Allied Minds writes-off seven businesses in restructuring

Shares in Allied Minds tumbled on Wednesday after the US intellectual property firm said that it will restructure and reallocate capital and management resources across its portfolio, which will result in a $146m write-down in full year results, in order to accelerate commercialisation.

This will result in $14m worth of funding in its 2017 budget being discontinued for seven of its subsidiaries, Biotectix, Cephalogics, CryoXtract, Novare Pharmaceuticals, Optio Labs, RF Biocidics, and Tinnitus Treatment Solutions.

The FTSE 250 company said it will seek “strategic alternatives” for these businesses, which could include sales or transfers of legal entities or assets, or liquidations.

Capital and management resources released from the subsidiaries will then be diverted to other companies in the portfolio that are more advanced or are promising early stage companies.

From the restructuring there will be a $9m charge currently estimated at $4.7m in the second quarter.

At 30 June 2016 the seven subsidiaries represented $146.6m of Allied Minds' subsidiary ownership adjusted value (GSOAV), which is expected to be marked down on publication of its full year results, but offset with some positive movements elsewhere in the portfolio.

Interim chief executive Jill Smith said: "Today's measures are a necessary step in refocusing the company on the areas where we have most potential. While many of the discontinued subsidiaries have demonstrated progress against technical milestones, the path to commercialisation is unlikely to yield appropriate financial returns.

“The restructuring will result in a mark down to GSOAV. However, it places Allied Minds in a stronger position to capitalise on the exciting opportunities in front of us, and ultimately to deliver returns to shareholders over the medium term to longer term through accelerated commercialisation and monetisation, and portfolio growth."

Shares in Allied Minds were down 17.51% to 215.30p at 1302 BST.