Botry-Zen chairman Dr Max Shepherd said because of the rejection by shareholders last week in Dunedin of a $1.8 million capital-raising proposal the company "is currently operating in excess of its approved overdraft limit with the Bank of New Zealand and is therefore in default of its facility and security arrangements".
PricewaterhouseCoopers was yesterday appointed as an independent adviser to prepare a report on Botry-Zen's financial position and options, which will then be discussed with the BNZ, he said in a statement.
Botry-Zen, which raised almost $10 million for research and development of its two mainstay grape fungus-fighting products during the past seven years, had signalled earlier this month it was running into problems.
Because of production difficulties at its Dunedin manufacturing plant, it had to reassess whether it could meet production targets, which had formed the basis of forecasts to the BNZ and to subscribers to the $1.8 million capital-raising proposal.
This in turn also impaired its cash flow.
Dr Shepherd said yesterday there were no discussions with a third party to provide additional capital and the board expected it was "likely" Botry-Zen would be sold.
There had been some "early expressions of interest", he said.
"It would be premature, however, to speculate what the timing and outcome of a sales process might be," Dr Shepherd said.
