Liverpool City Council (LCC) has called in a £2mln loan that was made to RedX Oncology, a subsidiary of Redx, and Redx was unable to stump up the money.
Redx professed bewilderment at the timing of LCC’s move. It had been in talks with the council regarding the restructuring of the loan arrangement, but had been unable to reach agreement.
The company has been actively seeking to secure alternative sources of finance in order to facilitate repayment of the loan as soon as possible, and has offered LCC an immediate payment of £1 million in return for a short grace period in which to repay the outstanding amount. This offer was rejected.
FRP Advisory was appointed as administrators to the company on Wednesday afternoon.
"The timing of this action by LCC and its advisers FRP is extremely unfortunate and quite baffling,” said Iain Ross, chairman of Redx.
“The board and its advisers felt consistently confident that we could have found the appropriate solution within a short period and can't quite fathom why a creditor with whom we have had a good relationship for over five years is taking such an aggressive stance when they know, and have been provided with the evidence, that the company is making excellent progress on all fronts,” Ross said.
“The company, which now comprises 84 employees, has two incredibly important state of the art cancer programmes, which will shortly commence clinical development in seriously ill patients, and both these assets are attracting significant partnering interest from a number of large pharmaceutical companies. Despite this and our assurances to resolve the matter quickly, LCC has refused to meet with me or to have any direct discussion," Ross said.
A spokesman for FRP Advisory confimed members of the firm has been appointed as administrators to both Redx Pharma Plc and RedX Oncology.
"The administrators are considering options for the group in line with their statutory duties and in the interests of creditors," the firm said.
The group's business and assets include a number of specialist oncology drugs at various stages of development, together with related intellectual property, and the administrators will be seeking to realise the assets in the interests of creditors.
The local authority lent the money to Redx when it was based in Liverpool – it has since relocated to Cheshire and, according to the Liverpool Echo, the council said it lent the money to support Redx’s business expansion plans in the city.
The loan term was initially three years, but the council extended to five, but its patience now appears to have run out, with Liverpool mayor Joe Anderson claiming the company has shown “no willingness to make any repayment of any size during this period – despite it raising substantial funds from shareholders over the past few years”.
That does not tally with chairman Ian Ross’s claim that the company had offered to make an immediate payment of £1mln.
The loan was due to be repaid in full at the end of March and according to the Liverpool Echo, the council claims “no contact was made by the company” in the run-up to that deadline.