Advanced Oncotherapy PLC (LON:AVO) has secured financing of up to £52mln to help fund the development of its LIGHT proton therapy system.
The agreement with Dubai-based Bracknor Investment Group will see AVO issue a minimum of £13mln in convertible loan notes in tranches of £1.3mln each over the next 24 months.
If AVO decides it wants more than this ‘minimum requirement’, it has the option to draw down up to ten additional tranches (£13mln).
Should the full £26mln be issued within the two-year timeframe, Advanced Oncotherapy has another option to raise up to an additional £26mln on the same terms, which could potentially take the total commitment up to £52mln.
The cash will be used to fund the development of its LIGHT proton therapy system, as well as paying for the installation of the first LIGHT unit at its new Harley Street facility.
A chunk of the money will also be allocated to funding the company’s pipeline, with the remainder to be used for general working capital purposes.
“I am delighted that we have been able to finalise a flexible funding partnership with Bracknor that helps us fund the development of our first LIGHT system to completion, supports our first installation in Harley Street, as well as underpinning our plans to move into volume manufacturing and full commercialisation,” said chief executive Nicolas Serandour.
“The flexibility to draw down further funds provides the company with the security needed to pursue our plans to deliver shareholder value through the commercialisation of our unique proton therapy technology.”
The first tranche of the financing will be drawn down immediately.
AVO will receive 95% of the nominal value of each tranche. For example, if the company opts to draw down £1.3mln, it will actually receive £1.235mln.
Further drawdowns of the notes can be requested by the proton therapy specialist if all previously issued notes have been converted or if the last issuance was more than 20 days ago.
The conversion price will be equal to the lowest daily volume weighted average price (VWAP) during the 15 trading days prior to Bracknor issuing its notice to convert.
Bracknor is prevented from acquiring more than 29.9% of the company’s shares.
To try and reduce possible dilution, Advanced Oncotherapy can repay up to 50% of the total amount in cash.
Based on a warrant exercise price of 85p and conversion price of 65p, AVO would have to issue a total of up to 48.6mln new shares to honour the deal, assuming all conversion fees are paid in cash, and assuming the issuance of a maximum of 20 tranches.
The company said its other financing option with Metric Capital, which it provisionally agreed last September, remains open to consideration.
One of the conditions for securing that £24mln of funding was that AVO had to secure separate non-dilutive financing which it said it is also still considering.