Horizon Science Pty Ltd (Administrators Appointed)
DRAFT
Horizon Science Pty Ltd (Administrators Appointed) (“Horizon”)
First meeting of creditors 18 August 2015
Horizon Science Pty Ltd (Administrators Appointed) 2
Formalities
Purpose of meeting
Background
Financial Position
Financial Performance
Sale Strategy
Resolutions
Questions
Agenda
Horizon Science Pty Ltd (Administrators Appointed)
Formalities
3
Open meeting
Administrator Chairperson: Corporations Regulation 5.6.17 (1)
Introductions
Barry Kogan (Administrator)
Rajiv Goyal (Senior Manager)
Nicole Jackson (Assistant Manager)
Arvind Sridharan (CEO – Horizon)
Quorum: Corporations Regulation 5.6.16 (2)
Attendance register
Voting
Time and place convenient: Corporations Regulation 5.6.14
Proofs of debt and proxies
Horizon Science Pty Ltd (Administrators Appointed)
Purpose of Meeting
4
Convened under Section 436E of the Corporations Act to:
determine whether to appoint a Committee of Creditors, and if so, who are to be the Committee’s members; and
consider the removal of the Administrators and appoint an alternative Administrator who has consented to act.
This meeting has no authority to consider any other business; and
At the second statutory meeting, a decision is made regarding the company’s future.
Horizon Science Pty Ltd (Administrators Appointed)
Declaration of Independence, Relevant Relationships and Indemnity (“DIRRI”) and Remuneration
5
DIRRI
DIRRI dated 10 August 2015 - distributed with notice of meeting
We remain of the view that we are free of any potential conflict of interest
Remuneration
Schedule of rates provided with meeting information
Comprehensive remuneration report will be provided prior to the second meeting of creditors
Horizon Science Pty Ltd (Administrators Appointed)
Background
6
Administrators appointed on 6 August 2015 by Directors (formed the view that company insolvent or likely to become insolvent)
Directors’ powers are suspended and Administrators are in control
Voluntary Administration provides moratorium period for investigation / determination of company’s future:
Return company to Directors;
Deed of Company Arrangement; and
Liquidation.
Objective is to maximise the chance of the business to continue in order to provide a better outcome for creditors than an immediate winding up
We have assumed control of the Company’s affairs and are offering its assets for sale and considering any recapitalisation proposals
Horizon Science Pty Ltd (Administrators Appointed)
Voluntary Administration - Timeline
7
VA appointed –
6 August 2015
Within 25 business days
– 10 September 2015
Written notice of
first meeting mailed
to creditors and
employees on 10
August 2015
1st meeting of
creditors held
Purpose:
(i) Replace VA
(ii) Consider the
appointment of
a Committee
of Creditors
Complete
preliminary
investigation
2nd meeting of creditors
held
Options:
(i) DOCA
(ii) Liquidation
(iii) Return to directors
Issue s439A
Report and form
opinion
Administrators take
control of company
and its assets
Receive any
DOCA proposals
Within 20 business days
– 3 September 2015
Within 8 business days
– 18 August 2015
Horizon Science Pty Ltd (Administrators Appointed)
Background
8
Incorporated in June 2004.
Horizon specialises in the commercialisation of patented technology, including functional foods, beverages, nutritional supplements and nutraceuticals/pharmaceuticals.
The Company operates an administrative and research laboratory in South East Melbourne and a Membrane Filtration Plant in Mossman, Far North Queensland.
Horizon has developed two products:
Benecarb Syrup is produced commercially in Far North Queensland. It is sold to sugar producers who use it to manufacture an all-natural low GI sugar. In addition to the sale of the syrup, the Company derives royalty income from licensing the LoGIcane™ trade mark.
Sugarcane Polyphenol Extracts (Polynol) and their effects on body composition are being researched by the Company. It holds patents for a range of phytochemicals derived from molasses which are believed to reduce body fat and increase lean muscle mass. Polynol has completed pre-clinical trials in animals but is yet to be trialed on humans. Accordingly, the Company is yet to derive any revenue from its work with Polynol.
Horizon Science Pty Ltd (Administrators Appointed)
Background (continued)
9
The Company has generated revenue through sales of Benecarb. It has also received refundable R&D tax incentives from the ATO.
The Company raised circa $14.3 million in equity capital. Subsequently, the Company’s operations have been funded by secured loans provided by shareholders totalling circa $11.5 million.
Attempts to raise further funds have been unsuccessful which lead to the appointment of Administrators.
At the time the Administrators were appointed the company had four employees.
Horizon Science Pty Ltd (Administrators Appointed)
Financial Position at Appointment
10
Financial Position as at 6 August 2015
Assets $'000
Cash at bank 265
Receivables 13
Fixed assets and Intellectual Property Withheld
Total assets Withheld
Liabilities
Trade creditors 49
Other liabilities (GST, PAYG, Superannuation and Accrued leave) * 34
Secured creditors 11,462
Total liabilities 11,545
Total Equity (Deficiency) Unknown
Source: MYOB Accounts as at 6 August 2015
* Excludes certain priority claims (i.e. Long Service Leave, Payment in Lieu of Notice)
Horizon Science Pty Ltd (Administrators Appointed)
Financial Performance
11
Statement of Financial Performance for FY15
Revenue $'000
Royalty income 91
Benecarb sales 166
Research and development tax incentive 405
Other income 23
Total Revenue 685
Expenses
Benecarb production expenses 547
Administrative expenses 593
Business development expenses 213
Research and development expenses 216
Total Expenses 1,569
Net profit (loss) after tax (884)
Source: MYOB Accounts as at 6 August 2015
Horizon Science Pty Ltd (Administrators Appointed)
Sale strategy
12
The Administrators have commenced the sale process.
Parties can acquire the IP and other assets of the business or may submit a recapitalization proposal.
First advertisement appeared in the AFR on 13 August 2015.
Data-room opening on 18 August 2015.
Non-binding indicative offers due on 31 August 2015 and prior to second meeting.
Appropriate parties being directly targeted.
Horizon Science Pty Ltd (Administrators Appointed)
Resolutions – Removal and Replacement of Administrators
13
Section 436E(4) of the Corporations Act 2001
We have not been made aware of any alternative Administrator having been nominated or consenting to act
Horizon Science Pty Ltd (Administrators Appointed)
Resolutions – Committee of Creditors
14
Role:
consult with the Administrators about matters relating to the administration; and
receive and consider reports by the Administrators.
Committee of Creditors cannot instruct the Administrators
We do not recommend forming a Committee of Creditors at this stage
Horizon Science Pty Ltd (Administrators Appointed)
Resolutions – Committee of Creditors (continued)
15
Resolution – committee of creditors (if required)
“That:
………………………… representing …………………………
………………………… representing …………………………
………………………… representing …………………………
………………………… representing …………………………
………………………… representing …………………………
be appointed to the Committee of Creditors of Horizon Science Pty Ltd”
Q & A
Horizon Science Pty Ltd (Administrators Appointed)