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UBNZ gets in deeper with Genesis Research

Wednesday 29th September 2010

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Would-be Crafar farms buyer, UBNZ Funds Management, is pushing towards 25% control of troubled bio-tech company Genesis Research & Development, according to the company’s half year report to June 30, released today.

The report says Genesis will now be pursuing opportunities in the dairy industry which it expects will “have lower risk and earlier revenue opportunities than the therapeutic projects that have been previously undertaken”.

UBNZ, fronted by controversial mainland Chinese businesswoman May Wang, has added a $250,000 convertible note loan to the $466,278 it injected in June when it bought a 16.3% stake in Genesis, which has ceased active trading in New Zealand owing to lack of funds.

Assuming the conversion rate is at the same price as the June issue, that would allow UBNZ to take its stake to 23.3% of Genesis, which is struggling to get payments owed from both a buyer of its BioJoule intellectual property, Pure Power Global, and for services to its largest asset, Solirna Biosciences.

Solirna is in Genesis’s books at a value of $1 million, around 75% of the company’s assets, but Solirna owes Genesis $586,000, which Genesis has booked in the half year under review, but has yet to be paid. The debt may yet be converted to equity in Solirna, which has also ceased trading due to lack of funds. 

Genesis said it had negotiated during the period with Pure Power Global over a “significantly reduced” price for the BioJoule assets, recognising current economic conditions after Pure Power initially failed to pay.

“An initial deposit was paid but Pure Power Global did not complete the settlement,” the report says.

Genesis had also paid $150,000 to end the lease on its premises, using funds raised through the $250,000 convertible loan from UBNZ.

Accounting firm Ernst & Young delivered a heavily qualified review report – a lesser examination than an audit – saying it could not establish a value for Solirna and raised a “material uncertainty” about Genesis’s capacity to continue trading.

The rarely traded share last traded at 4.2 cents.

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