Chemeq CEO to step down

As Chemeq (ASX: CMQ) continues its efforts to raise capital through a placement to institutional and sophisticated investors, CEO and chairman Graham Melrose has announced plans to step down from the CEO role, remaining non-executive chairman.

The restructuring will take place once a suitable replacement for the CEO position has been appointed. The company is also seeking two additional independent non-executive directors.

The announcement comes as analysts express concerns about the board and management of the company in light of last week's voluntary suspension while a $50 million capital raising is underway. It has also come to light that while the company had $7.5 million in cash and assets at the end of the financial year, it also had debts of nearly $12 million, raising concerns that the company may have been trading while insolvent and rumours of an ASIC investigation.

Chemeq's media spokesperson Peter Cassuben said that ASIC had asked some questions of the company, and the company was in the process of answering them.

He was unable to give a date for the resumption of trading on the ASX, but said it was anticipated to occur very soon.

Analyst and co-editor of BioShares David Blake said the revelations of the company's shaky cash position could have major implications for Chemeq's board and management.

"If they've got themselves in this predicament, then maybe they're not up to the game," he said.

"The longer this goes on and the more difficulties that are found for whatever reason, the worse it will get for Chemeq."

Southern Cross Equities biotech analyst Stuart Roberts also expressed concern about Chemeq's management, saying that allegations of trading while insolvent were very serious.

"The substantial cost over-runs on the plant indicate the company has problems with capital management," he said.