DRAFT Horizon Science Pty Ltd (Administrators Appointed) · Horizon Science Pty Ltd (Administrators...

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


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


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.


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


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


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


– 3 September 2015


– 18 August 2015


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.


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.


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)


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


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.


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


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


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”

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