Nektan raises £2.6m through new share placement

White label and gaming content provider Nektan has completed its share placement to raise new working capital, with the final proceeds of £2.6m (€3.0m/$3.3m) ultimately failing short of its original £3.0m target.

The supplier has struck subscription agreements and secured intentions to subscribe from certain investors to raise £2.6m, issuing 52m shares at a price of five pence per share. After expenses related to the placement are factored in, the company will receive £2.5m in working capital.

Funds raised from the placing will, according to Nektan, be now used to support working capital requirements of its operations, with the idea of continuing the growth of its gaming solutions business in Europe.

In addition, Nektan said that it will commit some of the new funds to the ongoing development of its B2B software licensing and games distribution business.

However, Nektan also noted that the placing remains subject to approval at an extraordinary general meeting (EGM) of its shareholders. The provider said that if the placing does not secure this approval, the proceeds would not be made available.

If this were the case, Nektan said it “would need urgently to pursue additional or alternative funding sources”, which could in turn incur additional costs.

Last week, Nektan extended the deadline for orders for the placing for the fourth time, after revealing that certain parties were proposing “unacceptable” terms in return for investment.

Nektan previously suggested that it would surpass its original £3.0m target to ultimately raise £5.0m. This saw the placement deadline extended from 25 September to 2 October, then 9 October, before being pushed back to 18 October.

However, negotiations with investors revealed that interested parties were proposing terms “unacceptable” to the board, resulting in these groups being excluded from the placing.

Meanwhile, Nektan also confirmed that it has received commitment to convert all of the remaining Series A convertible loan notes (CLN) and interest into shares, at the same placing price as the new ordinary shares issued.

The remaining principal balance of £3,447,267 of Series A CLNs, and outstanding interest of £470,936 at 18 November 2019, the proposed date of the EGM, will be converted into new ordinary shares, resulting in 78,364,063 new shares being issued.

Nektan has also agreed to amend the interest rate, waive interest and extend the term of the Series B CLNs. The principal balance of £1.1m, which currently incurs 10% interest to be paid on a quarterly basis, will be amended so that the repayment date is extended from 29 April 2020 to 31 March 2023.

Noteholders will also waive their right to the coupon until 1 January 2021, from when interest of 5% per year will be payable.

Amendments to the Series A and B CLNs are subject to approval at next month’s EGM.