Wound specialist may breach loan term

Analytical scientists Olivia Scott and Gill Riches in the labs at Tissue Regenix in Swillington, Leeds. Picture Tony Johnson.

Wound specialist Tissue Regenix, which uses animal and human tissue to replace damaged human body parts, is in talks with loan provider MidCap Financial Trust after saying it is likely to breach one of its loan terms.

Leeds-based Tissue Regenix said that based on the data available to the company, it believes it will breach this covenant test.

The group said the terms of the loan credit facility entered into with MidCap Financial (for a term loan and revolving credit facility) include certain financial covenants which are tested periodically.

One of these covenants is a trailing 12 month revenue test which is scheduled to be tested no later than the end of November.

The firm said it is proactively engaged with MidCap Financial over this potential breach and is in discussion about the consequences of this.

It said these discussions are progressing well and the board is optimistic of being able to agree a solution with MidCap Financial.

By November 8, the company had drawn down £5.9m of the term loan and £469,000 of the revolving credit facility.

The company's cash balance at the end of October was £7.3m. It said that further announcements will be made at the appropriate time.

Tissue Regenix's agreement with MidCap Financial Trust is for a revolving credit facility and a term loan credit facility of up to £17m.

The proceeds are to be used to invest in additional capital expenditure to sustain the firm's future business growth, generate further clinical and health economic real world data, and for general corporate and working capital purposes.

The firm said the credit facilities would enable the company to meet the growing demand for its products.

It also allows it to invest in the growth of the business as it strives to reach profitability in the near term, whilst limiting dilution for shareholders.

Tissue Regenix is a leading medical devices company in the field of regenerative medicine.

It was formed in 2006 when it was spun out from the University of Leeds.

The company's patented decellularisation (dCELL) technology removes DNA and other cellular material from animal and human soft tissue leaving an acellular tissue scaffold which is not rejected by the patient's body and can then be used to repair diseased or worn out body parts.

Current applications address many critical clinical needs such as sports medicine, heart valve replacement and wound care.