Collagen Solutions PLC (LON:COS) shares leapt higher on Monday as the firm said it is to raise £6mln at a premium to its current share price, with a multi-billion-dollar US agriculture company agreeing to pump in the majority of the cash.
Rosen’s Diversified, the fifth largest beef processor in the US and valued by Forbes at over £2.4bn (US$3bn), is to invest £4.2mln into Collagen through the purchase of 83.6mln shares at 5p apiece – almost 25% above Friday’s closing price.
A separate placing and open offer at the same price among existing investors will raise up to a further £1.8mln, and one major shareholder has already committed to taking up their entitlement of 8mln shares.
The money will allow Collagen to expand its contract manufacturing activities, develop new products, and help with the commercialisation of ChondroMimetic – its knee cartilage scaffold that is awaiting sign-off by European regulators.
It will also be used to pay off debts and fund working capital.
“We are pleased to welcome Rosen's Diversified Inc. as our strategic partner and anchor investor in this round,” said chief executive Jamal Rushdy.
“This funding round will support continued growth of our core business, including our supply of collagen and tissue biomaterials as well as new product development contracts activity, providing the company a solid foundation over the next several years.”
He added: “In addition, the funding will support our launch of ChondroMimetic following review and approval of the data we previously submitted to our Notified Body.”
Tissue supply deal agreed
Rosen’s strategic investment is part of its plans to get into the animal tissue-related biomedical products space.
AIM-quoted Collagen uses collagen and/or animal tissue, such as pericardium, to make everything from heart valves to bone grafts right through to wound dressings.
As well as investing in Collagen, Rosen’s Scientific Life Solutions subsidiary has agreed a deal which will see it supply tissue to the company.
In afternoon trading, shares in Collagen Solutions were 17.3% higher at 4.75p.
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