction,” stated Noam Danenberg, CEO of Wize. “The Cosmos team brings a proven track record, experienced management and logistics capabilities within the Bitcoin mining industry. Consistent with our focus on maximizing value for our shareholders, this transaction provides a continuing interest in our LO2A biomed activity, through the creation of a contingent value right, while providing exposure to Cosmos’ Bitcoin mining operations.”
James Manning, CEO and founder of Cosmos, commented, “Through this transaction we are excited to be providing public markets access to our digital infrastructure business and have enjoyed working with the like-minded Wize team throughout this process. Becoming a part of a publicly traded company is central to our continued growth and will allow us to accelerate our expansion plans moving forward.”
Key Transaction Details
Under the terms of the BIA, Wize will commence an off-market takeover offer under applicable Australian laws to acquire all of the outstanding shares of Cosmos (the “Offer”) in exchange for 38.78 shares of Wize common stock and 22.33 warrants (each to acquire one share of Wize common stock) (the “Milestone Warrants”) for each Cosmos share (subject to a minimum tender of at least 90% of Cosmos’ outstanding ordinary shares). Subject to certain exceptions, the Milestone Warrants will become fully exercizable into Wize common stock provided Cosmos warrant holders retain the Wize stock issued to them until December 31, 2021 (the “31 December Milestone”).
Upon completion of the transaction, and assuming all of the holders of Cosmos shares accept the Offer, Cosmos shareholders will own approximately 81.3% of the outstanding common stock of the combined company (87% if all of the Milestone Warrants become fully vested), while Wize existing shareholders will remain the owners of approximately 16.3% of the outstanding common stock of the combined company (11.1% if all of holders of the Milestone Warrants satisfy the 31 December Milestone and the Milestone Warrants become fully vested), each on a fully diluted basis and including warrants to be issued to Wize’s financial advisor to the transaction.
Following the targeted closing of the transaction in the first quarter of 2021, and based on Wize’s 60 day VWAP of US$0.143 on December 29, 2020 (and assuming that all the Milestone Warrants become fully vested), the combined company is expected to have a market capitalization of approximately US$75.75 million.
Upon completion of the transaction, pre-closing Wize security holders will receive one contingent value right (“CVR”) for each share of Wize held on the record date. Each CVR will entitle the holder to a pro rata share of any consideration that may be received in connection with Wize’s existing LO2A business, subject to transaction expenses and customary deductions as detailed in the CVR agreement.
Following completion of the transaction, it is expected that the combined company will have approximately US$5 million in cash and cash equivalents. Cosmos will retain its experienced management team, with Cosmos’ CEO and founder James Manning assuming the role of CEO of the combined company. The Board of Directors of the combined company will consist of three members designated by Cosmos and one member designated by Wize, and the combined company will seek shareholder approval to be renamed Cosmos Capital, Inc. (or similar name), and to effect a reverse share split of the combined company’s common stock.
Independent Expert Report
The BIA provides that Cosmos will obtain an Independent Expert Report to opine on whether the transaction is fair and reasonable to the shareholders of Cosmos not associated with Wize. The IER will be provided to Cosmos shareholders with the Target Statement to be sent to Cosmos shareholders.
Unanimous Recommendation of the Cosmos Board
The Cosmos Board of Directors have carefully considered the BIA and the terms of the Offer and unanimously recommend that, in either the absence of a superior proposal or the IER concluding that the Offer is neither fair or reasonable, Cosmos shareholders ACCEPT THE OFFER once commenced and have indicated that they will ACCEPT THE OFFER in respect of all Cosmos shares they own or control.
The closing of the transactions contemplated under the BIA and the PIPE agreements is subject to the satisfaction of certain customary closing conditions, including 90% minimum acceptance of the Offer by Cosmos shareholders, and is expected in mid to late first quarter of 2021. The full conditions to the Offer will be set out in the Bidder Statement which Wize expects to dispatch to Cosmos shareholders as soon as practicable.
What exactly is “bitcoin mining” and how does it effect the buyers of the cryptocurrency? Basically, when you buy a large amount of bitcoins, you are purchasing large chunks of virtual currency that is completely virtual (you don’t have to actually touch it to feel its value) and is stored within the computer of the buyer called a “miner”. The miner “mines” the currency and that process is what makes the coins valuable. Usually, the more work that is done to secure the coins, the more valuable they become.
But how does the value of a unit of currency get created? This is simple – it’s all about supply and demand. When there are more buyers than sellers, the price of that unit of currency rises and vice versa. So, with that being said, if there aren’t enough people mining for bitcoins, you can expect the price to rise because there will be less people willing to pay for them, which in turn will drive up the price of each unit. It is this process that people call “bitcoin mining” – this is where some people use specialized ASIC computers to attempt to “mine” the currency by solving mathematical problems.