CMQ - Chemeq Limited

[rederob]

It seems to have solved its factory problems but now needs to win some good contracts.

Knobby
I held CMQ for a few years - not this one tho!
I would love to see it get ahead, but am not sure it has solved its plant problems yet - they seem to have more excuses than a very naughty boy!
The other issue that concerns me is that there is no transparency in its product pricing or future profitability.
Usually a company in the doldrums will release to market an idea of when it will turn around, because.....
CMQ just trots out a grand plan that is not being supported by any numbers.
I see this as a big worry for potential investors.
The good news is that when CMQ does have "good" news (ie something tangible to base an investment decision on), it will not be too late to get on board - and it looks like being under 50cents/share at that!

 

[Knobby22]

Knobby
I held CMQ for a few years - not this one tho!
I would love to see it get ahead, but am not sure it has solved its plant problems yet - they seem to have more excuses than a very naughty boy!
The other issue that concerns me is that there is no transparency in its product pricing or future profitability.
Usually a company in the doldrums will release to market an idea of when it will turn around, because.....
CMQ just trots out a grand plan that is not being supported by any numbers.
I see this as a big worry for potential investors.
The good news is that when CMQ does have "good" news (ie something tangible to base an investment decision on), it will not be too late to get on board - and it looks like being under 50cents/share at that!

I agree 100% rederob.
They are not really interested in their general shareholders at present.
The merchant bankers want to make their money and the founder wants to rescue his.
When they do turn it around, I think they will, then the merchant banks will want to sell down. There is no rush or good reason to invest at this stage but I am keeping a careful eye on it. I do expect a turnaround in six months but the company has still got some very serious risks and it may take longer. They really need to form an alliance with another international company and build a factory in Europe or Mexico to really make it as a company. The founders plan was badly flawed and poorly executed.

 

[dotcomm]

chemeq

anybody have any thoughts on chemeq.

mr williams has said all along chemeq will achieve its milestone covenant.

if there was a problem they would have put out a warning ages ago.

support being shown in 30cent range. if news breaks this will go.

3 days to go

 

[bigdog]

Danger ahead
Barbara Drury
October 18, 2006

http://www.theage.com.au/articles/2006/10/16/1160850872928.html?page=fullpage#contentSwap2

Electronic payments company ERG, Strathfield Group and animal antibiotic group Chemeq are similarly challenged, Hoffman says. All have made losses two years running and all have negative cash flow.

In addition, Strathfield and Chemeq have borrowings greater than shareholders' equity (total assets minus liabilities), another bad sign.

And if the boss has no faith in the business and hardly any stakeholding in it, investors should probably follow suit, he says.

Poor cash flow
The first sign of a company in trouble is often an operating loss. This is not necessarily a portent of doom because in an otherwise robust company losses can be temporary. But if the loss is accompanied by falling cash flow then investors should take a long hard look at the numbers.

Greg Hoffman, research director at The Intelligent Investor, says a loss-making company with negative cash flow will quickly become insolvent unless it can raise money from banks and shareholders. Hence, rising debts and deteriorating interest cover (the number of times a company's earnings before interest and tax cover its tax bill) are also reliable warning signs.

If the company continues losing money its bankers and shareholders eventually will say "no more" and the company will go belly up.

To illustrate the point, Hoffman has singled out four companies he believes are treading on too many corporate landmines for comfort.

Winemaker Evans & Tate lost $64 million in 2006 and $73 million the previous year. As at June 30 this year total debts of $169 million exceeded total assets of $140 million.

Evans & Tate's banker has given it some breathing space but Hoffman doesn't hold out much hope for its long-term survival in its current form.

Electronic payments company ERG, Strathfield Group and animal antibiotic group Chemeq are similarly challenged, Hoffman says. All have made losses two years running and all have negative cash flow.

In addition, Strathfield and Chemeq have borrowings greater than shareholders' equity (total assets minus liabilities), another bad sign.

ERG and Strathfield have issued hundreds of millions of shares in recent years as they struggle to survive.

According to Hoffman, corporate failures are seldom the result of a sudden misfortune. Instead, they tend to be the gradual and inevitable result of poor underlying economics, giving investors the clues to look for better opportunities elsewhere.

And if the boss has no faith in the business and hardly any stakeholding in it, investors should probably follow suit, he says.

 

[bigdog]

CMQ are not looking VG - perhaps the end!

Sydney - Thursday - October 26: (RWE Australian Business News) -
Chemeq Ltd has received from Stark Trading and its associates (Stark), being some of the Bond holders, a Notice of Redemption pursuant to clause 12.2 of the Convertible Bonds Deed Poll.

In the Notice Stark has alleged an Event of Default has occurred in that Chemeq has allegedly failed to achieve a total gross revenue from all sources of at least $4.0 million for the financial year ending 30 June 2006 as required by clause 2.9(a) of the Deed Poll and Stark is seeking the repayment within 10 business days of its convertible bonds, which have a face value of $50.0 million.

Director has resigned today

 

[Knobby22]

Investment bankers are nasty to deal with.
Probably is the end though I expect the business will be a great earner to them.

K22

 

[The Barbarian Investor]

*bump*

Keeping an eye on this as i drive past eery now and again..still seems to be functioning though hitting record lows

 

[bigdog]

But they never seem to have sales of product

I would not expect to see any action

In fact I wonder what the staff are doing
-- training courses

I hold CMQ and am interested in your future updates

The only guaranteed income is the interest on their cash
-- offset by interest expense

 

[bigdog]

For those lucky shareholders that hold CMQ

Life or death situation here!

28 November 2006
TRADING HALT
Chemeq Limited (ASX: CMQ) advises that its application for an injunction against Stark Trading and its associates (“Stark”) and Harmony Capital Partners (“Harmony”) will be heard in the Supreme Court tomorrow 29 November 2006.

Chemeq Limited has requested a trading hold for Wednesday 29 November 2006, whilst the
injunction application is being heard by the Supreme Court. An update will be provided after
the close of tomorrow’s proceedings.

At that hearing, it is expected that the Supreme Court will determine whether Stark and
Harmony will be formally injuncted from relying on the Notices of Redemption lodged with
Chemeq until the Supreme Court hearing of Chemeq’s action seeking a declaration that it has met the final milestone covenant.

The parties have previously agreed to maintain the status quo until 30 November 2006 to allow this Supreme Court hearing to take place.

The ultimate trial date to hear Chemeq’s action seeking a declaration that it has met the final
milestone covenant will be set by the Supreme Court. This is likely to be sometime in the new year at the earliest.

Chemeq is strongly of the view that it has met the final milestone covenant.

FOR FURTHER INFORMATION PLEASE CONTACT:
David Williams
Chief Executive Officer
Chemeq Limited
Tel: 08 9528 0200

 

[bigdog]

Todays papers

Chemeq battles backers on funding

Chemeq headed to the Supreme Court yesterday for the first day of what is expected to be a five-day trial to determine whether the pharmaceutical group breached the terms of the note trust deed over $60 million in convertible notes.

 

[The Barbarian Investor]

The founders sold out via aprivate sale and the price bounced after his sale according to the papers

be interesting to see outcome of case

Are they into any other countries to produce product?

 

[doctorj]

Chemeq is strongly of the view that it has met the final milestone covenant.

The audit opinion that caused all the grief was issued 3 months ago or there abouts. To meet the financial milestone convenant, they had to have x amount of revenue. The question is whether they actually ever had that revenue. Three months later, have they received any monies for that sale? If not, case closed as far as I'm concerned.

 

[bigdog]

ASX Trading halt announced today
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00689558

No doubt update on legal battle!

 

[bigdog]

ASX ann today
CMQ 12:46 PM Supreme Court Ruling
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00689888

Not good news for shareholders!

1 February 2007
SUPREME COURT RULING
Justice Templeman in the Supreme Court today found that Chemeq Limited (ASX: CMQ) has failed to meet the terms of the final milestone covenant set out in the Convertible Bonds Deed Poll. This covenant required Chemeq to achieve gross revenue from all sources of at least $4.0 million for the year ended 30 June 2006.

Pursuant to the Convertible Bonds Deed Poll, the Notices of Redemption previously issued by Stark Trading and its associates and Harmony Capital Partners require Chemeq to repay the $60.0 million face value of the convertible bonds forthwith.

The court has granted Chemeq a stay of execution until 4.00 pm WDST Monday 5 February 2007, this will enable Chemeq to review Justice Templeman’s decision and considering its position.

A further announcement will be made to update shareholders as soon as possible. The trading halt over Chemeq’s securities will continue in the interim.

 

[doctorj]

Scary for holders. In my very humble opinion, thats CMQ done and dusted - there's enough weight to support the opinion that its unlikely they're a going concern.

 

[Kauri]

Just drove up the Rockingham-Freo road and I think I saw a For Sale sign up on the verge..

 

[rederob]

Just drove up the Rockingham-Freo road and I think I saw a For Sale sign up on the verge..

Buy the sign.
It is worth more than the company, and can be manufactured more efficaciously.

 

[reece55]

Well, I agree with everyone else here........ looks like it's goodbye for Chemeq. The chart since 99 is just a gem - from 50 cents, to 8 bucks in 03 to now, a 20 cent stock. To be honest, I was always surprised to see that they were still going - I understand that the product is interesting, but they just never made any money. My only question is why the hell Deutsche bank acquired shares in this completely stuffed company. The other thing that interests me is that, ok the bond holders have initiated the action - but CMQ only have 12 Mil net in the bank. So bond holders are going to get back maybe 20c in the dollar........ Intererting stuff, plus the money will get eaten by legal fees now too......

Cheers

 

[Knobby22]

reece55

The investment bankers now will have control of the technology which is excellent, they also have an interested European firm. It has been tested in the West Australian plant which is really a pilot plant. It will now go offshore and will eventually make them a lot of money.

It is unfortunate that the founder was so headstrong and executed such a risky strategy. He could have ameliorated the risk by having a partnership with another company. He has lost a fortune.

 

[bigdog]

CMQ Company Trading Status: = Suspended

http://www.thewest.com.au/default.aspx?MenuID=32&ContentID=8871
Last roll of the dice with Chemeq appeal
5th February 2007, 6:45 WST

The board of besieged animal drug group Chemeq is expected today to mount a last ditch effort at corporate survival by launching an appeal against a Supreme Court ruling that threatens to put control of the onetime WA market darling in the hands of foreign investors.

Chemeq’s top management are understood to have spent the weekend in discussions and receiving briefings from their legal team firming up grounds for appealing against Justice Tony Templeman’s rejection of Chemeq’s attempt to fend off immediate repayment demands from bondholders owed $60 million.

An appeal, which could be unveiled to the court as early as this morning, would give Chemeq’s legal team the opportunity to have the Court of Appeal test its interpretation of accounting rules and a bondholder agreement, while also giving Chemeq’s board more time to try to find a way out of its lastest financial mess.

Justice Templeman last week gave a stay of execution on his judgment until 4pm today so Chemeq’s management and advisers could decide whether to appeal.

If Chemeq does not lodge an appeal and the judge does not extend his stay of execution, US hedge fund Stark Trading and Singapore-based Harmony Investment Fund could move immediately to put receivers into Chemeq in light of the company having failed to pay up on a demand made three months ago.

It is understood Stark Trading has hired insolvency accountants from Ferrier Hodgson to advise it on what to do with Chemeq while rival insolvency specialists from KordaMentha have been working with Chemeq management on strategies for dealing with its financial woes.

Receivership would be a horror ending for supporters and financial backers of former Chemeq executive chairman Graham Melrose, who invented the Chemeq polymeric antimicrobial that its backers claim has the potential to earn billions of dollars in revenue by replacing many antibiotics routinely used by pig and poultry farmers around the world.

But the company has stumbled on the question of whether it satisfied a bond covenant that it must achieve total gross revenue of $4 million from all sources in 2005-06. It posted revenue of $4.1 million in that period.

But Justice Templeman found a $1.44 million order last year from a South African distributor should not be included in the company’s 2005-06 revenue figures in light of a falling out and significant doubts whether the bill would be paid.

He also found that $2.3 million of interest revenue enjoyed by Chemeq in 2005-06 could not be counted towards the $4 million target.

Chemeq chief David Williams last night declined to say whether the board would appeal.

“We still believe we have satisfied the covenant and we are out there to do the best we can to protect our shareholders,” he said.

NEALE PRIOR