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“Seamus Mulligan’s Nerano Pharma is poised to take a sizeable stake in AIM-listed Advanced Oncotherapy as part of a complex financial restructuring plan.
Trading in Advanced Oncotherapy shares has been suspended since July.
Nerano is a long-term backer of the company, which is developing a proton-based therapy for cancer cells. The Irish company has advanced loans of £23.8 million (€27.5 million) to Advanced. With rolled-up interest, the total sum due to Nerano is £27.8 million (€32.1 million), most of which is overdue.
Under the restructuring plan, Mulligan’s company and other lenders will agree to a debt for equity swap. Mulligan, through Nerano and Barrymore Investments, already controls 5.6 per cent of the equity in Advanced.
According to a company statement, the debt conversion may result in Mulligan’s company controlling over 30 per cent of Advanced, a level that would trigger a mandatory offer for the company under the takeover code. In such a scenario, Advanced is likely to seek a waiver from the takeover panel from the mandatory bid requirement.
Mulligan, a former Elan executive, is one of the country’s most successful entrepreneurs. He made over $500 million when he sold Adapt Pharma, a maker of opioid overdose treatment Narcan to Emergent BioSolutions in 2018.
Advanced Oncotherapy use protons rather than x-rays to maximise the destructive effect of radiation on tumours while minimising damage to the patient’s healthy tissues. Its technologies are based on research conducted at the Cern laboratory in Switzerland. The company was targeting in-patient treatments this year.
However, the company said in July that it urgently required funds. Aside from the debt to equity swap, the company plans to raise £61 million in fresh equity.
It is negotiating bridging loan finance with a number of investors, which it hopes to conclude shortly.
Separately, Nerano recently led a $5.3 million for Avectas, a Maynooth-based cell therapy company.”
No worries Kenj, at least it got us revved up a bit. Think we are all in need of some news on this one.
Ac, your maths looks fine. However it implicitly assumes that Seamus Mulligan is being given 25p shares (as now) and that there are no changes to the nominal share price that would see existing shares split (i.e, “x for 1”).
It seems that what’s happening at the moment is a first stage in the recap plan - that all the debt due to have been repaid already is being converted into shares - which removes the immediate pressure but doesn’t provide working capital. The bridging loan will help pay back-salaries and outstanding invoices but may or may not provide a meaningful amount of working capital. And then the proposed full equity raise - which we’ve been led to believe *won’t* be for 25p nominal price shares - will raise £60m+ but at the cost of way more dilution. At that point, Mulligan’s share would reduce significantly from the 30%. As would our holdings.
Sorry for posting out of date links.
The date on the first was very obscure, and I didn't pay much attention to the second.
I had tried to view the FT article, but like others could not access it, probably as I only have a basic account.
Anyone want to review the following maths?
- In these workings, assume there are 100 shares (or 100 equal 'tranches' of shares).
- Mulligan currently owns about 6, and will receive x new shares after the debt-for-equity swap.
His holding is then (6 + x).
- The number of new shares will then be (100 + x). Mulligan will own 30%, or 0.3, of the new total.
- So (6 + x) = 0.3 * (100 + x) [ i.e. 30% of the enlarged capital ]
=> (6 + x) = 30 + (0.3 * x)
=> 0.7 * x = 24
=> x = 240 / 7 = 34 (roughly)
- So shares roughly go from 100 to 134.
That's an increase of about one third. Or - existing shares (inclduing our own) will be three quarters (100/134) their previous value once the total is enlarged.
If that's the case, it's not total wipeout.
I would say it's not too bad a deal for retail investors IF the plus side is that company remains afloat.
Any thoughts?
Actually, if he is adding 24.4% to take a total of 30% that would be
32.1/0.244 = 131.5M euros x 0.86 = £113M
Seamus's 30% values the company at £92M. FWIW.
In The Times 7th and Sunday Times 8th, but need sub to read it. Headlines..
Oct 7, 2023 · Seamus Mulligan’s Nerano Pharma is poised to take a sizeable stake in AIM-listed Advanced Oncotherapy as part of a complex financial restructuring plan.
Oct 8, 2023 · Seamus Mulligan’s Nerano Poised To Exchange €32.1m In Loans For A 30% Stake In Advanced Oncotherapy
Currently holds 5.6%
29 June 2020
ADVANCED ONCOTHERAPY PLC
("Advanced Oncotherapy" or the "Company")
Advanced Oncotherapy announces strategic funding partnership and debt facility
Agreements provide access to up to approximately £42 million of funding
Strategic €20 million funding partnership with VDL Groep expanding close partnership with existing supplier, VDL ETG Precision
Nerano Pharma to provide $30 million debt facility
Advanced Oncotherapy will use facilities to further develop and advance manufacturing of additional LIGHT systems to address unmet medical need
Advanced Oncotherapy (AIM: AVO), the developer of next-generation proton therapy systems for cancer treatment, today announces that it has entered into two financing agreements, providing the Company access to up to approximately £42 million of additional funding to further the development of the LIGHT system and advance the manufacturing of up to 30 LIGHT systems.
Your quite right meldrew
I hope I've misread the dates of the articles. I'm heavily invested in AVO so am as keen as anyone for it to succeed.
Forgive me if I'm wrong but those article seem quite old.
laingbuissonnews:
Advanced Oncotherapy secures up to £42m in new loan facilities
By Maria Davies -30th June 2020
And the Macfarlanes article seems to be dated 03 July 2020
What am I missing?
It's not like it can affect the sp
Thank you Kenj, seem strange that the news is out before an RNS, but then again it is AVO
That took some doing to get back into my account. But managed to see the headline on the FT article so all is not dead. Just a pity we arnt treating people yet. Hopefully not long before news, Started buying creo they appear to be past the stages we are suffering through as they have a working appliances to sell as a pose to us just developing, here's to being able to add some more avo
Whatever it takes to get it back fired up and tested and on to treatment of patients
Ok, so the Recap Plan RNS refers to the CS loan as “Nerano/CS”, so I guess we can consider that to be included in Nerano’s total. The June RNS stated that Nerano’s loans totalled £27.8m including accrued interest, so converting to Euro and bringing up to date can get to 32.1m. The debt-to-equity swap is on, then. Positive if it keeps the company afloat. Does the Times article mean we’ll hear about the Recap Plan tomorrow (“early October”)?
Thanks for the info but I can’t find it even though I have Times Online? Also I’m confused - Nerano Pharma doesn’t have €32.1m of loans. From memory they had about 10m plus interest (CS had c10m, the CLN was about 8m, and the interest in all those brought the total to c40m). I suppose it’s possible Nerano have lent more to repay the CLN or CS loan. But then that ignores Nerano’s equity stake of c30m shares. And they were always very keen not to go beyond the 30% stake overall beyond which a takeover bid would need to be put forward (tbh I’m hazy on that rule so I’ve prob got the detail wrong). Can you quote more from the article to clarify?
Thanks for that Fergal982. Dilution on the cards
Thanks for posting!
Darn link didn’t work but to quote;
“Pharma king Mulligan closes on cancer care stake
Seamus Mulligan’s Nerano poised to exchange €32.1m in loans for a 30% stake in Advanced Oncotherapy”
Has anyone seen the latest Times article?
[LINK REMOVED]
The Company intends to provide a more detailed update on the prospective recapitalisation and funding plan in early October 2023. ?
Cant be easy trying to secure funding in the position they have got themselves in, an update would be nice though.
I think its more of a technicality rather than negligence etc. Probably unable to complete the 'going concern' section. Or they cant pay the auditors to sign it off, but the books are probably up to date waiting on the outcome of this situation and funding.