(Alliance News) - ValiRx PLC on Wednesday said it conditionally raised GBP200,000 from a share issue priced at 3.5 pence per share.
The placing, conducted on the biotechnology company's behalf by Peterhouse Capital Ltd was with new investors and is conditional on the passing of a share capital reorganisation resolution by shareholders at a general meeting. Peterhouse has been made ValiRx's sole broker with immediate effect.
In mid-February, shareholders rejected a motion proposed by ValiRx to allow it to issue new shares to raise some funding. ValiRx had warned in January a lack of shareholder backing would "impair" its ability to keep funding clinical trials.
At the time, ValiRx said it was dependent on relief from creditors to keep going. It was also looking at other sources of funding.
After speaking with shareholders, ValiRx now wants to consolidate 125 existing shares into one share, then sub-divide that share into one new ordinary share and one new deferred share.
Post-reorganisation, ValiRx will have raised the GBP200,000 from the issue of 5.7 million news shares at a price of 3.5 pence each. Before the reorganisation, the placing shares represented 714.3 million ordinary ValiRx shares at a price of 0.028 per share.
Shares in ValiRx were down 12% at 0.035p in London in midday trading.
ValiRx described its capital position as "extremely weak" and said it is "dependent on the support of its creditors to continue trading". Funds raised from the placing will go towards working capital and cover outstanding creditors for services "critical to the operation of the company".
Peterhouse has agreed to allow ValiRx access to the conditional placing proceeds "to alleviate the immediate working capital strain on the company", with no director fees or remuneration to be paid until after the general meeting.
"The company will be required to raise further funds in the near future in order to meet its working capital requirements," ValiRx noted.
Should the placing and necessary due diligence checks complete as expected, ValiRx intends that Martin Lampshire - currently an executive director at Global Resources Investment Trust PLC - to join its board as a non-executive director.
By Anna Farley; annafarley@alliancenews.com
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ValiRx (VAL)