Struggling animal pharmaceutical company Chemeq has won a court injunction that will restrain its convertible bondholders from appointing a receiver.
Struggling animal pharmaceutical company Chemeq has won a court injunction that will restrain its convertible bondholders from appointing a receiver.
The decision means Chemeq shares will resume trading on the Australian Stock Exchange tomorrow.
A company announcement is pasted below:
The Board of Chemeq Ltd has requested that the securities of the Company be reinstated to official quotation.
Chemeq is currently finalising its appeal against an earlier Supreme Court decision that it had not met the terms of the final milestone covenant set out in the Convertible Bonds Deed Poll. Chemeq's appeal is due to be heard by the Court of Appeal on Monday 12 March 2007.
Pending a determination on Chemeq's appeal, The Supreme Court of Western Australia has granted an injunction restraining the convertible bondholders from appointing a receiver to the Company. The injunction was granted on the basis of various undertakings given by Chemeq to the Court.
Chemeq has already placed its Rockingham manufacturing facility on care and maintenance and suspended non-essential prject and discretionary spending and will maintain that position unitl the determination of the appeal.
As at 31 January 2007, Chemeq had cash and short term deposits of $11.5 million, with creditors, accruals and retentions of $1.5 million.
Chemeq also has on issue $60 million in convertible bonds that mature on March 30, 2008. These convertible bonds are shown in Chemeq's annual accounts and the pro forma balance sheet as at 31 December 2006 as non-current liabilities because in the Directors' view they are not repayable immediately. If Chemeq's appeal is not successful, these convertible bonds will become repayable immediately.
Despite the uncertainty created by the earlier Supreme Court decision, the Board of Chemeq believes that its appeal has reasonable prospects for success and that it is appropriate for Chemeq's securities to be reinstated to quotation.
If Chemeq's appeal is successful, the Board intends to aggressively pursue its new strategy of commercialising its IP and products through strategic partnerships, including utilising contract manufacturing and strategic joint ventures.
