Faron Pharmaceuticals Limited (AIM:FARN) said it is to seek authorisation for a rights issue to help resolve its funding situation with IPF Fund II SCA, SICAV-FIAR (IPF).
Finland-based Faron warned last week it was in breach of a debt agreement with IPF signed in February 2022 and also several subsequent waivers.
As a result, it is in several 'Events of Default' it said with its bank accounts blocked as they are all pledged to IPF.
Negotiations related to possible restructuring of the loan facility as well as a waiver of covenant obligations are ongoing, the statement earlier this week said.
In its update today, Faron said talks are still ongoing about another waiver and getting its accounts unblocked.
On 19 February, Faron held cash and equivalents of €4.3 million, enough, it said, to cover its needs until the beginning of April 2024.
As well as a rights issue, Faron said it is looking at alternative short-and long-term financing options.