Embattled animal pharmaceutical products manufacturer Chemeq Ltd has gone into a trading halt ahead of tomorrow's Supreme Court hearing into the company's application for an injunction against US bonds trader Stark Trading.
Embattled animal pharmaceutical products manufacturer Chemeq Ltd has gone into a trading halt ahead of tomorrow's Supreme Court hearing into the company's application for an injunction against US bonds trader Stark Trading.
Stark had alleged that, by failing to achieve total gross revenue of at least $4 million for the year ended 30 June 2006, Chemeq had violated its revenue covenant with the group.
As a result, Stark had sought repayment within 10 business days of its convertible bonds, which have a face value of $50 million, by November 5.
At that hearing, it is expected that the Supreme Court will determine whether Stark and Harmony will be formally injuncted from relying on the Notices of Redemption lodged with Chemeq until the Supreme Court hearing of Chemeq's action seeking a declaration that it has met the final milestone covenant.
The parties have previously agreed to maintain the status quo until 30 November 2006 to allow this Supreme Court hearing to take place.
The ultimate trial date to hear Chemeq's action seeking a declaration that it has met the final milestone covenant will be set by the Supreme Court. This is likely to be sometime in the new year at the earliest.
The claim was prompted by a dispute over a $1.5 million sales contract with Chemeq's South African distributor Inviro, which has refused to meet the payment terms of the contract. Chemeq has stated that the $1.5 million could be booked under accounting regulations since delivery was made and acepted by the customer.
Chemeq is currently pursuing legal action against Inviro in the South African courts. In the meantime, the company has implemented a direct distribution model in South Africa to serve its current and future customers.
The full text of an announcement from Chemeq is pasted below
Chemeq Ltd advises that its application for an injunction against Stark Trading and its associates and Harmony Capital Partners will be heard in the Supreme Court tomorrow 29 November 2006.
Chemeq Ltd has requested a trading hold for Wednesday 29 November 2006, whilst the injunction application is being heard by the Supreme Court. An update will be provided after the close of tomorrow's proceedings.
At that hearing, it is expected that the Supreme Court will determine whether Stark and Harmony will be formally injuncted from relying on the Notices of Redemption lodged with Chemeq until the Supreme Court hearing of Chemeq's action seeking a declaration that it has met the final milestone covenant.
The parties have previously agreed to maintain the status quo until 30 November 2006 to allow this Supreme Court hearing to take place.
The ultimate trial date to hear Chemeq's action seeking a declaration that it has met the final milestone covenant will be set by the Supreme Court. This is likely to be sometime in the new year at the earliest.
Chemeq is strongly of the view that it has met the final milestone covenant.
