Celadon confident in seeing through funding challenges

23rd Aug 2024 11:58

(Sharecast News) - Cannabis-based medicines specialist Celadon Pharmaceuticals updated the market on its financial position on Friday, amid ongoing challenges related to delays in expected funding.

The AIM-traded company had anticipated raising £2.1m through an equity fundraising round announced on 10 May, with shares issued in four tranches.

To date, Celadon said it had received £0.6m of the £1m committed by one investor, but the delay in receiving the £0.1m due from the third tranche had led to the postponement of the fourth tranche, worth £0.25m.

The investor had reiterated their intention to fulfil the outstanding payment obligations, but Celadon said the timeline remained uncertain.

Additionally, Celadon said it had faced delays in accessing funds from its committed credit facility.

An initial drawdown request for £1m, submitted on 27 June, had only partially materialised, with £0.3m received as of 22 August.

The remaining £0.7m was expected following the completion of a property transaction, according to the lender.

Despite the delays, the company's directors said they were confident in securing the remaining funds.

As of 22 August, Celadon's cash reserves stood at £0.21m - a figure that could improve upon the receipt of the outstanding equity and credit facility funds.

However, the company's continued operations depended on the timely arrival of those funds or alternative financing, which was yet to be secured.

The board said it was also exploring longer-term debt facilities with potential institutional lenders to refinance the existing credit arrangements.

Celadon said it would provide further updates as the situation progresses.

"Celadon is grateful to the investor and lender for their re-confirmed commitments to the Company and for the additional funds received from the lender," said chief executive officer James Short.

"The group's ongoing conversations with alternative potential lenders continue to progress positively with a view to securing the long-term future for the business."

At 1130 BST, shares in Celadon Pharmaceuticals were up 31.27% at 28.88p.

Reporting by Josh White for Sharecast.com.