By Steve Moore | Wednesday 3 May 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
A “Restructuring and New Investment” announcement from Rex Bionics (RXB) sees Chief Executive Crispin Simon “delighted that the alternative options we have been pursuing have borne fruit” and Chairman David Macfarlane “warmly thank our shareholders, who have made this possible. I would also like to take this opportunity to thank our nominated adviser, Stifel, for its unstinting support over the past three years”. Sounds a good outcome then, strange though as I previously noted the company approaching a transaction from the perspective of going-concern desperation. Hmmm…
The announcement is of Rex contributing its operating business to an Australian company and funds managed by Melbourne-based BioScience Managers contributing an initial Australian$7.5 million (£4.4 million), with Rex then to have a 36% shareholding and the BioScience funds 64%. This also includes “base cost funding” planned to allow Rex to be a going concern for three years following completion, with it unable to distribute its shares in the Australian company for three years (subject to certain permitted transfers).
Rex emphasises the transaction values its holding “at approximately AUD4.21 million (£2.45 million), equivalent to approximately 10p per the company share, representing an 82% premium to the closing mid-market price of the company shares on 2nd May 2017”.
HOWEVER, less than three years ago it was “delighted to have joined the AIM market” at 180p per share! And the shares only fell to sub 10p post the disastrous March announcement. Indeed, even now it “is expected to take approximately two years to bring the upgraded REX device to the point of transfer to manufacturing” and “further funding is likely to be required to commercialise”.
Meanwhile, Rex “intends to initiate an accelerated evaluation of structural options… including whether to continue trading of its shares on AIM”. Considered a cash shell, it would have six months to deliver a material transaction – though I also note “the company's nominated adviser, Stifel, has notified the company of its intention to resign on 26th May 2017”. This gives Rex one month from then to appoint a new one or it is AIM cancellation anyway.
Chief Executive Crispin Simon “delighted”, Chairman David Macfarlane “warmly thank our shareholders” and “thank” Stifel “for its unstinting support over the past three years”. Are they taking the piss? – with it now this or “if shareholders do not approve the proposed transaction at the General Meeting… will be forced to cease operating and/or enter into an insolvency procedure with immediate effect”!
Roll Call of Shame: Crispin Simon, David Macfarlane, Stifel Nicolaus Europe and Consilium Strategic Communications.
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