Neil Woodford-backed Allied Minds share price dives on writedown costs from restructuring

 
Lynsey Barber
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Neil Woodford's funds are one of Alied Minds' biggest shareholders (Source: Getty)

Shares in the Neil-Woodford-backed tech innovation group Allied Minds have dived as much as 18 per cent at the open after announcing a restructuring that is expected to result in $146.6m (£118m) of writedown costs.

Seven of the FTSE 250-listed US company's subsidiaries will be dropped, via a sale, transfer of assets or liquidation in order to focus on other areas of the business.

"Capital and management resources unlocked from this process will be diverted to other companies and opportunities in the portfolio where there is greatest potential for value creation," the company said in an update to the market.

"Attention will be focused in particular on our more advanced subsidiaries and most promising early stage companies, and on scaling our origination platform to take full advantage of opportunities across our network of research institutions and corporate partnerships."

Neil Woodford's funds own a 29 per cent stake in the firm and is one of its biggest shareholders.

Allied Minds, which invests in early-stage companies and R&D to commercialise the technology will discontinue Biotectix, Cephalogics, CryoXtract; Novare Pharmaceuticals, Optio Labs, RF Biocidics, and Tinnitus Treatment Solutions.

It expects to free up around $14m from the restructuring for the year ahead, minus charges of $4.7m in the second quarter.

"Today's measures are a necessary step in refocusing the company on the areas where we have most potential," said interim chief executive Jill Smith.

"While many of the discontinued subsidiaries have demonstrated progress against technical milestones, the path to commercialisation is unlikely to yield appropriate financial returns. At the same time, there is an opportunity cost of diverting capital consumed by these subsidiaries from investment in some very promising areas of the portfolio and in scaling our pipeline and partnerships."

The firm will publish full-year results on 27 April.

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