Food firm looks to extract benefits from rights issue; Provexis to raise pounds 5m to strengthen balance sheet.

Byline: ALEX TURNER

HEALTHY drinks group Provexis has announced plans to strengthen its balance sheet with a pounds 5m rights issue.

The firm, which has a 75% interest in a joint venture with the University of Liverpool, has made consecutive pounds 1m-plus losses and is looking for the cash injection to enable it to grow.

Provexis specialises in using extracts from tomatoes and bananas for medical benefits.

It has developed Fruitflow, a tomato-based drink that thins the blood and helps circulation.

It is looking to issue 200m new shares in two phases, at a price of 2.5p per share to raise pounds 5m before costs - more than 70% below the share price at the time of the announcement.

Provexis chief executive Stephen Moon said: "The proceeds of the subscription will significantly strengthen our balance sheet, putting us in a stronger position when negotiating commercial arrangements for our patented, scientifically-proven Fruitflow heart-health technology.

"It will also enable the company to explore and accelerate the development of new claims for Fruitflow and our NSP#3G plantain technology for the treatment of inflammatory bowel disease-related conditions."

It expects the initial subscription shares, which will raise just over pounds 1m, to begin trading on the Alternative Investment Market on Wednesday with the second phase being subject to approval at a general meeting.

The company lost pounds 4.5m in the year to March 2009, compared with a loss of pounds 1.1m the previous year.

A goodwill write-off relating to an acquisition dating back to 2005 accounted for pounds 3m of this year's figure.