Norwood Abbey to buy Sino-Excel Petroleum.CRITERION: Tim Boreham...

Norwood Abbey to buy Sino-Excel Petroleum.

CRITERION: Tim Boreham | September 14, 2009
Article from: The Australian.

IF only for a Monday morning laugh, we note that this stunning biotech under-performer has formally waved the white flag and switched its focus to Chinese coalmining.

Ah, well: the company made such a botch of needle-free drug technology, eye-care and immunology that it might as well try something else ... anything.

Under the transaction, which has all the hallmarks of a backdoor listing, Norwood will buy 100 per cent of Sino-Excel Petroleum, which in turn fully owns the delightfully-monikered DeBang Resources.

DeBang holds management rights over an established coal operation in Henan Province and has an option to acquire three coal concessions.

The deal, subject to holder approval, involves Norwood issuing shares to Sino-Excel at an agreed price of 1.7 cents. The consideration is payable 50 per cent upfront and the rest based on earnings targets, with a “major fund raising” undertaken through a Hong-Kong based group.

The Norwood board believes the deal is in the “best interests of shareholders”, which isn't surprising, given Norwood has a negative net equity position of $1.1 million and there's only $397,000 of cash left in the kitty.

Norwood shares have been suspended since March, having last traded at $0.006. The usual story with these shell-company capers is that existing holders are diluted down to next to nothing.

In this case, we won't hazard a guess on whether there's any residual value for Norwood's once-hopeful flock.

Criterion last had Norwood as a sell at 8c in February 2007. The company lost $22m in 2005-06 and went on to lose a further $20m in 2006-07.