(Alliance News) - Nektan PLC on Wednesday said it intends to raise at least GBP3.0 million via an equity placing and reached agreements to restructure its convertible loans notes and loans from directors.
Shares in Nektan were down 32% at 6.10 pence in London on Wednesday afternoon.
Nekan said its business-to-business revenue trebled in its 2019 financial year ended June 30, rising to GBP980,000. However, business-to-customer revenue fell "due to the continued impact of increased UK taxation and player verifications".
Given this, the company has spoken to partners and gained support for re-initiating "significant marketing spend" to grow revenue.
The gaming technology platform and services provider said it has also opted to re-align its cost base and is expecting to break even on a monthly earnings before interest, depreciation, taxation, and amortisation basis toward the end of its financial 2020 year.
The company is planning to raise at least GBP3.0 million, net of expenses, to boost its working capital. The money will be raised via an equity placing.
Should the placing succeed as planned, Nektan has agreed to restructure its series A and B convertible loan notes as well as GBP1.3 million of loans from Executive Director Gary Shaw and from Venture Tech Assets - which is controlled by Non-Executive Director Sandeep Reddy.
The series A notes, which have a GBP3.5 million principal plus GBP400,00 of interest, will be amended and fully converted at the placing price per share. The director loans will be deferred to April 2021.
Nektan is in talks to extend the GBP1.0 million of series B notes, which carry a coupon of 10% interest paid quarterly. The repayment date is set to be extended to March 2023 with the noteholder waiving their right to the coupon until January 2021, at which time a 5% per annum coupon will be payable.
Nektan has agreed to receive GBP350,000 of the equity placing through an unsecured loan while the other transactions complete. This unsecured loan has a 10% per annum coupon and is repayable on demand.
"Should the proposed placing not be successful, it is likely that the company will require further funding in order to continue as a going concern and that therefore the directors would, if required, seek additional capital through an alternate fundraising and/or asset sales or part sales," Nektan cautioned.
At present, Nektan is making payments to the UK's HMRC relating to its GBP4.6 million owed in point of consumption tax.
Nektan Non-Executive Chair Jim Wilkinson said: "The proposed placing and associated strengthening of the group's balance sheet through the conversion and extension of its convertible loan notes is a very important development for Nektan and, if successful, will leave us in a materially stronger position. I thank the CLN holders for their support in this regard.
"The group remains convinced that its technology platform is well placed in the markets in which it operates. With a significant number of integrations expected to be delivered during the course of 2019 and a pipeline of exciting opportunities, the group believes it has reached a transformational stage and has an exciting future ahead."