Bond buyback for BioProgress
to restructure its finances in the wake of its recent problems with
increasing overheads and slower trading at its US subsidiary.
Richard Trevillion, the company's chief executive, said BioProgress has decided to repurchase in full a £5 million block of five-year, 4.0 per cent unsecured convertible bonds that were issued to an institutional investor last October.
"We decided that we wanted to remove this liability from our balance sheet in order to give greater financial flexibility and certainty as we take the business forward," said Trevillion.
Last month, BioProgress, which specialises in using its XGEL cellulose films for drug delivery, reported that trading levels at its BioTec Films subsidiary in Tampa, Florida, were not going to reach levels indicated in previous announcements, while overheads were also higher than expected. The news presaged the departure of former chief executive Graham Hind, and after Trevillion stepped in the company started a review of its strategy and operations, which concluded earlier this week.
The bonds will be repurchased shortly for £3.3 million, including £1.65 million in cash and the issue of 4,285,714 million new shares to the bondholder, representing 3.5 per cent of the company. The option to subscribe for further bonds up until 6 October 2006 will also be cancelled.
As a result, BioProgress will show a capital gain in its 2005 accounts of approximately £1.7 million (€2.6m) on the repurchase, and will also not make any accrual for interest payable as the bondholder's right to any accrued interest has been waived.
"I am delighted that we have been able to reach this agreement, which represents a discount of approximately 34 per cent to the face value of the bonds," said Trevillion.
