Balcatta-based Advance Healthcare Group Ltd will raise $400,000 through a share placement to fund legal action against a major shareholder, Nedlands-based Pharmaust Ltd.
The case brought by PharmAust concerns the validity of share transactions that took place before an AHG shareholder meeting in August last year, to vote on an offer by private equity player Hawkesbridge Ltd involving a debt for equity swap.
The complex Hawkesbridge proposal would have resulted in up to 80 per cent of AHG being controlled by the Sydney investment fund.
However, Hawkesbridge sold an 11 per cent shareholding on the eve of the meeting to newly appointed Advance Healthcare chief executive Ken Atkinson.
The companies headed into mediation last week.
The full text of an AHG announcement is pasted below
SHARE PLACEMENT
The Directors advise that today they have resolved to make a placement of 20,000,000 fully paid ordinary shares at an issue price of 2 cents per share to raise $400,000.
The placement will be made to an unrelated party pursuant to the "excluded offer" provisions (Section 708) of the Corporations Act, 2001.
Funds raised from the placement will be applied to meeting the legal and other costs associated with the Court proceedings instigated by Pharmaust Limited and to meet the costs associated with convening of a meeting of shareholders as foreshadowed in ASX announcement dated 8 January 2007.
All placement issue shares will rank equally in all respects with the existing ordinary shares of the Company on issue. Appendix 3B application for quotation of the new shares will be lodged once application funds have cleared and allotment is completed. No director or their associates have participated in this placement issue.
In conjunction with this raising, the directors also propose to offer existing shareholders the opportunity to participate in an entitlements issue at the same issue price as the placement (ie at 2 cents per share). The final terms of this entitlements issue are to be decided after the holding of meeting of shareholders and those details along with the offer document will be lodged with ASX as soon as practical
