CBD

Phosphagenics suspends CEO

Phosphagenics suspends CEO

Biotech Phosphagenics has suspended chief executive Esra Ogru as it awaits the results of an investigation into "what appear to be irregular transactions in relation to its invoicing and accounting records".

Founder, joint CEO and second-largest shareholder Harry Rosen flew back from New York on Monday to take sole control of the company's operations.

News of Ogru's suspension came as a shock on Monday. Seen on TV spruiking Phosphagenics' products, she is respected in the biotechnology industry.

It also will no doubt be raising the eyebrows of investor Simon Marais, whose Orbis Group is Phosphagenics' biggest shareholder, with a 13.1 per cent stake.

While details were scanty, Phosphagenics told the market "the amounts involved may be material".

Former chief financial officer Ashley Arnott, who left the company in January, told CBD there was no sign of trouble when he departed. "I was there until after the financial-year process was through, and the audit, and that was all fine," he said.

While it does not make a profit, the company has growth potential in the shape of its main product, a dermal patch designed to deliver painkiller oxycodone, and it also has a range of cosmetic creams.

Reassurance by the company on Monday that its $14 million cash pile was intact failed to stop its share price plunging 19 per cent to finish the day at 10.5¢. That is a paper loss for Marais' Orbis of $3.3 million.

Steadfast moves

Tough times for former QBE chief executive Frank O'Halloran, who will have to work 57 years and three months in his new gig before he reaps as much as he got in his final year at the insurance group. At this rate he will be fully cybernetic before breaking even.

O'Halloran was appointed chairman of insurance broking network Steadfast in October last year, a role for which he will get $200,000 a year. It is not quite the $11.45 million he trousered for eight months' work in 2012, his final year at QBE. Steadfast also lacks the glamour that comes with QBE's possession of a mysterious black box reinsurance company in exotic tax haven Bermuda.

Details of O'Halloran's pay at Steadfast are in a prospectus issued by the company as it puts its cap out to investors in a bid to raise up to $562.8 million and list on the ASX next month. Steadfast plans to use the money to snap up stakes in 58 insurance brokers and four related businesses and glue them together as one operation.

CBD wanted to know how much profit the entire shebang, including the new acquisitions, made in 2012 but, sadly, this figure is missing from the Steadfast prospectus. Apparently, that would have involved making too many assumptions to generate a valid figure.

However, the document does reveal the pre-acquisition Steadfast turned profits of just $2.9 million in 2011 and $6.2 million in 2012. As nothing could possibly go wrong when integrating 60 or so disparate businesses, CBD is sure that Steadfast's profit forecast of about $30 million for 2013 is entirely achievable.

Not impressed

CuDECO chief executive Wayne McCrae was in fine form on Friday, blaming the company's woeful share price on "relentless selling and short selling of shares by a group of hedge funds", including "blatant manipulation by four funds". It reminds CBD of the time in 2006 he blasted critics as "southern dickheads".

Meanwhile, the company continues to post triumphant videos on YouTube.

Despite an impressive display of big trucks and a swelling soundtrack, the video, posted on June 23, has yet to impress shareholders. It has just one comment, dating from a week ago: "Great video buts [sic] its [sic] doing nothing for the share prices so who cares!"

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bbutler@fairfaxmedia.com.au

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