Piece by piece, a bankrupt biotech company is selling itself to the highest bidder.
One of the last two remaining major assets of Chesterfield-based Commonwealth Biotechnologies Inc. was auctioned Monday to a businessman from China.
CBI sold all the stock of its Australian-based R&D subsidiary Mimotopes for about $875,000, according to Andrew Chien, who represented the buyer at the auction.
Richard Freer, CBI’s CEO, said Wednesday by phone that bankruptcy court approved the sale of the Australian shares.
That leaves CBI, which is in Chapter 11 bankruptcy, with only one major asset left to sell: its 32,000-square-foot former headquarters and laboratory facility in Midlothian. It, too, will be sold as CBI looks to pay off its creditors and become a debt-free, publicly-traded shell company that would then hopefully be combined with another company looking to go public through a reverse merger – a cheaper and faster way of going public than an IPO.
“All of these funds, except a few dollars we’ll use to maintain the parent in Richmond, will go to paying off the creditors,” said Freer, who is one of three employees left at CBI.
The buyer of the Australian shares was Hongyan Xu, a Chinese businessman who at one time was in line to become the head of CBI through a merger that never quite materialized.
The Australian subsidiary is still an active operating entity that is conducts early stage drug discovery R&D work for third parties, Freer said. CBI bought the company in 2007.
“It was of interest to us because it expanded our capabilities in R&D,” Freer said.
According to bankruptcy filings, CBI listed $6.9 million in assets, made up of the Mimotopes shares and the building, and $4.9 million in debt.
The building, which is leased to and occupied by Bostwick Laboratories, has been for sale for a couple of years. The property is still being shopped around, Freer said. CBI has hired CB Richard Ellis as a broker and they have had a few bites, but nothing to write home about just yet.
“We have an offer, but it’s pretty fuzzy at the moment,” Freer said.
The lab sits on 4.5 acres and was most recently listed at $5.7 million. It was originally listed about two years ago at $6.43 million.
Should the property receive more than one bid, it will go through the same auction process that the Mimotopes shares went through Monday, Freer said.
As part of its lease, Bostwick has an option to have first right of refusal to purchase the property.
The property has been a point of contention recently between CBI and its largest shareholder and now former chairman.
CBI last week ousted its chairman after he tried to organize shareholders to slow down and reorganize the company’s unwinding process. In particular, former chairman Bill Guo wanted to stop the sale of the real estate, refinance the mortgage on the building and hold it until the market turned around.
Guo still plans to hold an online meeting in April where he hopes shareholders will voice their support for such a plan.
(You can read more about Guo’s attempts and ouster here. )
Freer’s plan is that a reverse merger with a promising company will bring some value back for CBI’s battered shareholders.
“We’re not looking for a cash payment for the shell,” Freer said. “What I’m trying to do is find a company that will allow our shareholders to blend in” with the shareholders of the resulting public company.
Those shares would then ideally rise in value once the merger partner goes public.
“I believe it’s doable, and we’re pushing towards it,” Freer said.
CBI is being represented in its bankruptcy by Tavenner & Beran. Michael Falzone and Franklin Cragle of Hirschler Fleischer are representing the committee of unsecured creditors who have claims against CBI.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
Piece by piece, a bankrupt biotech company is selling itself to the highest bidder.
One of the last two remaining major assets of Chesterfield-based Commonwealth Biotechnologies Inc. was auctioned Monday to a businessman from China.
CBI sold all the stock of its Australian-based R&D subsidiary Mimotopes for about $875,000, according to Andrew Chien, who represented the buyer at the auction.
Richard Freer, CBI’s CEO, said Wednesday by phone that bankruptcy court approved the sale of the Australian shares.
That leaves CBI, which is in Chapter 11 bankruptcy, with only one major asset left to sell: its 32,000-square-foot former headquarters and laboratory facility in Midlothian. It, too, will be sold as CBI looks to pay off its creditors and become a debt-free, publicly-traded shell company that would then hopefully be combined with another company looking to go public through a reverse merger – a cheaper and faster way of going public than an IPO.
“All of these funds, except a few dollars we’ll use to maintain the parent in Richmond, will go to paying off the creditors,” said Freer, who is one of three employees left at CBI.
The buyer of the Australian shares was Hongyan Xu, a Chinese businessman who at one time was in line to become the head of CBI through a merger that never quite materialized.
The Australian subsidiary is still an active operating entity that is conducts early stage drug discovery R&D work for third parties, Freer said. CBI bought the company in 2007.
“It was of interest to us because it expanded our capabilities in R&D,” Freer said.
According to bankruptcy filings, CBI listed $6.9 million in assets, made up of the Mimotopes shares and the building, and $4.9 million in debt.
The building, which is leased to and occupied by Bostwick Laboratories, has been for sale for a couple of years. The property is still being shopped around, Freer said. CBI has hired CB Richard Ellis as a broker and they have had a few bites, but nothing to write home about just yet.
“We have an offer, but it’s pretty fuzzy at the moment,” Freer said.
The lab sits on 4.5 acres and was most recently listed at $5.7 million. It was originally listed about two years ago at $6.43 million.
Should the property receive more than one bid, it will go through the same auction process that the Mimotopes shares went through Monday, Freer said.
As part of its lease, Bostwick has an option to have first right of refusal to purchase the property.
The property has been a point of contention recently between CBI and its largest shareholder and now former chairman.
CBI last week ousted its chairman after he tried to organize shareholders to slow down and reorganize the company’s unwinding process. In particular, former chairman Bill Guo wanted to stop the sale of the real estate, refinance the mortgage on the building and hold it until the market turned around.
Guo still plans to hold an online meeting in April where he hopes shareholders will voice their support for such a plan.
(You can read more about Guo’s attempts and ouster here. )
Freer’s plan is that a reverse merger with a promising company will bring some value back for CBI’s battered shareholders.
“We’re not looking for a cash payment for the shell,” Freer said. “What I’m trying to do is find a company that will allow our shareholders to blend in” with the shareholders of the resulting public company.
Those shares would then ideally rise in value once the merger partner goes public.
“I believe it’s doable, and we’re pushing towards it,” Freer said.
CBI is being represented in its bankruptcy by Tavenner & Beran. Michael Falzone and Franklin Cragle of Hirschler Fleischer are representing the committee of unsecured creditors who have claims against CBI.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].