Sphere Medical Holding PLC (LON:SPHR) was the biggest faller in London on Tuesday after it unveiled plans to cancel its AIM listing as it looks to facilitate a much-needed £8mln investment led by Neil Woodford.
The company, which makes the Proxima blood gases monitors, said the investment was conditional on it de-listing and becoming a privately-held entity.
The point-of-care monitors and diagnostic devices group desperately needs the cash injection as it currently only has enough money to last it through to next month.
Sphere is recommending that shareholders vote in favour of the cancellation and warned that should they not do so it would likely be forced to enter into an insolvency process.
‘In best interests of shareholders’
“After careful consideration and after taking professional advice, the directors have concluded that accepting the conditions of the investment is in the best interests of its shareholders,” a statement read after close of play on Monday.
Aside from the obvious benefits of the initial proposed investment, the firm said there were other reasons for de-listing.
It told investors that it feels undervalued by the markets and that a private company structure would allow for greater future investment from Woodford – its substantial shareholder – as there are restrictions on how much funds can invest in publicly-traded companies.
Woodford investing £4mln
Woodford Investment Management is proposing to subscribe for £4mln worth of convertible preferred shares, while Wales Life Sciences Fund would put up £1mln in return for the preferred convertible shares.
Other new and existing shareholder would also be able to invest up to a further £3mln by way of subscription for convertible preferred shares.
Should Woodford and the Wales Fund exercise all of their investment warrants, then after the subscription they would hold a combined stake of 87.7% in Sphere.
Off AIM by 20 September
Sphere is holding a general meeting on 8 September where it is recommending that shareholders vote in favour of the cancellation and the £8mln investment.
Should the proposals get the go-ahead, Sphere expects the last day of trading to be on 19 September with official cancellation a day later.
In late afternoon trading, Sphere Medical shares had slumped by 81%, or 4.88p to 1.12p.
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