Recce secures extended interest-only period on Avenue Capital debt facility
Recce Pharmaceuticals (ASX:RCE) has executed an amendment, dated 16 October 2026, to its existing secured debt facility with Avenue Capital Group (Avenue), first announced on 17 June 2025. The Avenue Capital debt facility amendment extends the interest-only period by three months to 31 December 2026.
The draw period for Tranche 2 of the US$5m facility has also been extended, from 30 September 2026 to 31 December 2026. According to the company, the amendments are intended to support its ongoing Phase 3 clinical trial programs and align its debt service structure with key operational milestones.
Key amendments
- Interest-only period extended by three months to 31 December 2026
- Scope for two further interest-only extension options, potentially through to 30 September 2027
- Tranche 2 draw period extended from 30 September 2026 to 31 December 2026
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What the amended terms mean
Interest-only extension options
The amended agreement sets out the following structure for the interest-only period:
- The baseline interest-only period has been extended by three months to 31 December 2026.
- Two subsequent interest-only extension options are introduced, potentially extending through to 30 September 2027.
- These extensions are contingent on the company achieving defined capital raising targets and positive clinical milestones within its ongoing Phase 3 programs.
The announcement does not disclose the specific capital raising targets or clinical milestones.
The clinical milestones that unlock these extensions sit within a Phase 3 program that recently gained an active-controlled Phase 3 arm, with R327G set against physician-selected comparator antibiotics in a non-inferiority design.
Tranche 2 remains milestone-gated
Access to Tranche 2 remains subject to the satisfaction of the existing clinical and funding milestones. Other than the amendments described, the key terms of the facility remain unchanged and are set out in the company’s announcement of 17 June 2025.
Warrants issued to Avenue as consideration
In consideration for the amendments, Recce will issue Avenue 493,103 additional warrants. The warrants will be issued under the company’s existing placement capacity under ASX Listing Rule 7.1.
| Term | Previous term | Amended term | Investor impact |
|---|---|---|---|
| Interest-only period | Shorter by three months | Extended by three months to 31 December 2026, with two further options potentially through to 30 September 2027 | Extension options are contingent on defined capital raising targets and positive Phase 3 clinical milestones |
| Tranche 2 draw period (US$5m) | Available until 30 September 2026 | Available until 31 December 2026 | Access remains subject to the existing clinical and funding milestones |
The warrant details are as follows:
- 493,103 additional warrants issued to Avenue
- Equivalent to US$100,000 (A$143,000)
- Exercise price of A$0.29, expiring on 15 October 2031
- Otherwise on substantially the same terms as those previously issued to Avenue, detailed in Appendix 2 of the 17 June 2025 announcement
Because the warrants fall within existing placement capacity under Listing Rule 7.1, the announcement does not indicate a separate shareholder approval step for their issue.
Understanding interest-only periods in biotech debt
An interest-only period means a borrower pays interest on its debt but does not repay the principal during that time. For a clinical-stage company, this can preserve cash while costly trials are under way.
Alongside debt flexibility, Recce has also drawn on a non-dilutive tax refund from the ATO, which lifted its pro-forma cash position and eased pressure on the cash needed to carry dual Phase 3 programs.
In Recce’s case, the extension is intended to support its ongoing Phase 3 clinical trial programs. The further extensions depend on equity funding and clinical progress.
Avenue Capital Group is a global investment firm founded in 1995 by Senior Principals Marc Lasry and Sonia Gardner. It has deployed more than US$100 billion in investments, manages assets of over US$11 billion, and is headquartered in New York.
What investors should watch next
Two dates frame the amended facility. 31 December 2026 is the end of the baseline interest-only period and the Tranche 2 draw period, while 30 September 2027 is the potential outer limit if both extension options apply.
Investors may wish to monitor company updates on capital raising and Phase 3 clinical milestones, given that both are tied to the extension options and Tranche 2 access.
Recce’s pipeline includes RECCE® 327 (R327), which the FDA has granted Qualified Infectious Disease Product designation under the Generating Antibiotic Initiatives Now (GAIN) Act, providing Fast Track Designation and 10 years of market exclusivity post approval.
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