Redx, the Liverpool-based pharma research company, has been put into administration by Liverpool City Council over a dispute on a £2m loan.
Update: The administrators have today said that they are working with the company’s advisers on proposals to rescue Redx and return the company to the control of its directors, with the intention of lifting the suspension and restoring trading in the ordinary shares.
In 2012, the council provided a three year £2m investment loan, with accrued interest at 12% a year so that Redx could expand its operations in the city. However it appeared to the council that it was not making any payments despite raising millions on the Aim market £22m in the last round. The repayment deadline had been extended to the end of March of this year.
The offer by the company to make an immediate £1m payment is too little too late it seems for Liverpool City Council. By appointing administrators it will most likely recoup all of its loan and interest as they are the secured creditor. Shareholders will likely receive nothing.
Iain Ross, recently appointed chairman of Redx Pharma, said: “The timing of this action by LCC and its advisers FRP is extremely unfortunate and quite baffling considering our efforts to have face to face discussions, including earlier today, the immediate offer of a payment plan and our latest proposal to make an immediate £1m payment in return for a short grace period.
“The board and its advisers felt consistently confident that we could have found the appropriate solution within a short period and can’t quite fathom why a creditor with whom we have had a good relationship for over five years is taking such an aggressive stance when they know, and have been provided with the evidence, that the company is making excellent progress on all fronts.”
Ross added: “The company, which now comprises 84 employees, has two incredibly important state of the art cancer programs, which will shortly commence clinical development in seriously ill patients and both these assets are attracting significant partnering interest from a number of large pharmaceutical companies.
“Despite this and our assurances to resolve the matter in seven days, LCC has refused to meet with me or to have any direct discussion and therefore it is with regret that we need to take this step. I remain confident that given the time requested we could reach a speedy and amicable resolution.”
It would appear that the company has been a bit naïve in not addressing the secured creditors concerns earlier when they have their own pressure to balance the books and deliver for the City of Liverpool.
Raising these large sums and continuing to make losses was only going to upset them! In effect they were trying to boost their share value with a hope of selling for a big profit.