Elan announced last night that it intends to issue new shares and loan notes in a fundraising round which the company hopes will generate around $425 million in new finance.
Elan said it will issue 35 million ordinary shares which, if completed at $5, could raise $175 million. In addition it announced a 5-year convertible debt note of worth around $250 million, with a 6.5-7 per cent coupon.
Analysts expect that the share and convertible issue will raise $425 million, $25 million more than is required to meet the company's medium term debts payments.
Elan has indicated it will use the cash raised to pay off loans due in December.
Though the share issue may lower Elan's share price in the short term, analysts welcomed the move will boost cashflow.
Mr Ian Hunter of Goodbody Stockbrokers described the move as a "long-term positive" for the stock as it resolves medium term liquidity issues.
"The focus can now move to resolution of the SEC inquiry, continued streamlining of existing operations and progress of Antegren in the potential treatment of Chron's and MS," he added.