BresaGen in $5m bridging finance bid

Adelaide biotech BresaGen (ASX:BGN) is attempting to boost its cash reserves by up to AUD$5 million through a private placement of convertible preference shares, managed by PricewaterhouseCoopers Securities.

BresaGen said its cash balance at the end of September was $4.215 million, down from $5.86 million at the end of June. Its reserves are sufficient to sustain it until December, allowing for the retention of funds for employee entitlements and repayment of grant funds, should this be necessary.

The company's chief financial officer, Linton Burns, said the company was optimistic the share placement would provide bridging finance to carry it through to February, when it is expecting to receive funds from a major capital-raising venture in the US, announced earlier this year.

BresaGen appointed US investment bankers Caymus Partners to undertake the capital raising, to fund its biogeneric business plan.

Caymus recently sent an offering document to private equity investors in the US, including venture capitalists, and the first round of investor meetings is underway.

Burns said that while BresaGen expected the cash-raising would be successful, the funds would not go into the bank until February -- hence the move to raise bridging finance.

He said BresaGen had safeguarded its employee entitlements and allowed for grant liabilities by setting aside a large contingency fund, but if the US capital-raising goes well, the company may dip into the funds.

The issue price for each BresaGen convertible preference share will be $100; the shares will convert into ordinary shares on the first anniversary of the date of issue, based on the market price of its ordinary shares at that date.

Neither the US nor Australian fund-raising ventures are underwritten.