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article in the weekend australian hi guys

article in The Weekend Australian

Gain follows pain

SADLY, dear readers, we cannot bring you a deal of the week this week as we've found a deal so scintillating, so compelling in its flair, that it veritably romps in as the Margin Call Deal of The Year.

We speak of the transaction struck by the small Perth-based company - don't faint - Pharmanet.

Until little over a year ago, Pharmanet was an unknown; a mere pimple on the vast landscape of scientific progress.

That changed one fateful day in early August when Pharmanet announced it had discovered a cure for ... wait for it ... pain. Such was the enormity of the scientific breakthrough that the Pharmanet stock price rallied 1000 per cent in three days.

Even though Pharmanet had spent just $0.00 on research and development in the June quarter in which the announcement was made, John Palermo's company had been able to discover a cure for something which had plagued humanity since the beginning of time: disclosure ... sorry, pain.

Now, Palermo and his intrepid team have struck the deal of a lifetime to accompany the medical breakthrough of the millennium.

"Pharmanet announced today that it has entered into a share sale and purchase agreement with Molecular Pharmacology (USA) Limited for the sale of its wholly owned subsidiary Molecular Pharmacology," said a statement tendered to the ASX.

"Under the terms of the agreement, MPL USA has agreed to issue 88 million restricted trading shares of its common stock to Pharmanet Group Limited in exchange for 100 per cent of the issued capital of MPL."

In other words, the mighty Pharmanet has a market capitalisation of $7 million. It owns 100 per cent of the exciting MPL in the US and has just sold 100 per cent of MPL for the equivalent of $248million.

As surely as pain follows injury the consideration of $248 million has been satisfied by means of scrip, not cash.

Anyway, Pharmanet's savvy shareholders benefited this week from this miraculous uplift in valuation, although there is still a discount - if that $248 million was the real folding stuff rather than soggy beer coasters, Pharmanet should be changing hands at $1.03 a share. Still, the stock doubled this week. So, nice work from the lads. Very nice work indeed.