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I hope the lack of news at the moment isn’t related to the Israeli-Palestine conflict. I can imagine that might give a lender reason to pause for a moment in case there are significant impacts on financial markets. That’d be typical AVO - ready to go and then the rug is pulled at the last moment. I hope not.
“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.”
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.
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?
Wrong. The SP was 11p or so before an excessive reaction from a small number of retail investors, on top of macro movements. We now have more information than we did at the time of the RNS and the situation appears more favourable than indicated. “The market” has not yet factored this in and values the company on outdated data - as it always does, since it tends to look backwards rather than forward.
The bridging finance people will have full sight of AVO’s accounts, such as they are, and will be well aware of the financial position. The discussions would hardly be at an advanced stage otherwise. They will also be fully aware of the recapitalisation plan’s status, which would provide reassurance as to the viability of the company going forward - we hope.
Who knows, Bushy, but two months after saying more or less the same thing - “more gold pours and shipments from July onwards” - they wouldn’t now repeat it if there were residual major problems.
“The Company plans to increase the size and regularity of its gold pours and shipments through Q4-2023 as the operation progresses towards steady state production and a full year of commercial production for FY-2024.”
Couldn’t be clearer. May be slower than expected but by December Kor will be producing at full capacity.
It’s not been added on the LSE site yet but I get news alerts from the Stock Exchange. Perhaps it’s on the company website by now.
Ooh, news. Still working on Recap Plan incl bridging finance, more news to come early October. There’s life in the old dog yet!
Q3 was always a risky time. Any delay at Kor would put pressure on HUM’s ability to service debt, given that we knew only 15-20k ozs was likely to be produced at Yan (with corresponding high AISCs). And that’s exactly what’s happened. They key information we now need, and quickly, is where we are with Kor and why it’s taking as long as it is. If just regular commissioning issues to work through, then no long-term problem. A disappointing slug of extra debt but nothing worse. So come on Dan, more comms please. (And, btw, it’s good to have such a supportive lender).
So basically an extra $20m debt to bring KOR and KEUG to fruition, not all of which may be required, and a bit extra cost for servicing this and the refinanced €35m - an extra $3.8m pa cost in total. It seems sensible to me to delay repayment costs if things are a bit tight. Otherwise it’s just a slight delay in hitting commercial production - that’s all. Good to hear Yan remains on target for FY, and there’s no reason to believe Kor won’t be ready for 2024. Repayment of $77m debt in 2024 isn’t difficult if 200k ozs are produced at $600 margin. Not sure what people were thinking - rapid debt repayment was always the stated priority. Looking forward to Dugbe news soon - a sale would remove all concern here.
Meldrew, that rogue transaction was only for 200k shares wasn’t it? £3500. Unless I’m missing something.
On the Recap Plan, I do hope it still is being progressed in the background as surely this is the way to put pressure on a potential buyer/strategic investor. They can’t low-ball the shareholders if there is an alternative route to survival.
Oh Ade, you’re having a ‘mare at the moment. Time to take a break, maybe, or quietly go away for the sake of your own health and (cough) credibility?
Curious, I agree “something” is certainly going on, as they ran out of money at the end of May. The poor staff and creditors must be pulling their hair out. The Recap Plan is some seven weeks into its gestation now, which I guess is just about plausible, but normally it’d be a lot quicker. Therefore I’m thinking it’s more likely to be a sale. Must be any day now.
Meldrew, I feel you may be premature! It’s quite possible that sale negotiations are still going on - certainly, these must have come a long way if they’re ongoing, but nothing’s certain until the deal is signed. And the recapitalisation plan may be having the i’s dotted as we speak. Both may still come to naught, but the length of time since we heard anything gives me hope that going into administration is now the least likely outcome.
There’s been no cash available since end-May yet here we are - still clinging on. Staff’s loyalties will have been tested as they can’t have been paid for several months, so I can understand if there have been resignations, but hopefully most are still on board.
I do think the recapitalisation plan will have focused the minds of potential purchasers, who will realise they can’t put in a lowball offer (this assumes they believe the money can be raised per the plan).
Pensioner, thx for that info, i wasn’t aware Singer hadn’t updated their 2024 forecasts. Still, a full year of DOCOMO costs rather than just four months’ worth would add quite a bit to the cost base, but then there’ll be significant integration savings. We’ll just have to wait for the updated forecasts.
No it’s really not, Really. Debt has not been taken on to buy back shares. These are being bought from cash generated. Clearly you don’t like debt, and repayment of that would be your priority. Fine, but there’s nothing wrong with debt provided it is at a comfortable level. Returns to shareholders overall are enhanced more by buyback than debt repayment, which is the priority for me.
Net debt only rose because of the amount of cash used for the “non-recurring deferred contingent consideration”, so it’s not really a case of buying shares via debt, and one wouldn’t expect this to be the case in H2.