Leather goods firm Pittards has announced that it needs to raise up to £1.16m or face the possibility of administration.
The Somerset-based company has been struggling within the challenging economic environment for months, and in March planned to raise £255,000 with a placing of one million shares at a price of 25p per share.
In this latest update, the company said it had "successfully concluded" discussion with a trade investor, who has agreed, subject to finalisation of a subscription agreement to invest up to £1m via the issue of up to 25,000,000 new ordinary shares at a price of 4p per share.
Pittards revealed that if it is unable to raise to the funds it would be unable to continue to trade and would "most likely be placed into administration".
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The firm was founded in 1826 and is part of the history of leather manufacturing and glove-making in the Yeovil and Somerset area. The company today employs around 200 people in the º£½ÇÊÓƵ and 1000 in Ethiopia.
On June 29, the company announced it had agreed new banking facilities of £10.1m on the condition of it being able to carry out a successful equity raise.
The leather goods firm's shares on the AIM market have been suspended at the price of 5.375p as a full audit is to be completed for the year.
Talks have been underway surrounding a fundraise and a trade investor has agreed, subject to finalisation of a subscription agreement, to invest up to £1m. Based on a minimum fundraise of £1.16m the trade investor would be able to invest an aggregate approximately £638,670.
Trade investor subscription is based on the company successfully raising a minimum of £1.16m additional capital, a new banking facilities, the passing of the fundraising resolutions, and admission taking place.
In a statement Pittards added: “Should the company be unable to raise a minimum if £1.6m of additional capital the company would be unable to continue to trade and would most likely be placed into administration in which case the prospects for recovery of value, if any, by shareholders would be uncertain.
“The trade investors subscription remains subject to contract and there can be no guarantee that the condition of the trade investors subscription will be fulfilled or that it will completed on the terms set out.â€
A further announcement will be made in due course.
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