Chelsea Acquisition Corporation Announces Proposed Qualifying Transaction

Chelsea Acquisition Corporation Announces Proposed Qualifying Transaction 
CALGARY, ALBERTA -- (Marketwired) -- 07/15/13 -- Chelsea Acquisition
Corporation ("Chelsea" or the "Corporation") (TSX VENTURE:CAV.P) is
pleased to announce details concerning its proposed qualifying
transaction involving a proposed business combination with Pediapharm
Inc. ("Pediapharm"). Pediapharm is a private specialty pharmaceutical
company dedicated to serving the needs of the pediatric community.  
Chelsea has entered into a letter agreement with Pediapharm dated
June 25, 2013 (the "Letter Agreement"), pursuant to which Chelsea and
Pediapharm intend to complete a business combination (the
"Transaction") by way of an amalgamation to form a new company
("Amalco") called "Pediapharm Inc." Pursuant to the Transaction,
Chelsea will amalgamate with Pediapharm to form Amalco and: (i) the
issued and outstanding Pediapharm Common Shares will be exchanged for
an aggregate of 36,666,667 common shares of Amalco (the "Amalco
Common Shares") with a deemed value of $0.30 per share; (ii) the
outstanding Pediapharm share purchase warrants will be exchanged for
share purchase warrants of Amalco; (iii) each three (3) issued and
outstanding Chelsea Common Shares will be exchanged for one (1)
Amalco Common Share for an aggregate of 3,666,667 Amalco Common
Shares; and (iv) each three (3) outstanding stock options and agents'
options of Chelsea will be exchanged for one stock option or agents'
option of Amalco exercisable at $0.30 per share.  
It is intended that the Transaction, when completed, will constitute
the qualifying transaction of the Corporation pursuant to Policy 2.4
of the TSX Venture Exchange Inc. (the "TSX Venture") Corporate
Finance Manual. The Transaction is subject to the policies of the TSX
Venture relating to qualifying transactions, as well as shareholder
approval of each of Chelsea and Pediapharm.   
About Pediapharm  
Pediapharm is the only private Canadian specialty pharmaceutical
company, dedicated to serving the needs of the pediatric community.
Its mission is to bring to the Canadian market the latest innovative
pediatric products with the objective to improve the health and the
well-being of children in Canada. Since its debut in 2008, Pediapharm
has entered into numerous commercial agreements with partners from
Canada and other countries around the world.   
Pediapharm Corporate History and Structure  
Pediapharm was incorporated under the Canada Business Corporations
Act ("CBCA") on February 24, 2003. The head and registered office of
Pediapharm is located at 1 Place du Commerce, Suite 225,
Ile-des-Soeurs, Quebec, H3E 1A2. Pediapharm has one wholly-owned
subsidiary, Pediapharm Licencing Inc. which is incorporated under the
CBCA.  
Pediapharm currently has 11,414,001 Pediapharm Common Shares issued
and outstanding. Pediapharm has no stock options, warrants,
anti-dilution or other rights to purchase Pediapharm Common Shares
issued or outstanding, other than (i) an aggregate of 342,857 share
purchase warrants exercisable at $1.05 (the "Pediapharm Warrants");
(ii) convertible debentures of Pediapharm in the aggregate amount of
principal and interests, accrued as of August 31, 2013 of
approximately $1,985,000 which will be converted into Pediapharm
Common Shares (the "Pediapharm Debentures"); (iii) 602,038 options to
purchase Pediapharm Common Shares held by current or former
directors, officers or employees of Pediapharm at exercise prices
ranging from $0.87 to $1.05 (the "Pediapharm Options"); and (iv)
additional rights to purchase Pediapharm Common Shares pursuant to
certain anti-dilution provisions, rights, deferred stock units and
agreements.  
The two largest shareholders of Pediapharm are Sylvain Chretien of
Verdun, Quebec and FIER of Longueuil, Quebec; who own 29.8%, and
11.22%, respectively.  
Financial Information of Pediapharm  
Based on audited management prepared financial statements for the
year ended December 31, 2012, Pediapharm had revenue of $2,490,503,
operating expenses of $4,714,433, and a net loss of $2,223,930. In
addition, as at December 31, 2012, Pediapharm had working capital of
$212,268, assets of $1,723,778 and liabilities of $2,812,900.  
Based on unaudited management prepared financial statements for the
period ended March 31, 2013, Pediapharm had revenue of $828,629,
operating expenses of $1,000,867, and a net loss of $276,871. In
addition, as at March 31, 2013, Pediapharm had working capital of
$116 094, assets of $1,986,604, and liabilities of $3,352,597.  
Summary of the Proposed Qualifying Transaction  
Pursuant to the arm's length Letter Agreement, and subject to the
terms and conditions thereof, Chelsea and Pediapharm have agreed to
complete the Transaction to form Amalco.  
Pursuant to the Letter Agreement, the parties have agreed to use
their "commercially reasonable efforts" to cause Pediapharm to
complete a private placement (the "Pediapharm Private Placement") of
subscription receipts of Pediapharm (the "Subscription Receipts") at
a price of $0.30 per receipt (the "Offering Price") for gross
proceeds of a minimum of $4,000,000 and a maximum of $6,000,000. Each
Subscription Receipt will be automatically converted into one Amalco
Common Share concurrent with the completion of the Transaction at no
additional cost to the holder. The parties acknowledge that
Pediapharm intends to engage a syndicate of agents to be determined
(the "Agents") to act as agents on a "commercially reasonable
efforts" basis for the Pediapharm Private Placement and in connection
therewith intends to pay a cash commission to the Agents in an amount
to be determined. The parties agree the net proceeds of the
Pediapharm Private Placement will be held in escrow and released
concurrent with the completion of the Transaction.  
The parties also agree Pediapharm may proceed with a non-brokered
private placement of units of Pediapharm (the "Pediapharm Units") at
a price per unit to be determined, for gross proceeds of up to
$500,000 to close on or before August 31, 2013. Each Pediapharm Unit
will consist of one Pediapharm Common Share and one share purchase
warrant of Pediapharm (the "Pediapharm Financing Warrants")
exercisable at a price per share to be determined, for a period of
two years from closing of such private placement. Pediapharm may also
choose to proceed by way of financing in the same maximum amount by
way of a loan or any other financing agreement.  
Summary of Proposed Directors and Officers  
The board of Chelsea will be replaced to consist of seven (7)
directors all of whom will be nominees of Pediapharm, namely, Sylvain
Chretien, Pierre Lapalme, three other members of the current board of
Pediapharm and two independent directors from outside the province of
Quebec to be determined, provided TSX Venture does not object to such
nominations and such persons are eligible to act as directors
pursuant to the requirements of the CBCA.   
After the closing of the Transaction, the officers of Amalco will be
appointed by the Board of Directors of Amalco and will include
Sylvain Chretien as Chief Executive Officer, Benoit Hebert as
Vice-President, Business Development and Licensing, Roland Boivin as
Chief Financial Officer, Ashok Bhaseen as Vice-President, Marketing
and Sales and a Corporate Secretary to be determined by the Board of
Directors of the Resulting Issuer.  
Sylvain Chretien, Chief Executive Officer and Director  
Sylvain Chretien, Age 48, President, Chief Executive Officer and
Director: Mr. Chretien is the founder of Pediapharm as well as the
president and CEO since January 2008. He has over 24 years of
experience in both the pharmaceutical and the biotechnology sectors,
where he occupied various executive positions in sales, marketing and
business development. He worked with Nordic Laboratories from 1989 to
1994; with Pfizer Canada from 1994 to 1998; and with Biorthex Inc.
from January 1998 to June 2000. Before founding Pediapharm, Mr.
Chretien had his own consulting company called Gestion BioPrisma. Mr.
Chretien was a Director of Biophage Pharma and Warnex. He was
President of the Pharmaceutical Marketing Club of Quebec (PMCQ) in
1998 and executive member of BioQuebec in 2000. Mr. Chretien holds an
MBA in Management of Bio Industries from the Universite du Quebec a
Montreal and a B.Sc. in Sciences of Physical Activities from the
University of Laval.   
Roland Boivin, Chief Financial Officer  
Roland Boivin, Age 46, is the proposed Chief Financial Officer of
Pediapharm. From 1990 to 2008, Mr. Boivin held several management
positions at 3M Canada, including Business Manager - Consumer
Division. In that role, he had overall financial responsibility for
the Canadian consumer market. His most recent role at 3M was General
Manager - Quebec and he became a member of the Company's Executive
Committee. Mr. Boivin has since developed expertise in Finance,
Accounting, Corporate Governance and Continuous Disclosure with small
and medium size publicly listed companies. Mr. Boivin has been the
Chief Financial Officer of Golden Hope Mines Limited, a public
company listed on TSX Venture since June 2011. Mr. Boivin obtained
his Bachelor of Commerce from McGill University and his MBA from
Queen's University.  
Benoit Hebert, Vice-President, Business Development and Licensing  
Benoit Hebert, Age 46 has been the Vice-President, Business
Development and Licensing of Pediapharm since September 2009. Mr.
Hebert has more than 15 years of industry experience and has a
rare-blend of scientific expertise and business skills. Focusing on
pharmaceutical business transactions since 2000, he worked at Axcan
Pharma Inc. from July 2003 to November 2006. Mr. Hebert has lead
international licensing transactions, participated actively in
product acquisitions, managed international product development
alliances and global supplier relationship. Mr. Hebert holds an MBA
in Management of Bio-industries from the Universite du Quebec a
Montreal. Mr. Hebert also received a M.Sc. in Immunology and a Ph.D.
in Virology from the Institut Armand-Frappier. Before returning to
Canada in 2000, he was a NSERC postdoctoral fellow in structural
biology at Purdue University. He is past-president and a director of
the Canadian Healthcare Licensing Association (CHLA).   
Ashok Bhaseen, Vice-President, Marking and Sales  
Ashok Bhaseen, Age 56 has been the Vice-President, Marketing and
Sales of Pediapharm since September 2009. Mr. Bhaseen brings over 30
years of experience of Global Pharmaceutical marketing. He worked
with Abbott Pharmaceuticals from 1995 to 2006, among various roles as
Commercial Director for Pacific, Asia, Australia and Africa with
Abbott International and Canadian Market in marketing, sales,
business development, health communication and pharmacy programs. He
also worked with IMS Americas as Director, National Accounts from
June 2006 to November 2008. Prior to IMS and Abbott, he worked in
International markets as General Manager, Sales Manager and Group
Product Manager with Johnson and Johnson from 1986 to 1988 and Parke
Davis from 1988 to1990. He has successfully launched several new
products in Canada and International markets in primary care,
specialty, devises and OTC area. Mr. Bhaseen is also Global President
of Thyroid Federation International. Mr. Bhaseen holds a Masters
degree in Pharmaceutical Sciences from the University of Saugor and
an MBA from the University of Bombay.  
Pierre Lapalme, Director  
Pierre Lapalme, Age 72, has been the Chairman of the Board of
Pediapharm since September 2009. Mr. Lapalme has served as Director
and Chairman of the Board of Biomarin Pharmaceutical Inc. since
January 2004. Throughout his career, Mr. Lapalme held numerous senior
management positions in the pharmaceutical industry, including Chief
Executive Officer and Chairman of the Board of Rhone Poulenc
Pharmaceuticals, Inc. Canada (known as Sanofi Aventis), and Senior
Vice-President and General Manager of North America Ethicals. Mr.
Laplante was also President and CEO of Ethypharm North America from
1995 to 2004. Mr. Lapalme has also served on the board of directors
of public companies during the past five years: Insy's Therapeutic, a
specialty pharma corporation based in Arizona and traded on NASDAQ
(since March 2011), Sciele Pharmaceuticals Inc. (from 1998 to 2008)
and Bioxel Pharma (from 2004 to 2009). He also serves on the board of
two private biotech companies and was appointed to the board of
Aeterna Zentaris in December 2009. Mr. Lapalme studied at the
University of Western Ontario and INSEAD France.  
Information Concerning Chelsea  
Chelsea is a capital pool company that completed its initial public
offering and the Chelsea Common Shares are listed for trading on TSX
Venture. Chelsea currently has 11,000,000 Chelsea Common Shares
outstanding, stock options outstanding to acquire 1,100,000 Chelsea
Common Shares at a price of $0.10 per share until March 1, 2022, and
agent's options outstanding to acquire 300,000 Chelsea Common Shares
at a price of $0.10 per share until March 5, 2014. As at June 15,
2013, Chelsea had cash and near cash assets, net of liabilities, of
approximately $500,000.  
Other Matters Concerning the Qualifying Transaction  
The completion of the Transaction is subject to the approval of TSX
Venture and all other necessary regulatory approval. The completion
of the Transaction is also subject to additional conditions
precedent, including completion of the Private Placement for gross
proceeds of a minimum of $4.0 million, shareholder approval of
Chelsea and Pediapharm, satisfactory completion of due diligence
reviews by the parties, board of directors approval of Chelsea and
Pediapharm, completion of the Escrow Transfer (defined below) and
certain other usual conditions.  
The Transaction will be an arm's length transaction as none of the
directors, officers or insiders of Chelsea own any interest in
Pediapharm.  
Chelsea also announces it has reserved a price of $0.10 per Chelsea
Common Share ($0.30 per Amalco Common Share) for the grant of stock
options to acquire up to 10% of the number of issued and outstanding
Amalco Common Shares (the "Stock Options") in the event the
Transaction is completed. The grant of the Stock Options is subject
to regulatory approval. The Stock Options will be granted to
directors, officers, employees and consultants of Amalco, concurrent
with the completion of the Transaction.  
The parties have agreed that on completion of the Transaction,
Macquarie Private Wealth Inc. ("Macquarie") shall be paid a finder's
fee of: (i) $200,000, with $50,000 being payable in cash and the
balance to be payable by the issuance of 500,000 Amalco Common
Shares; and (ii) Candido Services (9132-8757 Quebec Inc.) ("Candido")
shall be paid a finder's fee of $130,000 with $32,500 being payable
in cash and the balance to be payable by the issuance of 325,000
Amalco Common Shares, resulting in total finder's fees of $330,000
($82,500 in cash and $247,500 in Amalco Common Shares).  
Concurrent with the closing of the Transaction, the current founding
shareholders of Chelsea will transfer within escrow an aggregate of
1,333,333 Amalco Common Shares at a price of $0.21 per share to the
insiders of Pediapharm, subject to the receipt of all necessary
regulatory approval (the "Escrow Transfer").  
Chelsea will apply to the TSX Venture for an exemption from the
sponsorship requirements in connection with the Qualifying
Transaction. There is no assurance that such exemption will be
granted. If such exemption is not granted, Chelsea will be required
to engage a sponsor for the Transaction.  
Trading of the Chelsea Common Shares will not resume until all
documents required by the TSX Venture have been filed. Chelsea will
issue a further news release when TSX Venture has received the
necessary documentation and trading of the Chelsea Common Shares is
to resume.  
As indicated above, completion of the Transaction is subject to a
number of conditions, including but not limited to, TSX Venture
acceptance and shareholder approval. The Transaction cannot close
until the required shareholder approval is obtained. There can be no
assurance that the Transaction will be completed as proposed or at
all.  
Investors are cautioned that, except as disclosed in the Information
Circular to be prepared in connection with the Transaction, any
information released or received with respect to the Transaction may
not be accurate or complete and should not be relied upon. Trading in
the securities of the Corporation should be considered highly
speculative.  
Neither the TSX Venture nor its Regulation Service Provider (as that
term is defined in the policies of the TSX Venture) has in no way
passed upon the merits of the proposed transaction and has neither
approved nor disapproved the contents of this press release.  
Except for historical information contained herein, this news release
contains forward-looking statements that involve risks and
uncertainties. Actual results may differ materially. Neither
Pediapharm nor Chelsea will update these forward-looking statements
to reflect events or circumstances after the date hereof. More
detailed information about potential factors that could affect
financial results is included in the documents filed from time to
time with the Canadian securities regulatory authorities by Chelsea.  
The securities of Chelsea being offered have not been, nor will be,
registered under the United States Securities Act of 1933, as
amended, and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons absent U.S.
registration or an applicable exemption from U.S. registration
requirements. This release does not constitute an offer for sale of
securities in the United States.
Contacts:
Chelsea Acquisition Corporation
Douglas Stuve
Director
(403) 234-3337 
Pediapharm Inc.
Sylvain Chretien
Chief Executive Officer
(514) 239-7966
 
 
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