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ValiRx agrees break fee as it terminates financing agreement

ValiRx will pay a break fee of £212,500 to European High Growth Opportunities SF after the pair agreed to terminate the financing deal
The two parties entered into the subscription agreement at the end of April

Drug developer ValiRx Plc (LON:VAL) has agreed to terminate a financing agreement with European High Growth Opportunities Securitisation Fund.

As part of the deal, ValiRx is paying the investor a £212,500 break fee; slightly higher than the £150,000 bosses had previously expected.

The fee will be paid in shares issued at the lowest closing price during the five days prior to the payment. ValiRx said this would protect its current cash position.

READ: ValiRx raises funds to meet immediate working capital needs

The company reminded investors that a £400,000 tax credit is due next month, while it has also raked in another £150,000 from the sale of an unlisted security.

A recent £300,000 share placing has also helped to top up the coffers.

“As previously announced, the company's working capital position is dependent on new funds being made available to it and it continues to manage its working capital position carefully.”

In late April, European High Growth agreed to subscribe for a total of 213mln shares in ValiRX at a price of 0.6p each, raising gross proceeds of £1.28mln.

The money was to be drawn down in three equal tranches of £426,000, which would have helped fund the Phase II trial of ValiRx's prostate cancer drug, VAL201, through to completion.

However, last month ValiRX said it was in advanced discussions to terminate the agreement following a delay to the issue of Tranche 2 shares.

ValiRx shares were down 1.7% in late-afternoon trading on Tuesday.

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