solvency issues ???????????????????????

The OBV indicator does not lie lol


Balance sheet blues at Chemeq
By Michael Weir
Perth
August 18, 2004

www.theage.com.au

Chemeq's cash squeeze has come under fresh scrutiny, with potential investors in the company's latest equity raising told the Perth biotech had a balance sheet deficiency at June 30.

Confidential details of Chemeq's $48.2 million placement and rights issue hawked to prospective investors by Ord Minnett show that $7.5 million in current assets at the end of the June financial year were outweighed by $11.7 million in current liabilities.

The unaudited balance sheet detailed in the two-page information briefing, which has not been released to the general market, listed Chemeq's net assets at $64 million, most of that tied up in non-current assets of $68.3 million. Non-current liabilities, however, were just $100,000.

The papers confirm that Chemeq is seeking to raise up to $55.3 million through a heavily discounted, underwritten placement and rights issue pitched as low as $2.40.

Chemeq, which has traded as high as $5.98 this year, was last exchanged at $3.42 before a trading halt was called on Monday.


According to the briefing notes, $21 million of the raising proceeds is earmarked to fund the upgrade of the company's new Rockingham animal drug plant.

Another $4 million is destined to "progress regulatory activities and R&D", while $20.9 million would be set aside for working capital. A further $2.3 million will be soaked up in the fees and costs associated with the Ord Minnett-managed equity raising.

The latest capital raising - the fifth in the past 18 months - comes just two months after the company raised $10 million at $4.55 a share through a placement to clients of Bell Potter Securities.

It also comes little more than a week after Chemeq revealed that the cost of completing the Rockingham plant had blown out to $52 million from the $35 million budgeted last September.

Chemeq executive chairman Graham Melrose did not return calls yesterday. Company spokesman Peter Cassuben, when asked if the company had any solvency issues, said: "I suspect the answer is no, but I will have to take advice on that and get back to you."