SYDNEY, Australia Executives of Brisbane-based ForBio Ltd. intend to raise US$25 million and substantially increase the company¿s market valuation by moving its market listing to the Nasdaq exchange.
ForBio¿s managing director, Bill Hendersen, said he believes U.S. investors have shown considerably more interest in technology stocks such as ForBio, and the company¿s share price will be more than doubled when it lists on Nasdaq.
The company has signed a letter of intent with a syndicate of underwriters in the U.S. for the issue of 2.5 million shares at a price, yet to be finalized, between US$9.50 and US$10.
As the existing Australian shares are consolidated every five shares will be merged into just one for quoting on Nasdaq a US$10 starting price will be equivalent to US$2, or slightly more than A$3 for each of the present Australian shares.
In contrast, ForBio¿s share price had fallen to A$1.40 just before its announcement last week, after trading at around A$1.90 in November.
Hendersen said the due diligence and legal preparation work for the initial public offering on Nasdaq is well advanced and will be completed within about three months. ForBio will be delisted on the Australian exchange, but will then apply to have the Nasdaq listing also quoted on the Australian exchange.
Hendersen did not know whether the application will be accepted by the Australian exchange.
The move by ForBio, a company which specializes in using tree genetics and robotics for mass cloning of trees, is part of a general shift by Australian high-tech stocks toward listing on Nasdaq an exchange generally seen as more appreciative of technology stocks than the local market.
A number of Australian software companies have moved to Nasdaq, including a company developing software for smart cards, Chip Application Technologies, which announced last week it will list on Nasdaq.
Hendersen said part of the problem with ForBio¿s share price was that many of the plantations set up using the tree clones produced by the company were in parts of South east Asia that have fallen into recession.
The company has now reorganized, with no plantations in Southeast Asia. It will use the money raised from the U.S. listing to create additional plantations to demonstrate its technology to customers. ForBio expects to announce a substantial loss for the year to December.
ForBio also has a 25 percent interest in ProBio America Inc., a company adapting technology used in tree genetics for use in humans. The technology which includes inhibitors to ensure that genes inserted into a foreign genome have only the effect intended is being used through an association with a group of researchers at the University of Hawaii.
The technology has been successfully used to clone mice, but there are no current plans to float the company. Hendersen said that ProBio is developing a business plan for further work on the technology. n