Chemeq finalises Japanese deal

Chemeq's bail-out deal with Japanese investment group Mizuho International has been signed off, and subject to approval from Chemeq's shareholders, the company will receive an injection of cash of at least AUD$40 million.

The transaction includes $20 million in convertible bonds to be issued to Mizuho and $20 million to related entities of investment management group Stark Investments, plus the commitment to underwrite an additional $20 million investment by the two companies if Chemeq options due to expire in June do not generate additional capital.

Stark, which has more than US$5 billion in assets under management, was nominated as an additional investor by Mizuho. The group's investment in Chemeq will be a direct investment and will not be managed under the company's convertible bond arbitrage strategy.

Minor adjustments to the term sheet originally released on January 6, 2005 include extending the deadline for Chemeq to provide evidence of additional confirmed orders for the 12 month period ending June 30, 2006 to September 30, 2005, from June 30, 2005. The floor conversion price has also been raised from AUD$0.55 to $0.60.

Chemeq chairman and CEO Graham Melrose said the company was putting together an explanatory memorandum to shareholders and planned to hold an EGM for shareholders to approve the deal in March.

"Now that the investors have completed their due diligence and final documentation has been agreed, we can now put the capital raising proposal to shareholders and get on with building Chemeq's global business," he said in a statement.

Chemeq's share price, which went into trading halt yesterday pending the announcement of the final terms of the deal, rose by as much as 14 per cent in early trading today. At the time of writing, the shares were trading at $1.73, up 4.2 per cent on Friday's price.