Benchmark plans share issue to fund CleanTreat scale-up

The Sheffield-based company said in a statement today that £19m will be used to fund scale-up of CleanTreat, the system that removes chemical residues and organic matter from water used in bath treatments to remove sea lice from farmed salmon.

The rest will provide additional working capital to fund the continuing business and strategy until the proceeds from the planned disposals of non-core businesses - anticipated to amount to between £30m and £35m before costs - are received. 

Interest in Fish Vet Group

The company said it had received indicative offers from several interested parties for the veterinary training and veterinary services (Fish Vet Group) businesses and is currently talking to prospective buyers.

It added that on the indications given, it may receive up to £29m before costs for the two businesses, and was also in advanced discussions with a potential buyer for one of its smaller non-core businesses which may earn it another £2m before costs in the next few weeks.

Regulatory approval

Benchmark’ executive chairman Peter George said: “We are preparing to launch BMK08, our novel medicinal treatment to combat sea lice, one of the main biological challenges in salmon farming.

“This requires scaling up CleanTreat, our proprietary system that removes medicinal residues from treatment water, and which is integral to the delivery of BMK08. Having reviewed a number of funding options, we strongly believe that an equity raise is the optimal funding strategy to deliver this scale.”

Benchmark said it anticipates launching BMK08 in the first half of 2021 following its anticipated regulatory approval, and that this will require scaling up CleanTreat, with an associated funding requirement.

Maximise returns

“Having reviewed a number of funding options, the directors strongly believe that an equity raise is the optimal funding strategy to enable speed to market and maximise returns for Benchmark shareholders,” stated the company.

BMK8, which has proved 99% effective against lice in trials with five salmon farming companies in Norway, must be used in conjunction with CleanTreat so that it is a pollution-free treatment option.

In its statement today, Benchmark said its directors believe there is demonstrable and growing interest from customers for its BMK08 CleanTreat solution and estimates it could reach peak annual sales of £50m in Norway alone and £75m globally.

Full ownership

“The company has considered various strategies to scale up CleanTreat including alternative funding options and, with support from a number of its major shareholders, has determined that retaining full ownership of CleanTreat by raising equity is the optimal route in order to increase speed to market and maximise the returns for Benchmark shareholders with the potential to generate a higher expected return from the company’s investment in product candidate BMK08 and CleanTreat,” continued the statement.

“The directors believe that this, together with the disposals and restructuring programmes being implemented in 2020, will accelerate Benchmark’s move from a position of net R&D investment to becoming a profitable and cash generating company.”

Benchmark plans two share issues, subject to shareholder approval.

It intends to raise £36.4m before costs by offering 91 million shares to the market, and to raise a further £6.6m before costs by offering 16,440,766 shares to qualifying shareholders.