Long-term energy storage firm Corre Energy has agreed a €5m loan facility with a group of existing shareholders.
The company is also to appoint a new interim board, which will include representatives of the shareholders offering the finance, as well as independent directors with relevant expertise.
"The interim board, alongside the executive management team, will conduct an immediate operational review to unlock the company's intrinsic value and boost shareholder returns," Corre said in a statement.
"A key priority of this review will be to significantly reduce operating costs."
The loan will be used by the company to meet ongoing operating expenses, working capital and for spending on capital projects.
The lenders include Stream Street Limited, Air Corre Limited, Springhill Property Investments (Jersey) Limited and Pageant Investments Limited.
Together they already hold a third of the company’s shares.
Other existing shareholders will also be able to participate on a similar basis once they are prepared to invest at least €100,000.
Under the agreement €5m will be accessible for up to a year, with €450,000 available on signing and a further €950,000 available today.
However, that was contingent on the approval of an interim board of directors.
The remainder of the money can be borrowed with the board’s approval.
The loan facility will mature at the end of June in 2028, with full repayment due at that date and an interest rate of 0% a year.
A condition of the deal will allow the amount drawn down to be converted into ordinary shares to a value of twice the remaining loan amount after a six-month locking period, if shareholders approve it.
Shares can also be converted during the lock up period in the case of a liquidity event such as a managed investment process of default.
"The Company believes that the facility, new interim board, and cost reduction programme, will enhance shareholder returns and support a successful conclusion of the investment process led by Rothschild, aligning with its vision to build a sustainable and flexible energy system in Europe," the company said.
Shares in Corre Energy closed up 20% on the day in the wake of the news.
However, its shares are down over 80% so far this year.
Stockbroker Davy said the terms of the loan reflect the company’s current balance sheet position and the need for immediate funding.
"It provides an important funding backstop for the business while it progresses discussions to secure strategic and longer-term investment," wrote analysts Michael Mitchell and Kate Nurse.
Earlier this year Corre hired Rothschild to advise it on securing new investment after it disclosed it had received investment interest from a number of parties in March.
Last week Corre said founding shareholder, Corre Energy Group Holdings, had transferred a 19.3% stake in the company to Stream Street to pay off a loan backed by shares.
It also said Corre Energy Group Holdings had promised an additional stake of 15.4% in Corre Energy as security for other loans.
It also announced that Rune Eng has resigned as interim chairman of the board and non-executive director from today.
Mr Eng had been on the board since 2021, but had only been interim chair since June this year.