Faron enters financing arrangement with Heights Capital Management entity
By Josh White
Date: Thursday 03 Apr 2025
(Sharecast News) - Faron Pharmaceuticals announced on Thursday that it has entered into a financing arrangement with an entity managed by Heights Capital Management for up to €35m in convertible bonds, issuing an initial €15m tranche to repay existing debt and bolster its financial position ahead of a key clinical readout.
The AIM-traded Finnish biotech said the proceeds from the first tranche would be used to repay its senior secured loan from IPF Fund II in full and for general corporate purposes.
It said the repayment would release the company's assets from security and remove restrictive cash covenants, improving financial flexibility and extending Faron's cash runway into the first quarter of 2026, assuming bond amortisations are settled in shares.
The €15m unsecured bonds carry a 7.5% interest rate and would be convertible into shares at an initial conversion price of €2.94 - a 20% premium to the reference share price.
Faron said it could choose to settle interest and principal in shares or cash over the three-year term, subject to liquidity conditions and ownership limits.
Up to 80,000 special rights, entitling holders to one share each, are attached to each bond.
The agreement included the option for two additional €10m tranches, subject to conditions including positive topline data from the BEXMAB phase two trial in relapsed or refractory myelodysplastic syndromes, due in April.
Conversion of further tranches would depend on market capitalisation and trading volume thresholds.
Faron said the structure would allow it to continue exploring business development opportunities and prepare for potential phase three development, with Bryan, Garnier & Co acting as sole placement agent and financial adviser.
"We are very grateful for IPF's support over the past years during challenging capital markets in biotech," said chief executive officer Dr Juho Jalkanen.
"For the next stages of growth, we are very pleased to partner with HCM, a leading provider of growth capital globally.
"We believe Faron has now all the flexibility and fire power it needs to fulfil its objectives for 2025 and make the most out of the up-coming BEXMAB phase 2 read-out."
At 1019 BST, shares in Faron Pharmaceuticals were down 5.58% at 203p.
Reporting by Josh White for Sharecast.com.
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