The council pushed the firm into administration in May over its failure to repay a £2m loan but now a £30m deal to sell some of its assets to a US company means it can now settle the debt. Tony McDonough reports
Drug developer Redx Pharma is set to exit administration and resume trading after settling its £3m debt with Liverpool City Council.
The council pushed the firm, which last year relocated from Liverpool city centre to Cheshire, into administration in May over its failure to repay a £2m loan.
Three-year loan
The authority loaned Redx the money in 2012 to support its expansion in the city. It later offered a two-year repayment extension but claimed in May the company had made no effort to repay.
Liverpool Mayor Joe Anderson said he had a “duty” to protect public money.
The move angered directors of the stock market-listed firm which has been developing lifesaving inhibitor treatments for pancreatic, gastric and biliary cancer.
Administrators FRP Advisory said it would “seek to realise assets in the interests of creditors”.
£30m deal
On Monday it was announced FRP had agreed to sell patents, intellectual property and manufacturing contracts around some cancer treatment drugs to US firm Loxo Oncology for around £30m.
This will allow Redx to pay the loan to the council, which has risen to more than £3m after compound interest was added, and resume trading.
It is expected trading Redx’s shares, which had been suspended on the Alternative Investment Market, will also resume trading.
Jason Baker from FRP said on Monday: “We are pleased to have taken a significant step forwards in line with our strategy towards the rescue of the (Redx) companies as going concerns.
“Today’s unconditional agreement is for the realisation of certain of the group’s intellectual property assets, the proceeds from which will allow for the creditors of the companies to be paid in full and provide working capital for the group’s continuing business, thus restoring the companies to solvency.
“The administrators anticipate that, upon their review and approval of the management’s final business plan, the company will be set to exit administration.”
‘Robust approach’
Liverpool City Council was also pleased with the outcome. In a statement it added: “The decision by the city council to call in the administrators was not taken lightly.
“Today’s announcement proves it was the right course of action when local authorities are seeking to be more commercial in their approach
“The council has worked with independent legal and financial advisers throughout the loan period to ensure it maintains a robust approach to managing its investments.
“The council has not only recovered the debt in full but welcomes the news that processes are in place to see the company continuing to operate as a business.”