In what is seen as a last-ditch attempt to save the company, Rockingham-based animal pharmaceutical products manufacturer Chemeq Ltd will appeal a court finding that it must repay $60 million to its major financiers.
The company, which retrenched around 50 full-time staff in September last year, has placed its manufacturing plant on care and maintenance and is reviewing ongoing projects to determine which can be deferred pending the appeal outcome.
A quarterly report, released December 31 2006, put the company's cash at bank at $13.7 million with creditors, accruals and retentions of $1.3 million.
In an announcement to the ASX, Chemeq chief executive David Williams said the company was obliged to appeal the decision in the interests of its shareholders.
"Chemeq intends to ask the court to consider our appeal on an urgent basis and to make orders that the status quo be maintained until determination of that appeal. Failing agreement with the bondholders, the company's application to maintain the status quo will be heard tomorrow afternoon," he said.
The supreme court had granted Chemeq a stay of execution until 4.00 pm today.
Chemeq shares remain in a trading halt.
The full text of a company announcement is pasted below
The Board of Chemeq Ltd has considered the Supreme Court decision that Chemeq had failed to meet the terms of the final milestone covenant set out in the Convertible Bonds Deed Poll and has decided to launch an appeal.
Chemeq Chief Executive Officer David Williams said that the company had undertaken a detailed review of the decision and had taken further legal advice from Senior Counsel.
"The Board believes that there are genuine grounds for an appeal and that Chemeq is obliged to appeal the decision in the interests of its shareholders," he said.
"While the initial decision is obviously an adverse outcome for the Company, we are committed to taking all possible steps to protect the interests of our shareholders."
"Accordingly, Chemeq intends to ask the court to consider our appeal on an urgent basis and to make orders that the status quo be maintained until determination of that appeal. Failing agreement with the bondholders, the company's application to maintain the status quo will be heard tomorrow afternoon. The present orders continue until then."
The Board has also resolved to place the Chemeq Rockingham facility on care and maintenance and is reviewing ongoing projects to determine which can be deferred pending the appeal outcome.
