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Shares of Celadon Pharmaceuticals PLC (LSE:CEL) fell by 20% following the announcement of a £1.05 million equity fundraising round, which involved issuing new shares at a discounted rate.
The company, which specializes in cannabis-based medicines, has issued 2.625 million new shares priced at 40 pence each. This price represents a 23.8% discount compared to the previous day's closing price of 52.5 pence.
Global Investment Strategy UK Limited managed the placement and will receive a cash fee along with warrants for 131,250 additional shares. This new equity infusion is intended to address Celadon's financial difficulties, which include delays in funding from a previous equity round and a drawdown from a credit facility.
Despite reconfirmations of payment intentions from both the equity subscriber and the lender, Celadon noted uncertainty regarding the exact timing of these payments. As of 10 September, the company reported having only £48,000 in cash. The new funds raised will increase the available resources to £1.046 million, which is anticipated to support the company’s operations until December, provided that creditor management remains cautious.
Celadon is also engaged in discussions with potential institutional lenders to secure long-term debt refinancing but has reported limited progress in these negotiations.
Following the news, Celadon’s share price dropped by 10.5 pence, settling at 42 pence.
