09/11/2013 03:45 EDT | Updated 11/11/2013 05:12 EST

Bioniche reaches agreement with dissident shareholders after proxy battle

BELLEVILLE, Ont. - Bioniche Life Sciences Inc. (TSX:BNC) and a group of dissident shareholders have reached an agreement that will see the company replace its chief executive and some of its directors.

The biopharmaceutical research company announced the settlement after a lengthy proxy battle with so-called "concerned shareholders," led by former Biovail Corp. executives William Wells and Greg Gubitz.

The shareholders were seeking to replace the company's board of directors after accusing management of failing to deliver on past promises in the face of a steady decline in the company's business.

A new slate of directors will be elected at the company's shareholder meeting Nov. 5.

The new board will include two current directors — James Rae and Rod Budd — as well as one of the activist shareholders, Gubitz.

The board will also include three new independent directors, who will be chosen from a list of candidates agreed on by the company and the concerned shareholders, and the company's new chief executive, once hired. In return, the shareholders have agreed to cease their activism for two years.

Bioniche has also agreed to reimburse the concerned shareholders for some of their expenses, which the company says is less than the cost of continuing the proxy battle.

"We are pleased to have been able to come to terms on a settlement with Messrs. Wells and Gubitz, which means an end to the distraction and expense associated with a protracted proxy dispute," board chairman James Rae said in a statement.

"We appreciate the patience and understanding of our shareholders during this unsettled time and we are optimistic about moving forward with our corporate strategies in a united fashion."

The company researches, develops, manufactures and commercializes health products used to treat both humans and animals.