LONDON (Alliance News) - Nektan PLC Tuesday said it had raised GBP7.1 million of new financing that it will use to expand in the US, grow its European business, and launch its partnership with The Sun newspaper in the UK, and it hopes it is now fully funded until it reaches breakeven on a cashflow level.
The mobile gaming platform provider said it had raised GBP4.7 million by issuing convertible loan notes, intends to drawdown a further GBP0.6 million from its loan facility with shareholder Disruptive Tech Ltd, with the remaining GBP1.7 million gross coming from a placing of 1.0 million shares.
"The last six months have seen an acceleration in demand for our mobile, tablet and desktop gaming products and services, most notably with our landmark real money gaming partnership announced with The Sun in the UK," Chief Executive David Gosen said.
Nektan said it has signed new contracts with 14 real money gaming and freemium partners which are either currently live or due to go live imminently since January. It added that its US joint venture, ReSpin, now has 18 signed contracts or letter of intent with licensed US tribal and commercial casino operators, with "data highly encouraging from the one solution already live in-venue".
In the three months to end-March, net gaming revenue from real money gaming white label partners more than doubled in the quarter from the previous quarter, it said. New depositors were up by more than 84% and deposits by more than 85% on the previous quarter.
Nektan had announced last month a GBP1.2 million loan from Disruptive Tech, which has a 12.8% stake in the business, and said at that time it was working to secure more funding to support larger projects and near-term growth. It had hoped to secure the extra money in March, but the delay means it hasn't been able to invest as quickly as it would have liked.
"The board has continued to consider several funding options for the company, and believes that the financing will ensure the company now has the capital to accelerate its stated investment plans. The company had originally expected to secure further capital in March and therefore the rate of investment and revenue growth over the last two months has not been at the levels originally envisaged by the directors," it said.
"The directors, however, remain encouraged by the considerable progress in the business and have maintained a tight control over costs. The directors believe that the net proceeds received by the company from the financing should ensure that it is fully funded to get to cash flow breakeven point," Nektan added.
The conversion price on the new loan notes is 209 pence, and Nektan would have to issue nearly 2.3 million new shares if the notes are converted in full.
It placed 1.0 million shares at 167.5 pence a share to raise gross proceeds of about GBP1.7 million. The placing shares represent about 4.9% of its existing share capital. Disruptive Tech agreed to exchange the GBP0.6 million already drawn down so far under its loan facility for placing shares.
Nektan shares were up 2.5% at 171.72 pence Tuesday morning.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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