Dimethaid's financial position depressed
LEONARD ZEHR
Dimethaid Research Inc.'s current financial position, "though depressed, is far from insurmountable," the company says in its information circular.
The Markham, Ont.-based drug developer, which is fighting a proxy battle with dissident shareholders, warned in June that its latest private sale of $4.2-million of special warrants would keep the company going until about Aug. 31.While the information circular said the company must raise money to support its operations, it didn't disclose any new financing initiatives.
Employee salaries have been frozen for the past two years, the company said, but in order to increase revenue, it needs to invest in sales and marketing programs.
The company also charged that the dissident's proxy challenge has "interfered with Dimethaid's ability to raise capital, eroding the recent financing offer from $10-million to $4-million."
Dimethaid said it had a term sheet offer on May 7 from an investment bank for a private placement to raise $10-million.
On May 11, when the dissident's demands were made public, the company said a number of institutional investors backed out of the proposed financing. The company's stock price then declined.
"Had it not been for the dissidents' actions, Dimethaid would have been able to complete a much larger financing, with less dilution," the company said.
A spokesman for the dissidents said his clients were out of the country and couldn't be reached for comment.
Dimethaid also disclosed that director Frederick Keeler, who is the husband of chief executive officer Rebecca Keeler, will not seek re-election at the annual meeting on Sept. 21.
Mr. Keeler's presence on the board was one of three issues raised by the dissidents, who claim to have support from shareholders controlling more than 20 per cent of Dimethaid.
They have also cited the protracted amount of time Health Canada took to approve the company's Pennsaid pain cream and a British arbitration decision for $2.7-million (U.S.) against Dimethaid for their proxy challenge.
The company said "these complaints are insufficient grounds for bowing to such an extreme demand as the replacement of the entire board."
In a letter to shareholders, Ms. Keeler also said the dissidents, led by Daniel Chicoine, lack pharmaceutical experience and are "effecting a takeover bid, without making an offer to all shareholders."
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