http://www.thewest.com.au/20040817/business/tw-business-home-sto1...

http://www.thewest.com.au/20040817/business/tw-business-home-sto129099.html

Chemeq rattles tinfor another $50m

MICHAEL WEIR

Embattled biotech Chemeq has gone back to the equity market for the fifth time in 18 months in a bid to raise up to another $50 million, angering investors already well under water on its last raising little more than two months ago.

The company was last night seeking to raise $10 million through Ord Minnett via an institutional book-build pitched at just $2.40 to $2.72 a share, while finalising plans for a $40 million, one-for-six rights issue.

At $2.40 a share, the raising would be 30 per cent below Chemeq's last close of $3.42 and nearly 60 per cent off the battered stock's five-month high of $5.98 in early June.

It is also below the $4.55 at which the company raised $10 million in early June through an issue to clients of Bell Potter, part of more than $65 million raised since early last year at up to $5.35 a share.

Chemeq's selection of Ord Minnett to handle the latest raising has sparked speculation of a falling out between it and Bell Potter.

Bell Potter head of corporate finance David Swain said the firm was likely to participate in the current raising. However, he said it was "fair comment" to suggest those clients who had taken part in the recent issues would be unhappy with the latest heavily discounted offer.

Chemeq unveiled the raising yesterday, little more than a week after it stunned investors by revealing a major cost blow-out at its Rockingham production plant. However, while the group sought a trading halt, it said only that it was considering "a proposal" to raise equity funds through Ord Minnett.

The proceeds, it said, would "fund the further expansion of its Rockingham production facility and provide working capital for the roll-out of production and sales".

Chemeq executive chairman Graham Melrose was unavailable for comment and company spokesman Peter Cassuben said he could add nothing to the statement already made to the market.

Ord Minnett co-head of corporate finance Greg Pye refused to reveal details of the capital raising.

"The issue will be attractively priced," he said. "I can't tell you what it will be at this point, partly because it's a book-build and I don't want hold myself to any figures."

Mr Pye said it was expected to take up to a week to complete the fundraising because few institutions were familiar with Chemeq, which has traditionally been supported by a strong retail shareholder base.

"We've had a lot of inquiries so far, so at this point it's looking good," he said. "But we've only just begun the process. I'm reasonably confident, but it's very early days."

More than $141 million has been wiped from Chemeq's market capitalisation in the past three weeks on the back of investor frustration with delays in commissioning the Rockingham animal antibiotic plant and the lack of firm sales contracts.

Another fundraising had been rumoured given the company's need for cash after it burnt $13.9 million in the June quarter, including $2.8 million on general overheads.

It had just $6.3 million in the bank at June 30, despite the $10 million raising.

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I don't hold CMQ

Cheers,

Fig Jam