Acambis plc: Proposed $40 Million Financing of the Canton Manufacturing Facility and Notice of Extraordinary General Meeting

CAMBRIDGE, U.K., Dec. 5, 2001 (PRIMEZONE) -- Acambis plc ("Acambis") (LSE:ACM) (Nasdaq:ACAM) announces the arrangements to finance (the "Financing") the reactivation of its manufacturing facility in Canton, Massachusetts (the "Facility"). The Financing is being arranged through Acambis' strategic partner and major shareholder, Baxter Healthcare Corporation ("Baxter").

The program to reactivate the Facility has been ongoing throughout 2001. Once completed, it will be capable of producing both anti-viral and anti-bacterial vaccines. In particular, it will enable Acambis to meet the requirements of its smallpox vaccine contracts with the US Government and its manufacturing agreement with Baxter.

Under the terms of the Financing, Baxter is to provide up to $40 million of lease financing. The Financing will cover:

 -- The sale-and-leaseback of the building and those contents owned
    prior to the reactivation program for $12.25 million, resulting in
    Acambis receiving net cash proceeds of $10 million; 
 -- Up to $25 million for the sale-and-leaseback of all the capital
    expenditure items required by Acambis to reactivate the Facility.
    Approximately $7.6 million will be receivable by Acambis at
    Completion of the Financing, representing the amount already spent
    by Acambis on the reactivation program.

The sub-lease agreement with Baxter is for a five-year period. It includes a flexible repayment schedule and an option for Acambis to repurchase the Facility and all the Facility's assets after two years and on each anniversary thereafter.

The Financing is subject to shareholder approval. A circular containing details of the proposed Financing, a trading update and notice of an Extraordinary General Meeting, is being posted to Acambis' shareholders today. The Extraordinary General Meeting is scheduled to be held at 11.00 a.m. on December 21, 2001. Completion of the Financing is expected to be on or before December 31, 2001.

Dr. John Brown, Chief Executive Officer of Acambis, said: "This financing package has been offered by Baxter on terms, which we believe are highly advantageous to Acambis and our shareholders. In particular, it enables us to reactivate this important asset while retaining our cash reserves for our extensive research and development programs. With our reactivation program on track, we expect that the Facility will soon be generating significant revenue for Acambis."

The Proposed Financing

Acambis leases a 47,000 sq. ft biologicals manufacturing Facility located in Canton, Massachusetts, US. Originally built in 1991, the Facility has not been in operational use since 1994. Following the strategic alliance entered into with Baxter in December 2000 which included a manufacturing agreement, Acambis has had a program underway to reactivate the Facility which, once completed, will be capable of producing both anti-viral and anti-bacterial vaccines in bulk quantities.

Acambis anticipates being able to use the Facility not only to generate significant revenues through manufacturing products on behalf of third parties, including Baxter and the US Government, but also to manufacture its own products, thereby generating and retaining value for shareholders.

The total budgeted capital expenditure required to reactivate the Facility is significant and has recently increased, principally to expand the anti-viral vaccine production capacity of the Facility and, in particular, to meet the increased production requirements relating to the smallpox vaccine contracts with the US Government. Depending on the final specifications of certain items still to be purchased, the total capital expenditure could be up to approximately $25 million.

Acambis wishes to retain its cash reserves for continued investment in its research and development programs. Earlier this year, therefore, Acambis announced that it was exploring a number of debt and/or leasing alternatives to finance the required capital expenditure. Since then discussions with several different providers of finance regarding a range of alternative financing proposals have taken place. During the course of these discussions, Baxter approached Acambis and offered to assist with the financing arrangements. Following initial discussions with Baxter, it became clear that the financing package being offered by Baxter represented the best option for Acambis and its shareholders.

The principal terms and conditions of the proposed Financing arrangements with Baxter, described more fully in the shareholders' circular, are summarized below.

 -- Baxter will make available to Acambis lease financing of up to $40
    million.  This Financing is intended to cover the following
    principal elements:
 -- The sale-and-leaseback of the land on which the Facility is built
    (the "Land"), the building shell of the Facility (the "Shell"),
    together with the original leasehold improvements and equipment
    (acquired before December 2000) contained within the Facility (the
    "Original Assets"). The Land and Shell, currently leased by
    Acambis, will be purchased for $2.25 million.  Acambis already
    owns the Original Assets and these, together with the Land and
    Shell, will be sold for $12.25 million, resulting in net cash
    proceeds receivable by Acambis of $10 million at completion of the
    financing ("Completion");
 -- The sale-and-leaseback of all the capital expenditure items
    required to be purchased by Acambis to reactivate the Facility
    (budgeted at up to $25 million).  Acambis will receive at
    completion approximately $7.6 million, representing the amount
    spent to date by Acambis pursuant to the reactivation program. The
    balance of the expenditure will be added to the lease as the
    expenditure is incurred; and
 -- Any interest accrued but not paid by Acambis during the first year
    of the sub-lease (see below).
 -- The Financing is being structured as a lease financing under which
    Baxter will sub-lease to Acambis all of the assets within the
    Facility, and those assets still to be acquired to complete the
    reactivation of the Facility (the "Facility's Assets") under a
    five-year agreement.

Assuming the Land, the Shell and the Original Assets are sold for a total of $12.25 million, and all $25 million (including the $7.6 million already acquired) of the assets required to complete the reactivation of the Facility (the "New Assets") are acquired by the end of the first year and no payments are made during the first year, annual payments under the sub-lease are expected to be approximately $3.4 million in the second year, $13.3 million in the third year, $12.4 million in the fourth year and $11.6 million in the fifth year.

On the basis of the repayment schedule outlined above, at the end of the five-year term of the sub-lease, 100 percent of the capital value of the Land and the Shell and 12 percent of the capital value of both the Original Assets and the New Assets will remain outstanding. At that time, Acambis will have the option to purchase all of the Facility's Assets for their outstanding capital value (plus any accrued but unpaid interest) which is estimated to amount to $6.45 million.

Under UK GAAP, this sub-lease arrangement will be treated as a finance lease and, therefore, the value of both the capital assets and the related liabilities will be shown on the face of Acambis' balance sheet.

The Board of Acambis believes that the Financing offers the following advantages:

 -- A significant amount of lease financing (up to $40 million) will
    be made available to Acambis on competitive market terms;
 -- $10 million of cash proceeds will be receivable by Acambis at
    Completion from the sale of the Original Assets.  These assets
    were originally purchased by Acambis for $5.1 million in 1996 and
    currently have a net book value of $0.1 million;
 -- Acambis has a flexible repayment schedule under which no
    repayments are required in year one and interest-only payments are
    required in year two;
 -- Acambis has a purchase option under which it can repurchase all of
    the Facility's assets on the second anniversary of the Financing
    term and on each anniversary thereafter;
 -- Acambis retains full flexibility to conduct its operations in the
    Facility in accordance with its own requirements; and
 -- Only limited financial and operational covenants are required
    compared to those required by alternative financing proposals.

Extraordinary General Meeting

Under the Listing Rules of the UK Listing Authority, Baxter is deemed to be a related party of Acambis due to the fact that Baxter currently owns approximately 12.6 percent of Acambis' issued share capital. As a result of this relationship, and the size of the Financing in relation to Acambis, the Financing is conditional upon the approval of Acambis' shareholders.

The circular gives notice of an Extraordinary General Meeting to be held on December 21, 2001.

Trading Update

As stated in a press release issued on November 29, 2001, Acambis has been awarded a second contract by the US Government to develop and produce 155 million doses of smallpox vaccine within the next 12 months. This contract is in addition to the existing contract awarded in September 2000, which has recently been amended to provide for Acambis to produce 54 million doses of vaccine in 2002. This second 155 million-dose contract is worth $428 million (300 million pounds), spread over 2002 and 2003.

Other than the award of the new smallpox contract, since the release of the last Interim Results statement on September 20, 2001, the Directors consider that Acambis has operated in line with their expectations and anticipate that it will continue to do so until the end of the financial year. Expenditure and cash outflows during the current period are also in line with expectations.

Notes to Editors:


Acambis is a biopharmaceutical company discovering, developing and manufacturing vaccines to prevent and treat infectious diseases. It has operations in Cambridge, UK, and in Cambridge and Canton, Massachusetts, USA. It has a broad portfolio of vaccine product candidates undergoing clinical trials and technology platforms that provide the basis for further vaccine product candidates.

Relationship with Baxter

Under the terms of a strategic alliance established with Baxter in September 2000, Baxter has agreed to invest 27.8 million pounds ($40 million) in Acambis, ultimately resulting in Baxter owning approximately 20% of Acambis' issued share capital. Today, Baxter's shareholding in Acambis is 12.6%. Acambis and Baxter also have several commercial agreements relating to manufacturing, technology transfer and marketing. Under the second smallpox contract awarded to Acambis by the US Government, Baxter is contributing towards the manufacturing process and to certain other aspects of delivery of the final vaccine product to the US Centers for Disease Control and Prevention.

This, and other news releases relating to Acambis, can be found on the Company's website at

This news release contains forward-looking statements that involve risks and uncertainties, including the timing and results of clinical trials and other product development and commercialization risks, the risks of satisfying the regulatory approval process in a timely manner, the need for and the availability of additional capital, and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements are based on estimates and assumptions made by the management of Acambis and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements.


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