Sphere Medical plunges after warning it could run out of cash
Shares of Sphere Medical plunged after the company said it would likely be forced into insolvency, unless it could fresh financing which was conditional on its delisting from AIM.
FTSE AIM All-Share
745.67
17:08 19/04/24
Health Care Equipment & Services
11,690.05
17:09 19/04/24
Sphere Medical Holding
0.40p
17:14 19/09/17
Sphere felt there was not sufficient funding available through public markets, so has decided to delist in order for one of its existing owners, Woodford Investment Management, to supply the quantum of funds needed.
That was due to fund restrictions on Woodford for its public market investments.
"Unless finance is secured, the group's working capital will be exhausted in late September 2017. If the company is not successful in obtaining the Investment, the board believes it is very unlikely that an alternative source of funding will be found and hence it will in all likelihood be forced to enter into an insolvency process," the company said in a statement.
The group's progress since launching its Proxima 3 product had not been reflected in the market price of the company's ordinary shares, despite attracting investment from star fund manager Neil Woodford.
Sphere said that the undertaking of the investment and cancellation would enable the company to continue developing the Proxima platform under a revised business model, significantly reducing commercial operations in the short-term.
Acording to the AIM-listed outfit, certain funds managed by Woodford Investment Management and the Wales Life Sciences Investment Fund had conditionally agreed to invest an aggregate sum of £5m.
New and existing investors would have the opportunity to invest an extra aggregate sum of up to £3m, the company added.