Chemeq investors end up with chickenfeed in biotech's crash
Kevin Andrusiak
May 31, 2007
THE once mighty Chemeq is no more. Unable to bear the strain of a $60 million debt to bondholders, the Perth-based biotech has called in the administrators to salvage what they can from the former market darling, which at one stage was worth $800 million-plus.
That was when its shares hit a record high of $8.01 on June 16, 2003, giving founder Graham Melrose a paper fortune of $190 million.
The glory days must now seem like a distant memory, with Chemeq shares worth a lowly 8.3c when KordaMentha was called in yesterday.
The estimated 7000 shareholders are expected to see little of the money they invested in Chemeq, which had grand plans to sweep the world with its patented pig and poultry feed supplement.
The decision ends seven months of acrimony between bondholders, who finally ran out of patience and caught Chemeq in a pincer movement to reclaim $60 million they were owed, which the company had used to refinance Chemeq's Rockingham headquarters south of Perth.
Chemeq chief executive David Williams was not available for comment yesterday, as he was meeting KordaMentha administrators Brian McMaster and David Winterbottom.
US-based Stark Trading issued Chemeq with a default notice for its $50 million on October 25, claiming Chemeq had not met prescribed revenue milestones.
It could have converted the bonds to 49.9 per cent of Chemeq shares. Singapore-based Harmony Capital Partners followed with its own default notice, lodged with the West Australian Supreme Court on November 9.
That gave Chemeq 10 days to come up with the $60 million it did not have.
The Supreme Court granted an injunction on February 8 restraining Stark and Harmony from appointing a receiver as the Rockingham facility was placed on care and maintenance.
A $75 million financing deal from little-known Perth company International Financing Corporation of Australasia was rejected by Stark and Harmony last month, leading to claims by Mr Williams that the bondholders were determined to sink the company to get their hands on its intellectual property.
It ends a slippery ride for the Perth-based company, which failed to live up to expectations, endured numerous delays to commercialisation and was slapped with a $500,000 fine by the Australian Securities and Investments Commission for breaching disclosure duties.
http://www.theaustralian.news.com.au/story/0,20867,21822569-643,00.html
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