Sale of Ellume's Australian arm on the table as liabilities hit $140m

Voluntary administrators of Brisbane-based medtech Ellume’s Australian arm have told creditors a business sale is under consideration, revealing the company has racked up $140 million in liabilities.

At the first meeting of creditors held on Monday, administrators FTI Consulting said they were looking into either selling Ellume Australia or recapitalising the company which manufactures COVID-19 at-home test kits.

In the period since administrators were appointed on 1 September FTI Consulting says it has been operating Ellume Australia on a “business as usual” basis, and undertook urgent negotiations for third party funding options which led to the signing of a funding agreement.

In addition, administrators said they established new supplier accounts to enable continued trading and met with staff in Brisbane to undertake an assessment of operations and determine entitlements owed to employees.

The firm’s research to date has found Ellume has liabilities of around $140 million, including $89 million owed to convertible note holders, $49 million to creditors, and $1.69 million of employee entitlements. As of 1 September, Ellume’s Australian arm had 215 employees.

This compares to confirmed assets worth about $39 million, including $1.5 million in cash, $37 million in plant & equipment assets, and $620,000 in debt owed to Ellume. Administrators are still assessing the value of the company’s inventory on hand.

FTI Consulting will soon issue a report to creditors on or before 28 September, and a second meeting of creditors will be held on or before 7 October where it will be decided whether the company is wound up, a deed of company arrangement is entered into, or administration of the company ends.

Decisions about the future of Ellume relate to the company’s Australian arm only, with its US-based subsidiary immune from the impacts of the administration.