Banks give Fagron time to sort out finances

BRUSSELS: Belgian pharmaceutical ingredients maker Fagron said on Thursday that banks had given it three months to sort out its financial situation, giving it time to raise fresh funds through a capital increase.

Fagron´s shares, which have tumbled 80 percent this year due to problems securing reimbursements by insurers in the United States, jumped 8 as much as percent on the announcement.

The banks currently allow for a maximum net-debt to recurring core profit (REBITDA) ratio of 3.25 but lifted that requirement until the end of March, Fagron said.

The company has not disclosed its current debt ratio. Analysts at ABN Amro estimated earlier this month that the group would need to raise 160 million euros ($175mln) to bring its net debt to core profit ratio to 2.5, or 280 million euros to take it to 1.5. Fagron, founded in 1990, makes ingredients for pharmacies and hospitals to make medicines, and previously said it aimed to raise funds to improve its financial position after talks to be taken over by another company failed. This failure also prompted the group´s founder and chief executive quit this month.