No receivers for Chemeq while appeal planned

The vultures are circling, but Rockingham-based animal pharmaceutical products manufacturer Chemeq Ltd has life in it yet, as the Supreme Court yesterday restrained bondholders Stark Trading and Harmony Investment Fund from appointing a receiver.

Chemeq has launched an appeal against a court finding last week that it must repay $60 million the bondholders after the company allegedly failed to fulfil the conditions of the bonds issue.

The appeal will be heard on March 12.

The full text of a Chemeq announcement is pasted below

Today the Supreme Court of Western Australia granted an injunction restraining the bondholders from appointing a receiver pending the determination of Chemeq's appeal on the basis of various undertakings given by Chemeq to the Court and to the bondholders.

Chemeq earlier this week filed an appeal against last week's decision that it had failed to meet the terms of the final milestone covenant set out in the Convertible Bonds Deed Poll.

Those undertakings include that pending the outcome of the appeal or further order Chemeq will not:

• enter into any transaction or commitment or incur any liability other than in accordance with a prescribed schedule;
• sell any assets, business or undertakings of the Company;
• distribute any income or assets of the Company; or
• engage further employees or contractors or terminate or vary the employment of existing employees or contractors.

And that it will:

• allow monitoring of the undertakings by a representative of the bondholders;
• regularly report expenditure; and
• maintain the Rockingham facility on a care and maintenance basis and not operate the plant to produce product.

Chemeq is committed to having the appeal heard as quickly as possible.