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Structured Product Merrill Lynch Dow Jones Euro Stoxx 50 Index Mitts | NYSE:MLB | NYSE | Ordinary Share |
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0.00 | 0.00% | 9.97 | 0.00 | 01:00:00 |
RNS Number:0863J M.L. Laboratories PLC 24 March 2003 Embargoed until 0700 24 March 2003 ML Laboratories plc PROPOSED DISPOSAL OF THE ICODEXTRIN MANUFACTURING BUSINESS OF ML LABORATORIES PLC The Board of ML Laboratories plc ("ML") is pleased to announce that it has entered into a conditional agreement with Baxter Healthcare Limited ("Baxter") to dispose of its Icodextrin manufacturing business located in Liverpool (the "Disposal"). The Disposal follows the Board's recent strategic review, which concluded that ML's manufacturing businesses are non-core, and which resulted in the subsequent divestment of its DNA manufacturing business that was completed in June 2002. The total cash consideration for the Disposal is #6.5 million plus the valuation of stock to be determined at completion of the Disposal ("Completion"). The proceeds of the Disposal, after settlement of finance leases and other obligations, including the repurchase of the Paul Capital Royalty Acquisition Fund, L.P. ("PCRAF") entitlements to participate in the net contribution generated by sales of Icodextrin to Baxter, but before expenses, are expected to amount to approximately #5.5 million. The net proceeds will be applied towards satisfying the working capital requirements of ML and its subsidiary undertakings following Completion (the "Continuing Group"). Icodextrin is a glucose polymer developed by ML and over which it holds extensive international patents for its use in a number of therapeutic fields. It is the active ingredient in a number of ML's products, including Adept, Dexemel and Emmelle. In 1996 ML and Baxter entered into an agreement whereby Baxter licensed the exclusive worldwide rights to the use of a solution of Icodextrin in the treatment of renal disease by peritoneal dialysis. Baxter markets the solution under the trademark Extraneal which is currently approved for marketing in 34 countries and is used by more than 9,000 patients on a daily basis. ML has supplied Icodextrin to Baxter from its manufacturing plant since 1996. In June 1998, ML and Baxter entered into a long-term supply agreement under which 95% of the production capacity of the plant at the time was contracted to be sold to Baxter until 2007. The current capacity of ML's plant is not sufficient to meet the current total requirement, for Icodextrin and Baxter sources alternative supply from a contract manufacturer. Baxter received marketing approval for Extraneal in the USA in December 2002 and approval in Japan is anticipated by the Board in 2003; consequently Baxter's requirement for Icodextrin will increase as the product is launched in these countries. ML does not wish to increase its investment in a non-core manufacturing asset, which has no alternative use. Following the Disposal, ML will continue to earn royalty income on sales of Extraneal under the terms of the existing licence agreement with Baxter. The turnover and profit before tax attributable to the Icodextrin Manufacturing Business for the audited financial period ended 30 September 2002 were #2,866k and #330k respectively and its net assets at that date were #1,561k In addition to the Disposal, ML will enter into an agreement with Baxter for it to supply ML, on commercial terms, with Icodextrin for use in non-renal dialysis applications including those for its Adept, Dexemel and Emmelle products. The Directors are unable to confirm that the Continuing Group will have sufficient working capital for its present requirements. As disclosed in the Chairman's Statement contained in the Preliminary Announcement on 28 January 2003, the Continuing Group's working capital adequacy is dependent on the receipt of significant milestone income and the proceeds of disposal of non-core assets, the timing and amount of which are difficult to predict. The proceeds of the Disposal represent an important element of the Continuing Group's projected cash flow and will constitute a significant contribution to the working capital requirements of the Continuing Group. The Directors continue to have a reasonable expectation that the Continuing Group will have sufficient working capital. However, significant milestone income forecast to arise on the commercialisation of the Continuing Group's products and, in particular the timing and amount of these milestone receipts, cannot be guaranteed. This is because the timing of signing of agreements with third parties, and the obtaining of regulatory approval for products, makes it difficult to predict, with certainty, whether or not milestones will be achieved on schedule and, therefore, the actual timing and amount of payments received. ML does not have any significant borrowings and does not have sufficient tangible assets on which to secure any material borrowing facilities. On the basis that the Disposal is completed, that net proceeds of #5,050,000 are realised, and that the Continuing Group is able to generate funds from milestone receipts on a timely basis, the Directors are of the opinion that the Continuing Group has sufficient working capital for its present requirements. Stuart Sim, Chairman of ML, commented: "This disposal is a further significant step in the repositioning of ML as a focused biopharmaceutical product development company, with the object of achieving cash self-sufficiency and profitability in the near term." The Disposal is conditional upon the approval of ML's shareholders in General Meeting. A circular giving further details of the Disposal will be despatched to shareholders as soon as is practicable. The circular will contain a notice of an extraordinary general meeting at which meeting shareholders' consent for the Disposal will be sought. Contacts: Stuart Sim 01925 844 700 ML Laboratories plc Tim Mickley/Richard Potts 0207 020 4000 WestLB Panmure Limited Ben Padovan/Graham Herring 020 7067 0700 Weber Shandwick Square Mile This information is provided by RNS The company news service from the London Stock Exchange END DISVXLFLXXBZBBZ
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