Sinovac Determines Trigger Event Occurred Under Rights Agreement

Sinovac Biotech Ltd. (NASDAQ: SVA) (“Sinovac” or the “Company”), a leading provider of biopharmaceutical products in China, today announced that its Board of Directors (the “Board”) determined that certain stockholders became “Acquiring Persons,” as defined in the Company’s Rights Agreement (“Rights Agreement”), prior to the Company’s Annual General Meeting held on February 6, 2018 (the “AGM”). As a result, a “Trigger Event” occurred under the Rights Agreement. The Board effectuated the exchange (the “Exchange”) of each preferred share purchase right (the “Rights”) that was valid and outstanding as of the close of trading in the United States on February 22, 2019 for 0.655 of the Company’s common shares (the “Common Shares”) and .345 of the Company’s newly created Series B Convertible Preferred Shares (the “Series B Preferred Shares” and, together, each an “Exchange Share”). The total Exchange Shares to be received by any holder will be rounded up to the nearest whole Common Share and rounded down to the nearest whole Series B Preferred Share. Since the Company is issuing a significant number of new Common Shares and Series B Preferred Shares in the Exchange, shareholders should expect the share price to adjust downwards to reflect the issuance of the Exchange Shares. The Board also amended and restated the Rights Agreement and declared a dividend of one preferred share purchase right (the “New Rights”) for each share of the Company’s capital stock outstanding as of the close of business on February 22, 2019.

Overview

• As previously disclosed by the Company on December 19, 2018, the High Court of Justice of Antigua and Barbuda held that the Company’s Rights Agreement is valid under Antigua law and found that “there was a secret plan to take control of the Company” at the AGM.
• Based upon the Court’s judgment and other facts, the Board determined that 1Globe Capital, LLC, Chiangjia Li, OrbiMed Advisors LLC and those additional shareholders who voted together with the foregoing at the AGM, together with their affiliates and associates (collectively, the “Collaborating Shareholders”) became Acquiring Persons on or prior to the AGM and their conduct resulted in a Trigger Event under the Rights Agreement.
• Under the Rights Agreement, a Trigger Event occurs when any group of shareholders who beneficially own 15% or more of the Company’s securities have an agreement, arrangement or understanding to act together for the purpose of acquiring, holding, voting or disposing of any securities of the Company.
• As a result of becoming Acquiring Persons, the approximately 28.7 million Rights of the Collaborating Shareholders automatically became void under the terms of the Rights Agreement.
• Pursuant to the Rights Agreement, the Board elected to exchange the approximately 42.4 million Rights held by the Company’s shareholders other than the Collaborating Shareholders for a combination of approximately 27.8 million Common Shares and approximately 14.6 million Series B Preferred Shares, all of which Sinovac issued today into a trust for the benefit of the holders of the valid and outstanding Rights. The Exchange Shares will not be released from the trust earlier than March 8, 2019.
• As a result of this issuance, the aggregate number of outstanding Common Shares increased from approximately 71.1 million to approximately 98.9 million. The approximately 14.6 million newly issued Series B Preferred Shares share equally in all dividends and distributions of the Company and vote together with the Common Shares on all matters brought before the shareholders, in each case on an as-converted basis and subject to applicable law. In addition, until the Series B Preferred Shares are converted into Common Shares (or until the Series B Preferred Shares are listed on a nationally recognized securities exchange), they will earn a preferred dividend equal to $0.41 per annum, payable quarterly in arrears.

• The Board also amended the Rights Agreement to extend the expiration date of the Rights Agreement to February 22, 2020 and to declare a dividend of one New Right for each share of the Company’s capital stock outstanding as of the close of business on February 22, 2019. One New Right will also be delivered with each share newly issued following this date.
• In order to receive the Exchange Shares in the Exchange, holders of eligible Rights must follow the instructions set forth under “Process for Completing Exchange of Rights” below.

Exchange of Rights for Common and Series B Preferred Shares