Ephraim is going broke while it waits for takeover target Bio-Nexus to pony up on costs
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Agricultural biogenetics researcher Ephraim Resources (ASX:EPA) is taking the company it wanted to buy to court.
Ephraim told investors on Wednesday afternoon that it had initiated legal proceedings against Bio-Nexus to recover the costs it incurred while trying to acquire the company.
In July last year, the pair struck a non-binding deal, under which Ephraim says Bio-Nexus agreed to pay the “reasonable costs” that the suitor incurred in connection with the acquisition.
Bio-Nexus is an Israeli software company that has designed a “mobile workflow engine” to enable the secure transfer of data.
The company services the medical, media, cyber and health care industries globally.
Ephraim says it has now placed negotiations for the potential acquisition on hold because of “Bio-Nexus’ repeated failure to pay costs it agreed to pay, specifically authorised and the approved”.
The company has been suspended from trading since early March 2017 after it decided not to go ahead with the acquisition of private Singapore-based company Alumi Envirotech from Goldson Global.
Ephraim had just $38,000 cash in the bank at the end of 2018 and wasn’t able to make the necessary repayments on its outstanding debt.
The company’s sole asset right now is PT First Flower, which is involved in Nipah palm breeding, tissue culture, cultivation and plantation, and producing sugar and or ethanol from the sap of the Nipah Palm.
PT First Flower has developed a method of improving Nipah palm to make it suitable for cropping on an industrial scale at competitive costs, to re-establish and optimise the use of degraded land for Nipah palm plantations in Indonesia.
Ephraim said in its December quarter report that it was working to secure additional funding and that it was in talks with its financiers to renegotiate the loan terms and get an extension.
The company says it is now “considering the implications of Bio-Nexus’ conduct for the future of the company” and the impact on its current commitments to its creditors.
Ephraim has been contacted for comment.