California investor shores up Aquasearch
By John Duchemin
Advertiser Staff Writer
As Big Island biotechnology firm Aquasearch enters bankruptcy and replaces its president, the company has attracted the aid of a multimillionaire California venture capitalist who seems intent on rescuing the company from its financial crisis.
Aquasearch founder Mark Huntley, above, is stepping down as CEO and is being replaced by Harry Daugherty.
Propper's Chardan Ventures has agreed to lend Aquasearch $300,000 in "debtor-in-possession" financing, a move approved Monday in U.S. Bankruptcy Court in Honolulu. The money will help the company, which has lost money since inception, pay for operations for the next several months.
Propper is not only propping up the company, which has struggled for years to pay its bills, but he appears key to resolving a dispute between company management and several minority shareholders who forced the company into bankruptcy court in October.
Under a deal worked out over the weekend, Aquasearch voluntarily entered bankruptcy, ending a month of fighting to stay out of bankruptcy. Company founder, president and chief executive Mark Huntley has stepped down a move sought by the dissident shareholders and is now chief technical officer. Replacing Huntley as interim chief executive is Harry Daugherty, a marketing consultant who this year has helped Aquasearch market its main product, the nutraceutical AstaFactor.
Overseeing Aquasearch finances through bankruptcy will be a three-person committee of Propper; Greg Kowal, a minority stockholder who spearheaded the dissident faction; and Dick Sherman, a current Aquasearch board member.
The moves were approved by Bankruptcy Judge Lloyd King. He also gave Aquasearch four months to come up with a plan to reorganize the company and pay millions of dollars in debt to dozens of creditors. If Aquasearch can't form a plan within four months, creditors can come up with their own plan for the company.
The dissidents did not object to the moves, and have backed off on demands to appoint a trustee to oversee Aquasearch a move that would likely have led to a dismantling of the company.
The bankruptcy appears to be coming off unusually quickly and smoothly, said Aquasearch attorney Jerrold K. Guben. He said a plan should be drawn up well within the four-month grace period.
Guben and Aquasearch officials declined to discuss specifics of any reorganization plan, but Guben said Propper may play a significant role in the company.
Propper helped form Montgomery Medical Ventures in 1984, a Silicon Valley firm that eventually amassed more than $135 million in its portfolio of investments. On his own since the mid-1990s, Propper has also invested millions in biotech ventures including Covalent, a Bay Area company in which he owns several million dollars' worth of stock, according to Covalent filings.