Leather goods firm Pittards is planning to raise £255,000 with a placing of one million shares at a price of 25p per share.
The Somerset-based company has been struggling within the challenging economic environment, which saw its shares drop 39% on Friday.
Pittards has said it has been operating at or around the ceiling of its banking facilities in recent months, which is "as a result of significant adverse foreign currency movements, resulting from the weakening pound sterling."
The company, which specialises in leather bags and goods, explained that it has been managing its working capital carefully in "anticipation of agreeing new and potentially restructured bank facilities."
However, due to the process taking longer than originally expected, now in order to complete, additional working capital is now required.
Following the company's announcement to raise £255,000 directors agreed to loans of £85,000 through share placing.
The directors and certain other employees have agreed to make interest free loans to the company amounting in aggregate to £85,000.
In addition, Edinburgh-based Lloyds Banking Group has confirmed its intention to increase Pittards' borrowing facilities by £340,000 and to extend its existing banking facilities until June 30, 2023.
Pittards hopes that the proceeds will allow the company to continue to manage its working capital until the end of May, by which time it expects to have secured new banking facilities with either Lloyds or an alternative provider.
Pittards said: "If the necessary resolution at the general meeting are not passed the placing will not proceed, and the company will not be able to continue to trade. Shareholders are therefore urged to vote in favour of the resolutions."
The firm will hold a general meeting on April 11.
In February, Pittards warned that pre-tax profit for 2022 would fall short of market expectations, with a number of factors hurting its performance in the latter part of the year. The company took a $1.5million hit at this time, stemming from post-mini-budget pound weakness hurting its UK business.
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