(Alliance News) - Motif Bio PLC on Wednesday said it intends to raise GBP600,000 through a 142.9 million share placing priced at 0.42 pence per share in order to fund its restructuring programme.
Shares in Motif were up 13% at 0.68p in London in late morning trade.
Motif will be holding a general meeting where shareholders will vote on the winding down or disposal of Motif's US subsidiary, Motif Biosciences Inc, and on the issue of placing shares at less than their 1 pence per share nominal value.
The placing is subject to the passing of these resolutions, as well as resolutions to make changes to Motif's articles of association and renew the firm's authority so that it can grant a warrant over 20% of it share capital to Hercules Capital Inc.
In 2017, Motif agreed up to USD20 million of debt financing from Hercules in two tranches. Motif drew down the first USD15.0 million tranche but did not meet the milestones for the second tranche of USD5.0 million. This was amended in February 2019 and in March the firm made USD7.5 million of early repayments.
A new deal has now been agreed, and was announced in its half-year report on Monday. Should shareholders approve a new agreement between the two companies, it has been decided that Hercules will relinquish its loan guarantee from Motif and relieve future obligations. Motif Biosciences Inc will then wind down operations and hire an advisor so it can sell its assets, including antibiotic iclaprim, ideally selling the drug to a firm who would commercialise it.
Hercules will then be given a perfected security interest in all Motif Biosciences Inc's intellectual property as well as a warrant for another 20% of Motif's shares an a 5 pence per share exercise price.
As a result, Motif would be "relieved of the liability and guarantee for the Hercules loan of approximately USD6.9 million".
Following this arrangement, Motif will become a cash shell under AIM rule 15, giving it six months to make a reverse acquisition or have its shares cancelled.
Should the capital raise not go ahead and the deal fail to gain shareholder support, then Motif will be forced to cease its operations and its shares would be suspended.
SP Angel Corporate Finance LLP is acting as bookrunner on the conditional placing.
By Anna Farley; annafarley@alliancenews.com
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