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ANIMALS: Viragen (UK) gambles on stock split to win more financing







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TITLE:  VIRAGEN GAMBLES ON STOCK SPLIT TO WIN MORE FINANCING

SOURCE: The Herald, UK

AUTHOR: Mike McCormack

URL:    http://www.theherald.co.uk/business/news/display.var.1555657.0.0.php

DATE:   19.07.2007

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VIRAGEN GAMBLES ON STOCK SPLIT TO WIN MORE FINANCING

Viragen, the troubled cancer-therapy researcher whose dire financial straits were revealed in The Herald last month, is gambling that a reverse stock spilt can buy it time to secure new sources of financing.

The Edinburgh-based company, which admitted losing $26.7m (£13.35m) in the nine months to June, leaving it with a working capital deficit of $1.1m, yesterday announced that it plans a 40-for-one reverse stock spilt, which would raise its share price from three cents to $1.20 at current market prices.

Viragen was delisted from the American Stock Exchange earlier this month for failing to meet capital adequacy rules and now trades on the over the counter (OTC) market in the US.

Valued at less than $2.6m, Viragen has lost more than $193.8m since inception.

Viragen is best known as the co-developer, with the Roslin Institute, of cancer treatments derived from the eggs of genetically engineered chickens.

The company was one of the earliest large-scale life sciences investors in Scotland, beginning with small labs for development testing, then opening a 17,000 sq ft laboratory and manufacturing plant in Edinburgh’s Pentland Science Park in 1995.

At the pre-split stock price, Viragen would not be able to meet its cash demands, even if the company was able to sell all of its remaining authorised shares. The reverse stock split increases Viragen’s potential income from share sales from less than $20,000 to more than $105m.

However, the company admitted it had not found any buyers for its shares.

Viragen also revealed that it planned to canvass creditors for a debt for equity swap which could see the company pay off up to $25m in current and long-term liabilities.

If successful, the swap would see former creditors become the dominant stockholders, owning more than 91.4% of Viragen’s outstanding shares.

However, the company warned that these moves represented only a temporary solution to its financial woes, noting: ”Cash and cash equivalents will not be sufficient to meet our operating requirements after approximately July 31, 2007. Thereafter, additional financing will be required.”


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