TIDMKMK
RNS Number : 5083U
Kromek Group PLC
30 July 2015
30 July 2015
Kromek Group plc
("Kromek" or the "Company")
Firm Placing and Open Offer to raise up to GBP11.0million
Kromek, a radiation detection technology company focusing on the
medical, security and nuclear markets, is pleased to today announce
a conditional Firm Placing and Open Offer to raise up to GBP11.0
million before costs. The Firm Placing has been undertaken with new
and existing institutional investors in the Company and was
over-subscribed.
Highlights
-- Firm Placing of 36,000,000 Ordinary Shares at the Offer Price
of 25 pence per Ordinary Share;
-- Open Offer for an aggregate of 8,012,836 Offer Shares on the
basis of 2 New Ordinary Shares for every 27 Existing Ordinary
Shares, at 25 pence each; and
-- Firm Placing and Open Offer, which is subject to shareholder
approval, will raise gross proceeds of up to GBP11.0m.
Lawrence Kinet, Chairman of Kromek, stated: "Kromek has made
good progress this year, in which we achieved a lot of important
operational targets, increasing our customer base and strengthening
our relationship with our OEM partners. This fundraise underpins
our plans to realise the value of our technology and offers all
shareholders the chance to participate. The Board recommends all
shareholders to vote in favour of the proposals, which we believe
will allow us to deliver increased value to our shareholders."
Enquiries
Kromek Group plc 01740 626 060
Arnab Basu, CEO
Derek Bulmer, CFO
Cenkos Securities plc 0207 397 8900
Bobbie Hilliam (NOMAD)
Julian Morse (Sales)
Luther Pendragon 0207 618 9100
Harry Chathli, Claire Norbury, Alexis
Gore
Capitalised terms used in this announcement have the meanings
given to them in the circular.
Introduction
The Company has today raised up to GBP11.0 million (before
expenses) via a conditional Firm Placing and Open Offer. The
transaction consists of a conditional Firm Placing to raise GBP9.0
million by the issue of, and allotment by, the Company of
36,000,000 New Ordinary Shares at 25 pence per new Ordinary Share
("Offer Price"). In addition, in order to provide Shareholders who
have not taken part in the Firm Placing with an opportunity to
participate in the proposed issue of new Ordinary Shares, the
Company is providing all Qualifying Shareholders with the
opportunity to subscribe at the Offer Price for an aggregate of
8,012,836 New Ordinary Shares at the Offer Price (payable in full
on acceptance), to raise up to a further GBP2.0 million.
The Placing Shares will represent approximately 25 per cent. of
the enlarged issued share capital of the Company. The Offer Price
is at a discount of 29 per cent. to the closing middle market price
of 35 pence per Existing Ordinary Share on 29 July 2015 (being the
last practicable date before publication of this announcement).
The Open Offer provides Qualifying Shareholders with an
opportunity to participate in the proposed issue of the New
Ordinary Shares on a pre-emptive basis whilst providing the Company
with additional capital to invest in the business of the Group. The
Firm Placing and Open Offer are not underwritten.
The Firm Placing and Open Offer are conditional on, inter alia,
the passing of the Resolutions at a General Meeting.
Application will be made to the London Stock Exchange for the
New Ordinary Shares to be admitted to trading on AIM. On the
assumption that, inter alia, the Resolutions are passed, it is
expected that admission of the New Ordinary Shares will become
effective on or around 18 August 2015 or such later time and/or
dates as Cenkos Securities and the Company may agree.
A circular will be sent to Shareholders today containing a
Notice of General Meeting and will be availabile shortly on the
Company's website (www.kromek.com).
Background to and reasons for the Firm Placing and Open
Offer
As announced in the Company's audited full year results for the
year ended 30 April 2015, which were announced immediately prior to
this announcement, Kromek has experienced good revenue growth and
achieved a number of its stated operational targets since its IPO
in November 2013. Despite this progress however certain key revenue
contracts have not been secured which has delayed the Group
achieving profitability in line with management expectations at the
IPO.
The Directors believe however it is increasingly evident that
CZT-based detectors are set to replace the prevalent
scintillator-based detectors. CZT is a semiconductor that directly
converts x-ray or gamma-ray photons into electrons, at room
temperature, creating a spectroscopic resolution that the Directors
believe outperforms any commercially-available scintillator. This
performance means CZT is an ideal detector solution for medical,
industrial and homeland security applications and therefore
represents a significant addressable opportunity to the Group. By
way of an example the Directors believe the CT and Single Photon
Emission Computed Tomography ("SPECT") addressable opportunity
stands at nearly $900 million over 8 years and $110 million p.a.
respectively, whilst the portable advanced radiation detectors for
nuclear safeguarding opportunity is over $1 billion.
The market positioning of Kromek leaves the Group strategically
placed to benefit from the increased adoption of CZT within the
identifiable markets. The net proceeds of the Transaction will
therefore provide the Group with the necessary working capital to
continue to invest in product development whilst also increasing
its sales and marketing presence to maximize the opportunities
available to the Group over the short to mid-term. The Directors
also believe a strengthened balance sheet will assist the Group in
building relationships and negotiating contracts with OEM and
government bodies who are increasingly looking to invest in CZT
projects as a new technology.
Use of proceeds
The Company intends to raise GBP9.0 million before expenses by
the conditional Firm Placing and up to a further GBP2.0 million
before expenses under the Open Offer. The estimate of expenses for
the Transaction are expected to be up to GBP0.6 million dependent
on the proceeds from the Open Offer.
The net proceeds will be used by the Company for the following
purposes:
(i) to further develop products for its core markets;
(ii) to strengthen the Company's balance sheet, which the
Directors believe will assist in establishing and expanding
existing OEM relationships;
(iii) to fund committed R&D and expansion of the Company's
sales and marketing team;
(iv) to fund capital expenditure and patent portfolio; and
(v) for general working capital purposes.
Current Trading and Prospects
The Company today announced its full year audited results for
the year ended 30 April 2015 and has made them available on the
Company's website (www.kromek.com). A copy of the Annual Report and
Accounts will be sent to Shareholders shortly.
The Firm Placing and Open Offer
Details of the Firm Placing
The Company has conditionally raised GBP9.0 million before
expenses by the conditional Firm Placing of 36,000,000 Firm Placing
Shares at the Offer Price to the Firm Placees.
The Firm Placing is conditional, inter alia, upon:
(i) the passing of all of the Resolutions;
(ii) the Firm Placing and Open Offer Agreement becoming or being
declared unconditional in all respects and not having been
terminated in accordance with its terms prior to Admission; and
(iii) Admission becoming effective by no later than 8.00 a.m. on
18 August 2015 or such later time and/or date (being no later than
8.00 a.m. on 31 August 2015) as Cenkos Securities and the Company
may agree.
If any of the conditions are not satisfied, the Firm Placing
Shares will not be issued and all monies received from the Firm
Placees will be returned to them (at the Firm Placees' risk and
without interest) as soon as possible thereafter.
The Firm Placing Shares are not subject to clawback.
The Firm Placing Shares (and the Offer Shares) will be issued
free of all liens, charges and encumbrances and will, when issued
and fully paid, rank pari passu in all respects with the Existing
Ordinary Shares, including the right to receive all dividends and
other distributions declared, made or paid after the date of their
issue.
Application will be made to the London Stock Exchange for the
Admission of the Firm Placing Shares to trading on AIM. On the
assumption that, inter alia, the Resolutions are passed, it is
expected that Admission will occur and that dealings will commence
at 8.00 a.m. on 18 August 2015 at which time it is also expected
that the Firm Placing Shares will be enabled for settlement in
CREST.
Details of the Open Offer
The Company is proposing to raise up to GBP2.0 million before
expenses. A total of 8,012,836 New Ordinary Shares are available to
Qualifying Shareholders pursuant to the Open Offer at the Offer
Price, payable in full on acceptance. Any Offer Shares not
subscribed for by Qualifying Shareholders will be available to
Qualifying Shareholders under the Excess Application Facility. The
balance of any Offer Shares not subscribed for under the Excess
Application Facility will not be available to Firm Placees under
the Firm Placing.
Qualifying Shareholders may apply for Offer Shares under the
Open Offer at the Offer Price on the following basis:
2 Offer Share for every 27 Existing Ordinary Shares
and so in proportion for any number of Existing Ordinary Shares
held on the Record Date.
Entitlements of Qualifying Shareholders will be rounded down to
the nearest whole number of Offer Shares. Fractional entitlements
which would otherwise arise will not be issued to the Qualifying
Shareholders but will be made available under the Excess
Application Facility. The Excess Application Facility enables
Qualifying Shareholders to apply for Excess Shares in excess of
their Open Offer Entitlement. Not all Shareholders will be
Qualifying Shareholders. Shareholders who are located in, or are
citizens of, or have a registered office in certain overseas
jurisdictions will not qualify to participate in the Open Offer.
The attention of Overseas Shareholders is drawn to paragraph 6 of
Part 3 of the Circular which will be sent to Shareholder today.
Valid applications by Qualifying Shareholders will be satisfied
in full up to their Open Offer Entitlements as shown on the
Application Form. Applicants can apply for less or more than their
entitlements under the Open Offer but the Company cannot guarantee
that any application for Excess Shares under the Excess Application
Facility will be satisfied as this will depend in part on the
extent to which other Qualifying Shareholders apply for less than
or more than their own Open Offer Entitlements. The Company may
satisfy valid applications for Excess Shares of applicants in whole
or in part but reserves the right not to satisfy any excess above
any Open Offer Entitlement.
The Board may scale back applications made in excess of Open
Offer Entitlements on such basis as it reasonably considers to be
appropriate. Application has been made for the Open Offer
Entitlements to be admitted to CREST. It is expected that such Open
Offer Entitlements will be credited to CREST on 31 July 2015.
The Open Offer Entitlements will be enabled for settlement in
CREST until 11.00 a.m. on 14 August 2015. Applications through the
CREST system may only be made by the Qualifying CREST Shareholder
originally entitled or by a person entitled by virtue of bona fide
market claims. The Offer Shares must be paid in full on
application.
The latest time and date for receipt of completed Application
Forms or CREST applications and payment in respect of the Open
Offer is 11.00 a.m. on 14 August 2015. If you have any questions
relating to the circular, and the completion and return of the
Application form, please contact the Registrar. Calls to the
helpline number, set out in the Circular, are typically charged at
your service provider's standard rate. Calls to the helpline from
outside the UK will be charged at applicable international rates.
Different charges may apply to calls from mobile telephones and
calls may be recorded and randomly monitored for security and
training purposes. Please note Capita Registrars cannot provide
financial or taxation advice or comment on the merits of the Open
Offer or as to whether applicants should take up their Open Offer
Entitlement.
If you are in any doubt as to what action you should take, you
should immediately seek your own personal financial advice from
your stockbroker, bank manager, solicitor, accountant or other
independent professional adviser duly authorised under the
Financial Services and Markets Act 2000 (as amended) if you are
resident in the United Kingdom or, if not, from another appropriate
authorised independent financial adviser.
The Open Offer is not being made to certain Overseas
Shareholders.
Qualifying Shareholders should note that the Open Offer is not a
rights issue and therefore the Offer Shares which are not applied
for by Qualifying Shareholders will not be sold in the market for
the benefit of the Qualifying Shareholders who do not apply under
the Open Offer. Qualifying non-CREST Shareholders should be aware
that the Application Form is not a document of title and cannot be
traded or otherwise transferred.
Further details of the Open Offer and the terms and conditions
on which it is being made, including the procedure for application
and payment, are contained in the Circular and in the accompanying
Application Form sent to Shareholders today.
The Open Offer is conditional on the Firm Placing becoming or
being declared unconditional in all respects and not being
terminated before Admission (as the case may be). The principal
conditions to the Firm Placing are:
(a) the passing of all of the Resolutions at the General Meeting;
(b) the Firm Placing and Open Offer Agreement having become unconditional; and
(c) Admission becoming effective by no later than 8.00 a.m. on
18 August 2015 or such later time and/or date (being no later than
8.00 a.m. on 31 August 2015) as Cenkos Securities and the Company
may agree.
Accordingly, if these conditions are not satisfied or waived
(where capable of waiver), the Open Offer will not proceed and the
Offer Shares will not be issued and all monies received by Capita
will be returned to the applicants (at the applicants' risk and
without interest) as soon as possible thereafter. Any Open Offer
Entitlements admitted to CREST will thereafter be disabled.
The Offer Shares (and the Firm Placing Shares) will be issued
free of all liens, charges and encumbrances and will, when issued
and fully paid, rank pari passu in all respects with the Existing
Ordinary Shares, including the right to receive all dividends and
other distributions declared, made or paid after the date of their
issue.
The Existing Ordinary Shares are admitted to trading on AIM.
Application will be made to the London Stock Exchange for the
admission of the Offer Shares to trading on AIM. It is expected
that Admission will occur and that dealings will commence at 8.00
a.m. on 18 August 2015 at which time it is also expected that the
Offer Shares will be enabled for settlement in CREST. Further
information on settlement and dealings in the Open Offer Shares is
set out in Part 3 of the Circular.
Firm Placing and Open Offer Agreement
Pursuant to the Firm Placing and Open Offer Agreement, Cenkos
Securities have agreed to use their reasonable endeavours as agent
of the Company to procure subscribers for the Firm Placing Shares
at the Offer Price.
The Firm Placing and Open Offer Agreement provides, inter alia,
for payment by the Company to Cenkos Securities of a corporate
finance fee and commissions based on certain percentages relating
to the number of Firm Placing Shares placed by Cenkos Securities
and the Offer Shares, multiplied by the Offer Price.
The Company will bear all other expenses of and incidental to
the Firm Placing and Open Offer, including printing costs,
Registrar's and Receiving Agent's fees, all legal and accounting
fees of the Company and of Cenkos Securities, all stamp duty and
other taxes and duties payable.
The Firm Placing and Open Offer Agreement contains certain
warranties and indemnities from the Company in favour of Cenkos
Securities and is conditional, inter alia, upon:
(a) Shareholder approval of the Resolutions at the General Meeting;
(b) the Firm Placing and Open Offer Agreement having become
unconditional in all respects (save for the condition relating to
Admission) and not having been terminated in accordance with its
terms; and
(c) Admission becoming effective not later than 8.00 a.m. on 18
August 2015 or such later time and/or date as the Company and
Cenkos Securities may agree, being not later than 31 August
2015.
Cenkos Securities may terminate the Firm Placing and Open Offer
Agreement in certain circumstances, if, inter alia, the Company is
in material breach of any of its obligations under the Firm Placing
and Open Offer Agreement; if there is a material adverse change in
the condition, earnings, business, operations or solvency of the
Company; or if there is a material adverse change in the financial,
political, economic or stock market conditions, which in their
respective reasonable opinion makes it impractical or inadvisable
to proceed with the Firm Placing and Open Offer.
Director Subscription
Certain Directors have indicated their intentions in respect of
taking up some of their entitlement to subscribe for New Ordinary
Shares under the Open Offer. Details of the Director intentions are
set out below:
Name Number Number of Number of Maximum number Percentage
of Ordinary Ordinary Offer Shares of Ordinary of Ordinary
Shares Shares held to be applied Shares held Shares held
held as a percentage for under following following
of the Existing the Open the Firm the Firm
Ordinary Offer Placing and Placing and
Shares Open Offer Open Offer
assuming
the Open
Offer is
fully subscribed
Arnab Basu 2,000,000 1.85% 72,000 2,072,000 1.36%
Prof. Max Robinson 9,500,000 8.78% 60,000 9,560,000 6.28%
Graeme Speirs 14,792,730 13.68% 80,000 14,872,730 9.77%
Brian Tanner 750,000 0.69% 50,000 800,000 0.53%
Transaction Considerations
As set out in the Recommendation section below, the Directors
believe the Transaction to be in the best interests of the Company
and its Shareholders as a whole. In making this statement the
Directors have spent time, and have taken appropriate advice, in
considering the Transaction and the method by which to raise the
net proceeds. The Directors concluded that a Firm Placing
accompanied by an Open Offer was the most appropriate structure to
raise funding for the following reasons:
- the Firm Placing enables the Company to attract a number of
new investors to its shareholder register, which the Directors
expect will improve liquidity going forward, and also to provide an
element of funding certainty within the Transaction; and
- the Open Offer of up to GBP2.0 million enables all
Shareholders to participate in the Transaction on the same terms as
institutional and new investors but without the time and costs
associated with a full pre-emptive offer. A full pre-emptive offer,
either via a rights issue or open offer, above EUR5.0 million would
have required the Company to have produced a prospectus which would
have taken significant time and cost.
The Offer Price represents a discount of 29 per cent. to the
closing mid-market price of the Ordinary Shares on the 29 July
2015, being the latest practicable date immediately prior to this
announcement. The Directors can confirm the Offer Price, and
therefore potential dilution for Shareholders, has been a key
consideration in setting the amount raised as part of the
Transaction and the decision to undertake an Open Offer. The Offer
Price was established as part of a book building process undertaken
by the Company's advisors and also following consultation with
certain substantial Shareholders and incoming investors.
Board Update
On 17 April 2015, Lawrence Kinet was appointed Interim Chairman
of the Company. Since this date, the Company has been assessing
suitable candidates to join the Board either in a Non-Executive
and/or Chairman capacity. The process remains ongoing and further
updates will be made as appropriate, with major Shareholders
consulted ahead of any appointment being made.
As of 29 July 2015, Mr Kinet assumed the title of Chairman of
the Company to provide stability and oversight to the executive
management team and to assist in the recruitment process. The
Company also intends in due course to undertake a wider review of
its Board to maximise its effectiveness and to comply with
appropriate corporate governance standards.
General Meeting
The Directors do not currently have authority to allot all of
the New Ordinary Shares and, accordingly, the Board is seeking the
approval of Shareholders to allot the New Ordinary Shares at the
General Meeting.
A notice convening the General Meeting, which is to be held at
NETPark, Thomas Wright Way, Sedgefield, TS21 3TD at 10.00 a.m. on
17 August 2015, is set out in a circular sent to Shareholders today
and which will be available on the Company's website
(www.kromek.com).
Recommendation
The Directors believe that the Firm Placing and Open Offer and
the passing of the Resolutions are in the best interests of the
Company and Shareholders, taken as a whole.
Accordingly the Directors unanimously recommend Shareholders
vote in favour of the Resolutions. The Firm Placing and Open Offer
are conditional, inter alia, upon the passing of the Resolutions at
the General Meeting. Shareholders should be aware that if the
Resolutions are not approved at the General Meeting, the Firm
Placing and Open Offer will not proceed.
Capitalised terms used in this announcement have the meanings
given to them in the circular.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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