A Davis biotech firm Thursday announced it had obtained a concession from lenders that could help it weather a potential cash shortage.
Marrone Bio Innovations Inc. said the lenders waived a clause that required Marrone to maintain at least $15 million in cash. “This waiver is very important to the company as it frees up significant liquidity,” said Chief Executive Pam Marrone in a prepared statement.
The deal came a week after the lawyer for a group of Marrone shareholders said the company was in danger of running out of cash later this year. Pam Marrone disputed that contention but acknowledged her company was wrestling with the $15 million cash minimum required by its lenders. Marrone Bio had $28 million in cash at the end of its latest quarter but has been consistently unprofitable and has been burning through its cash reserves.
The lenders are a group of technology investment funds that loaned $40 million to the company, which makes eco-friendly pesticides and other farm products.
Last week the company agreed to pay $12 million to settle a series of shareholder lawsuits over an accounting scandal that has dogged the company for nearly two years. In a court filing, shareholders’ attorney Michael McGaughey said the settlement was the best investors could expect in light of the company’s worsening financial position. The settlement is to be paid with insurance money.
Following a lengthy in-house probe, Marrone Bio acknowledged that it had overstated revenue by $6 million over a period of more than a year. In February, former Chief Operating Officer Hector Absi was charged with fraud, accused of cutting deals with distributors and not telling the company. The deals enabled distributors to return products if they couldn’t sell them.
Marrone Bio paid a $1.75 million fine to the Securities and Exchange Commission to settle the agency’s investigation into the matter.
The company’s shares closed at 66 cents, down 6 cents, on the Nasdaq market.