KEY POINTS:
Bad blood is flowing within ICP Biotechnology over the failure of founder, major shareholder and recently ousted managing director Earl Stevens to take up his rights in the serum products company's just-completed cash issue.
The July 9 prospectus stated the Earl and Tracey Stevens Family Trust, with 22.22 per cent, "confirmed to the directors that they intend to fully subscribe to their entitlements".
Stevens, who was on his last day of three months' "gardening leave" since his removal as managing director, denied making such a firm commitment other than in a private email to director Alastair Ward.
He also said the company was being economical with its public disclosures and queried the intentions of the other major shareholder, listed company Viking Capital with 13.6 per cent, controlled by Brent King.
On Thursday, ICP issued a statement saying that at least 60 per cent of the issue to raise $10 million had been taken up, but "contrary to expectations" the Stevens trust did not take up its rights.
Stevens said he wanted to take up his rights but "simply I didn't have the finances".
"The circumstances of the last few months have put me under immense pressure personally. Most of my net worth is tied up with the company.
"I don't know why the company tries to beat up on me the whole time. I never made any representations to the company other than one brief email."
In that email to Ward, he wrote: "At this point in time I have yet to secure the funds required but I am working on a number of sources."
Stevens said the directors chose to put comment about his intentions in the prospectus but he never signed off on it.
ICP, which back-door listed in May 2005 and makes proteins and serum from animal blood, has been going through turbulent times.
On May 7, it issued a shock "trading update" saying it would not meet forecast sales targets or break even in the June financial year as previously signalled. It said it was unlikely to book significant new sales until 2008 and forecast an ebitda (earnings before interest, tax, depreciation and amortisation) loss of about $8 million.
On May 18, Stevens, then owning 30 per cent of the company, "stepped down" as MD, and on May 30 the company announced a restructuring. The rights issue was announced on June 7 and on June 26 Stevens stepped down from the board.
At least one ICP shareholder has complained to the stock exchange and Securities Commission about the timing of Stevens' sale of a million shares in an off-market transaction to repay $175,000. Stevens said that sale had been approved in advance by the board.
Asked why he allowed the information in the prospectus and press release to go out unchallenged, Stevens said he didn't see the statement about his intentions.
He said his intention was to try to take up the issue "but it was never a lay-down misere".
"I have tried to find funding but have been unable to and part of the reason is that the company has consistently failed to put out any new information out about the prospects of the company.
"None of the people I spoke to were able to get a view on the future value of the company."
As well, he said until his gardening leave was completed, he was an employee and muzzled.
"I have been under lock and key as an employee working out my [three month] notice period I've not been able to comment at all.
"One of the reasons I resigned as a director was that I got sick of being beaten up the whole time and just put into a corner.
"They chose to put that in and they have chosen all the way along to represent that I am taking up my rights."
Stevens said he had "done my damnedest" to raise the money but failed. He accused the company of "managing the share price" with a lack of information to the market partly to increase financial pressure on him as the major shareholder.
By not taking up his rights, his holding will dilute to 11 per cent.
Thursday 's statement said the board would make placements of the unallocated rights at the same 5 cent price as to other shareholders.
King said Stevens had given undertakings about taking up his rights at board meetings.
"He chose not to dispute it. I was with him at investor meetings where he said he would be taking up his rights.
"All we can assume is that he is embarrassed that he hasn't been able to raise the funding and he is disappointed. It's a natural human reaction.
"He's disappointed for himself and for the company because he has put the company in a challenging position." He said the last time he met Stevens, a week before the prospectus was issued, relations were "cordial and pleasant".
To the board, Stevens "was extremely complimentary about Viking's role in keeping the company going".
King said if Stevens had taken up his rights, "there wouldn't be any opportunity for us to do so."
The first he knew the Stevens trust was not taking up its rights was on Wednesday night, when the issue closed.
King said Dr Stevens agreed last year when Viking took up its ICP stake it would increase it to 35 per cent, based on funds it had lent.
Viking had been an "extremely supportive" shareholder and would continue to be so.
He disputed the company had not disclosed material information.
On July 31, it announced it had secured an important distribution deal with giant US company VWR, which King personally negotiated in Boston.
He said he wanted that disclosed before the rights issue closed so investors would not claim they were not informed.
King, who was a major shareholder in vodka company 42 Below and was instrumental in its $138 million sale to Bacardi, said while the ICP was making solid progress it was not yet a viable business.
"We are working very, very hard to try and get that business as profitable as possible and the challenges have been significant for us."
He said companies like VWR saw ICP as a small company from tiny New Zealand. They were unlikely to place a $10 million order "in the middle of a cash rights issue and when you have some restructuring problems".
"It's up to us to recreate credibility and not go through the variabilities the company's had in the last nine months."
Stevens said the company he founded 30 years ago has great prospects. "The contract they announced last week is huge."
ICP shares last traded at 5.3 cents. They have lost two thirds of their value since April.
After placements, the company said 63 per cent of the rights were taken up, raising $6.6 million. Viking's holding increased to 19 per cent.
Managing director Sanne Melles said given Stevens didn't take up his rights and that 4 per cent of shareholders were ineligible as non-New Zealand residents, it was a pleasing result.
- NZPA
