The MGC Pharmaceuticals Ltd (LON: MXC) share price crashed 57.7% after revealing that it had raised £0.65 million (A$1.24 million) (before expenses) via a placing and subscription of 541,666,667 new ordinary shares of no par value in the capital of the Company for 0.12 pence (0.23 cents) per Fundraising Share.
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The decline in MGC Pharma’s share price was expected as the company offered the investors who participated in the fundraising a discount to yesterday’s closing price. The massive drop reflected the significant discount offered to the investors.
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Furthermore, the company raised £50,000 (A$95,000) from Roby Zomer, the CEO and Managing Director of the company, based on a convertible loan agreement alongside the placing and subscription. The total amount raised was now £0.70 million.
The convertible loan agreement allows Mr Zomer to provide an investment in the company without seeking advance shareholder approval, as would be the case with a direct subscription. Furthermore, some company management team members directly subscribed to ordinary shares with the firm based on subscription letters.
The European-based pharmaceutical company specialising in producing and developing plant-inspired medicines noted that it would use the funds raised to bridge its short-term working capital requirements and provide a cash runway.
However, the company also told investors that it was working on a plan to cut costs further so that the funds raised would last much longer. The company’s directors are also looking at alternative funding measures to provide the firm with additional cash.
Looking at MGC Pharma’s recent press releases, we can see that the company recently received an order worth US$1 million from AMC Pharma to produce ArtemiC, an over-the-counter version of CimetrA, a nanoparticle formulation based on curcumin and boswellia.
AMC Pharma had already placed an initial order worth US$2 million in March 2023, with the second US$1m order upping the total orders to date of ArtemiC by AMC to over 100,000 units. The new order was secured with an immediate down payment of US$150k.
*This is not investment advice.
MGC Pharma share price.
The MGC Pharma share price crashed 57.69% to trade at 0.11p, from Thursday’s closing price of 0.26p.
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