The chairman of a bankrupt local biotech firm has had enough.
He’s trying to shake up the lifeless company and salvage what’s left. And he’s willing to do it all in return for pay of $1 – from China.
On March 9, Bill Guo, chairman of Midlothian-based Commonwealth Biotechnologies, sent out a letter to plead to the company’s shareholders.
“As a result of [bankruptcy], almost all values of your shares of CBI have been lost. Is there any possibility that the company will continue as a going concern and get out of bankruptcy quickly? Yes, it is possible.”
But not without carrying out Guo’s plan, he wrote in the letter, which was filed with the Securities and Exchange Commission.
Guo called for a shareholders meeting April 4, at which time he wants shareholders to change the size of Commonwealth Biotech’s board to a single director. And you can probably guess who he wants to be No. 1.
His plan then calls for eliminating as many expenses as possible, including the claims he says the company’s chief executive has made against the company for hundreds of thousands of dollars.
Guo is frustrated after years of losses and a subsequent Chapter 11 bankruptcy filing by CBI in January.
The company has been in winding-down mode for some time. Last year it began an attempt to sell off what few assets it had left, including a lab in Midlothian that’s occupied by another local company.
The company’s assets consist of its building on Biotech Drive and some stock it owns in an Australian R&D venture, according to its bankruptcy filings. It lists $9.8 million in assets and $4.9 million in debt.
Selling off its assets was an attempt to create a debt-free, publicly traded shell company. That empty entity could then be a prime target for a reverse merger, a transaction that would help another company go public more easily.
“I have the following CBI reorganization plan to rescue some value of CBI’s shareholders,” Guo wrote in the letter. “This plan is to delay the fire sale of CBI’s building considering that the real-estate market is weak.”
Guo, who works in Beijing and is in his mid-40s, has a beef with the way CBI’s executives have handled the company.
In his letter to shareholders, Guo points to reasons why he believes CBI’s top executive and one of its co-founders, Richard Freer, are allegedly not qualified to continue running the company in its current state.
Freer, who previously had not returned repeated calls from BizSenseover the past several months, is a doctor and a scientist. According to Guo’s letter, Freer claims he is owed more than $200,000 from CBI. Freer did contact BizSense Tuesday and said the letters and SEC filings submitted by Guo on the company’s behalf were not authorized by CBI and the company does not stand behind the information contained therein.
CBI was founded in 1992. Over the years it has dabbled in many areas of the biotech world, including drug testing, paternity tests, genomics and bio-defense research for the government.
It also completed many mergers over the years, most recently with some Chinese entities in an attempt to find a profitable new line of business. (You can read more about the China deal here.)
But it stayed in the red, losing millions of dollars each of the past few years. From 2007 through 2009, CBI lost a combined $14.98 million and lost almost half a million through the first half of 2010, according to statements filed with the SEC.
CBI’s executives regularly received six-figure salaries and bonuses. Those pay packages seem to have peaked around 2006, when then-COO Freer, President Robert Harris and then-CEO Paul D’Sylva were paid $363,500 and $297,600 respectively.
By 2009, Freer was making about $122,000 a year, and the other executives were no longer on the payroll, at least according an annual report.
The company then began to drastically cut executive pay and other expenses. Its SEC filings said it reduced its number of employees and cut its marketing budget. It worked out a deal to sell two of its subsidiaries to locally based Bostwick. (Read more about the deal with Bostwick here.)
It also leased its Biotech Drive facility to Bostwick at $49,000 per month and has since moved into a 2,800-square-foot office on Grove Road in Midlothian.
If Guo gets his way, CBI will close down its Richmond operations and keep expenses at no more than $7,500 per month. He also wants to hold on to that Biotech Drive property, refinance it and wait to sell it until the real estate market turns around.
“The above proposals determined by you, the shareholders, are to make the organization structure leaner, and to cut the administrative costs to the minimum,” he said in his letter.
Guo has hired Andrew Chien of Connecticut to manage the shareholder meeting. Guo said he is covering all the costs for the meeting.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
The chairman of a bankrupt local biotech firm has had enough.
He’s trying to shake up the lifeless company and salvage what’s left. And he’s willing to do it all in return for pay of $1 – from China.
On March 9, Bill Guo, chairman of Midlothian-based Commonwealth Biotechnologies, sent out a letter to plead to the company’s shareholders.
“As a result of [bankruptcy], almost all values of your shares of CBI have been lost. Is there any possibility that the company will continue as a going concern and get out of bankruptcy quickly? Yes, it is possible.”
But not without carrying out Guo’s plan, he wrote in the letter, which was filed with the Securities and Exchange Commission.
Guo called for a shareholders meeting April 4, at which time he wants shareholders to change the size of Commonwealth Biotech’s board to a single director. And you can probably guess who he wants to be No. 1.
His plan then calls for eliminating as many expenses as possible, including the claims he says the company’s chief executive has made against the company for hundreds of thousands of dollars.
Guo is frustrated after years of losses and a subsequent Chapter 11 bankruptcy filing by CBI in January.
The company has been in winding-down mode for some time. Last year it began an attempt to sell off what few assets it had left, including a lab in Midlothian that’s occupied by another local company.
The company’s assets consist of its building on Biotech Drive and some stock it owns in an Australian R&D venture, according to its bankruptcy filings. It lists $9.8 million in assets and $4.9 million in debt.
Selling off its assets was an attempt to create a debt-free, publicly traded shell company. That empty entity could then be a prime target for a reverse merger, a transaction that would help another company go public more easily.
“I have the following CBI reorganization plan to rescue some value of CBI’s shareholders,” Guo wrote in the letter. “This plan is to delay the fire sale of CBI’s building considering that the real-estate market is weak.”
Guo, who works in Beijing and is in his mid-40s, has a beef with the way CBI’s executives have handled the company.
In his letter to shareholders, Guo points to reasons why he believes CBI’s top executive and one of its co-founders, Richard Freer, are allegedly not qualified to continue running the company in its current state.
Freer, who previously had not returned repeated calls from BizSenseover the past several months, is a doctor and a scientist. According to Guo’s letter, Freer claims he is owed more than $200,000 from CBI. Freer did contact BizSense Tuesday and said the letters and SEC filings submitted by Guo on the company’s behalf were not authorized by CBI and the company does not stand behind the information contained therein.
CBI was founded in 1992. Over the years it has dabbled in many areas of the biotech world, including drug testing, paternity tests, genomics and bio-defense research for the government.
It also completed many mergers over the years, most recently with some Chinese entities in an attempt to find a profitable new line of business. (You can read more about the China deal here.)
But it stayed in the red, losing millions of dollars each of the past few years. From 2007 through 2009, CBI lost a combined $14.98 million and lost almost half a million through the first half of 2010, according to statements filed with the SEC.
CBI’s executives regularly received six-figure salaries and bonuses. Those pay packages seem to have peaked around 2006, when then-COO Freer, President Robert Harris and then-CEO Paul D’Sylva were paid $363,500 and $297,600 respectively.
By 2009, Freer was making about $122,000 a year, and the other executives were no longer on the payroll, at least according an annual report.
The company then began to drastically cut executive pay and other expenses. Its SEC filings said it reduced its number of employees and cut its marketing budget. It worked out a deal to sell two of its subsidiaries to locally based Bostwick. (Read more about the deal with Bostwick here.)
It also leased its Biotech Drive facility to Bostwick at $49,000 per month and has since moved into a 2,800-square-foot office on Grove Road in Midlothian.
If Guo gets his way, CBI will close down its Richmond operations and keep expenses at no more than $7,500 per month. He also wants to hold on to that Biotech Drive property, refinance it and wait to sell it until the real estate market turns around.
“The above proposals determined by you, the shareholders, are to make the organization structure leaner, and to cut the administrative costs to the minimum,” he said in his letter.
Guo has hired Andrew Chien of Connecticut to manage the shareholder meeting. Guo said he is covering all the costs for the meeting.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].