Algorae Pharmaceuticals Secures $3M Debt Facility at BBSY+6.7% Interest
Algorae Pharmaceuticals has locked in a $3 million revolving debt facility with ScotPac, providing flexible, non-dilutive funding to accelerate its commercial operations across Australia and New Zealand.
- Secured $3 million receivables-based revolving credit facility
- Facility supports scaling of AlgoraeRx commercial operations in ANZ
- Interest charged only on drawn amounts, enhancing financial flexibility
- Facility backed by trade receivables and parent company guarantee
- Initial term of 24 months with competitive interest rate
Strategic Financing to Support Growth
Algorae Pharmaceuticals Limited (ASX – 1AI) has announced the successful securing of a $3 million debt facility with ScotPac Business Finance, a specialist Australian lender. This revolving, receivables-based working capital facility is designed to provide AlgoraeRx, the company’s commercialisation arm, with the financial agility needed to expand its footprint in Australia and New Zealand.
The facility’s revolving nature means Algorae can draw down funds as required and repay them flexibly, with interest charged only on the amounts utilised. This structure offers a cost-effective way to manage working capital without diluting shareholder equity, a notable advantage for a company balancing growth ambitions with capital efficiency.
Backing Commercial Operations and Inventory
AlgoraeRx sources, licenses, and supplies generic and specialty medicines through established manufacturing and distribution channels. The new funding will accelerate inventory procurement and enable the company to execute supply contracts more swiftly, responding to increasing customer demand across the ANZ region. By leveraging trade receivables as security, Algorae aligns its financing with operational cash flows, optimising liquidity management.
The facility is supported by a parent guarantee from Algorae Pharmaceuticals Ltd, underscoring the company’s commitment to prudent financial stewardship while pursuing commercial scale.
Terms and Market Context
The $3 million facility carries an interest rate of BBSY plus 6.70%, with the Bank Bill Swap Rate currently at 3.6025%. The initial term is 24 months, providing a medium-term runway for growth initiatives. Standard arrangement and management fees apply, consistent with market norms for receivables-based lending.
In a sector where capital needs can be unpredictable, this flexible funding arrangement positions Algorae to respond dynamically to market opportunities without the immediate pressure of equity raises or long-term debt commitments.
Looking Ahead
Algorae’s dual focus on AI-driven drug discovery and pharmaceutical commercialisation means it must balance innovation with operational execution. This facility strengthens the latter, enabling the company to scale its commercial business while continuing to invest in its proprietary AI platform, AlgoraeOS.
Investors will be watching closely to see how effectively Algorae deploys this capital to drive revenue growth and improve cash flow metrics in upcoming quarters.
Bottom Line?
Algorae’s new debt facility offers a nimble financial lever to fuel its commercial expansion, next steps will reveal how this translates into market momentum.
Questions in the middle?
- How quickly will AlgoraeRx convert this facility into increased sales and inventory turnover?
- What impact will the facility have on Algorae’s overall cash flow and profitability?
- Could this financing pave the way for further capital raises or strategic partnerships?
