re: Ann: Investment Transaction For PrIME Bio... It is rather...

re: Ann: Investment Transaction For PrIME Bio...
It is rather conspicuous as to who had the upper hand in the negotiations here. Giving away all voting rights means we have no control whatever. I must admit that I did not expect such a defeated outcome.

Xeraya needs the three NSP directors on the Prime Bio Board only for the time being since they have the expertise to set up the Singapore fractionation facility. After two or three years they can be instantly voted off the board at the whim of Series A Preference holders. There will be no need even to campaign for votes.

At present Prime Bio still needs membranes and cartridges from NSP. Xeraya have the choice of taking over NSP for a song or else to have membranes made in China. In China getting around a patent is easy.

If any further funding is to be raised, such as for expansion purposes, presumably the partners pay in proportion to their holdings, i.e. NSP pays for 60% of any loans taken out. If any profits are made Series A holders cream off 10% from the top. This is a very onerous rate when world interest rates are at record lows. If no profits are made (the plant still has to be built) the 10% becomes compounded interest. It may take two years for Prime Bio to gain facility approval from the HSA after which it still has to build up the client base. Xeraya will absorb profits for back payments for quite some years.

The intention was to list on the ASX but there is no mention of that in the ann.

After so many years of holding on to excellent IP that has been scarcely used JM must have thought that this is a now or never situation, and thus felt pressured to accede. Not every detail was announced of course. However, if there were any big pluses in the fine print these would certainly have been lauded in the ASX announcement.

The wild enthusiasm of the market embracing this long awaited new deal has been noted. The share price is unlikely to do anything positive until management has clarified the new prospective business plan.

Juke