Venture capital company in administration as directors work on rescue plan

Listed venture capital services business VentureAxess has been placed into administration as its directors struggle to restructure the company following the death of its founder in July last year.

VentureAxess, which is based in Sydney, is listed on the Newcastle Stock Exchange and specialises in providing services to emerging companies, including management services, capital raising services and advisory services.

The company’s wholly owned subsidiary, Medical Science Australia, operated a $12 million investment fund that invested in a number of technology companies and start ups.

But after a difficult 12 months of operation, the company was placed in the hands of administrators Peter Vince and Kylie Wright of Vince & Associates on April 29 in order to “deal with the claims of its creditors”.

Director David Hickie told SmartCompany this morning that the directors are committed to rescuing the company and will put forward a deed of company arrangement at a creditors meeting scheduled for June 2.

Under the proposal, an investor would inject capital to allow for the purchase of two businesses in the finance area. Hickie says that unlike most of the businesses within the VentureAxess vehicle, these businesses would generate the cashflow needed to get the group back on track.

If the deed of company arrangement is approved and the new businesses acquired, VentureAxess would then conduct a small rights issue.

Hickie says the directors are also in the process of trying to value the various businesses within the Medical Science Australia vehicle to try and determine their fair value.

“The company is worth saving,” Hickie says.

“We’ve got 4,000 shareholders and we’ve just got to get things back on track. There are some very good assets there that need to be realised [and] we’ve got to acquire something that has some cashflow for the business. “

He says the death of the company’s founder, Geoff Mullins, in July last year has presented a challenge for the directors. Hickie says there were a number of creditors that have only emerged since Mullins’ death and were previously unknown to the board.

“Trying to bring the company up to speed has been most difficult.”

While Hickie is confident of turning the company’s fortunes around, administrator Peter Vince says it is still too early to tell whether of the deed of company arrangement will be agreed to by creditors.

“It’s a question of whether the funding proposed to be made available is sufficient,” he says. On top of the ongoing expenses required to keep the business running and fund the administration, Vince says “there are… essential creditors such as the stock exchange and share registry, whose ongoing costs need to be met in order to preserve the listed shell”.

Vince says the investor who is proposing to fund the company restructure will also need to convince creditors to swap their debts for shares in VentureAxess, rather than receive any payment for debts owed.

“It ultimately comes down to whether the creditors are happy with the proposal,” Vince says.

“It’s early days and ultimately the investor may not even get to the starting line. Someone has got to be able to maintain the costs of the company. “

Hickie says he hopes to have the company back on track by June 30, if the deed of company arrangement is approved.