CathRx looks to delist from ASX

Medical device maker CathRx (ASX:CXD) will likely seek to delist from the ASX as it prepares the company for a sale.

In a conference call with investors, executive chairman and CEO Denis Hanley said the company had met with potential buyers in the USA, and had been met with “continuing interest” in its business model.

But CathRx's low market capitalisation of around $4 million and the relative illiquidity of its shares could complicate the search for a buyer.

The low liquidity means that CathRx's market capitalisation changes significantly based on even small share transactions, he said.

Hanley added that the reporting and other regulatory requirements of an ASX listing make negotiations with large corporations very difficult while a public company.

The company will also need to raise funds to prepare for a sale through a capital raising, and parties interested in underwriting the capital raising have indicated that delisting would be a requirement.

“As a result of that our current plan would be to seek shareholder approval to delist after the planned capital raising,” Hanley said.

He said that a delisting would not impact the company's structure or shareholder rights.

“It's just that there would be no ability to trade the stock on the ASX – the primary exit for shareholders from CathRx would be after the sale of the business and therefore a distribution of the results of the sale.”

Hanley also hinted at the planned size of the capital raising and timeline for the sale process.

“We think that the cost to get to the point where the company would be sold would be approximately $6 million per year, and we think that two years would give us the ability to negotiate,” he said.

Hanley first floated the possibility of taking the company private in conjunction with a capital raising during an earlier investor conference call in March.

He noted that the company was finding it difficult to negotiate the sale of CathRx licenses – or potentially the company itself – while the company's market capitalisation remained so low. At the time, the company had a market cap of $6 million.

Hanley said the company's low market cap had also been a factor in the collapse of a potential European partnership agreement.

CathRx is developing and producing a range of remanufacturable cardiac catheters for use in the diagnosis and treatment of cardiac arrhythmias.

The company is aiming to fill the need for a cost-effective alternative to expensive disposable cardiac catheters.

CathRx shares dropped in morning trade, down to $0.021 from yesterday’s close of $0.025.