Krm22 Plc Regulatory News (KRM)

KRM22 plc

("KRM22", the "Group" or the "Company")

Conditional Subscription Agreement and Trading Update

KRM22 plc, (AIM: KRM) the technology and software investment company that focuses on risk management for capital markets, today announces that it has entered into a conditional subscription agreement (the "Agreement") with 7RIDGE Investments 3 LP acting by its general partner 7RIDGE Investments 3 (GP) Limited ("7RIDGE") to subscribe for up to 25 per cent of the enlarged ordinary share capital of the Company at 53 pence per share to raise approximately £4.7 million in aggregate (the "Transaction").

The Agreement

Pursuant to the Agreement, 7RIDGE has conditionally agreed to subscribe (the "Subscription") for up to 8,916,584 new Ordinary Shares (the "Subscription Shares") in the Company at a price of 53 pence per share to raise approximately £4.7m in aggregate. 7RIDGE has today announced a conditional agreement to acquire Trading Technologies International, Inc. ("TT"), a leading provider of SaaS based services for capital markets companies, and the Agreement allows 7RIDGE to nominate TT, or any other entity controlled by 7RIDGE, to subscribe for the Subscription Shares in its place.

The Subscription is conditional, inter alia, on:

(1) 7RIDGE being satisfied that neither it nor TT will be treated as being in a concert party pursuant to the City Code on Takeovers and Mergers (the "Code") in respect of the Transaction, or the approval of a Rule 9 whitewash pursuant to the Code for the Transaction by the shareholders of the Company to the extent such approval may be required;

(2) Completion of the acquisition of TT by 7RIDGE, as announced today, which is subject to regulatory approval which is expected to complete on or before 31 December 2021;

(3) The negotiation and execution of a distribution agreement between the Company and TT; and

(4) Admission of the Subscription Shares to trading on AIM.

Accordingly, the funds receivable pursuant to the Subscription will not be received by the Company until such conditions are satisfied. In the event that neither clearance nor a whitewash approval is forthcoming then the parties intend to enter into a revised subscription agreement for such lower number of shares as will not trigger a mandatory offer under Rule 9 of the Takeover Code. Further announcements will be made with regards to the conditions applicable to the Subscription in due course.

Following completion of the acquisition of TT by 7RIDGE, completion of the subscription by 7RIDGE or its nominee for the Subscription Shares and the expiry of any transition period, it is expected that Keith Todd will be released from his role as CEO of KRM22 to become CEO of TT while remaining Executive Chairman of the Company. If the appointment of Keith Todd as CEO of TT proceeds in accordance with current expectations, the Company will propose that Stephen Casner, President of KRM22, succeeds Keith Todd as CEO of the Company. The Company places significant importance on corporate governance and therefore the composition of the Board. Accordingly, both the Company and TT will adopt appropriate protocols to avoid any commercial conflicts of interest. Keith Todd and Stephen Casner have been working together on KRM22 prior to the Company's IPO in 2018 and have a common and aligned view of the Company's strategy and operational approach. The transition of Stephen Casner to CEO is expected to be smooth and will allow KRM22 to achieve the growth the distribution agreement provides while Keith Todd remains Executive Chairman of KRM22.

Immediately following this announcement, the Company, if necessary, will prepare a whitewash circular and seek shareholder approval for the Transaction. Kestrel Partners, who own 22.3 per cent of the ordinary share capital of the Company, has signed an irrevocable agreement to approve the shareholder resolutions put forward as part of the Transaction.

The Company has been discussing, and will continue to discuss, distribution deals with major capital market players to accelerate the Company's growth. The relationship with TT will not be exclusive, however the proposed distribution agreement will provide a significant opportunity for KRM22 to target TT's customer base that spans over 1,000 firms including nearly all of the major tier one banks. The distribution agreement will start with the Company's Market Risk products and can expand to the Company's full suite of risk products.

Trading Update

In addition to the Transaction, the Company today issues a trading update for the second half of FY 2021. Trading in the second half of FY 2021 has been similar to that seen in the first half and is expected to deliver similar revenue and Adjusted EBITDA, which is lower than expectations. Accordingly, the Board expects to achieve revenue of £4.3 million, ARR of no less than £4.0 million and Adjusted EBITDA loss of £0.6 million for the full year. The Company has suffered from the pausing of a significant tier one bank agreement that was expected to be signed in FY 2021 as the contract was fully agreed but not signed however this contract is now not expected before FY 2023. Despite this, the sales pipeline remains strong, and with the proposed TT distribution agreement, FY 2022 forecasts remain positive and the Company expects growth on FY 2021.

Keith Todd CBE, Executive Chairman and CEO at KRM22 commented: "This is an important strategic step forward for KRM22 and will significantly improve our growth potential. Trading Technologies is a leading provider of SaaS based services for capital markets companies and is complementary to KRM22's SaaS based risk offerings. Stephen and I have known each other for twenty years and have proven to work effectively since KRM22 was formed. The transition of roles, to the extent undertaken in accordance with our current expectations, will be smooth and my new role at Trading Technologies would be complementary to KRM22. The outlook for KRM22 over the next few years will be improved by this transaction and will provide the capital that the Company needs."

For further information please contact:

KRM22 plc InvestorRelations@krm22.com

Keith Todd CBE, Executive Chairman and CEO

Stephen Casner, President

Kim Suter, CFO

finnCap Ltd (Nominated Adviser and Sole Broker) +44 (0)20 7220 0500

Carl Holmes / Kate Bannatyne

Alice Lane / Sunila de Silva (ECM)

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

About KRM22 plc

KRM22 is a closed-ended investment company which listed on AIM on 30 April 2018. The Company has been established with the objective of creating value for its investors through the investment in, and subsequent growth and development of, target companies in the technology and software sector, with a focus on risk management in capital markets.

Through its investments and the Global Risk Platform, KRM22 helps capital market companies reduce the cost and complexity of risk management. The Global Risk Platform provides applications to help address firms' market, compliance, operations and technology risk challenges and to manage their entire enterprise risk profile.

Capital markets companies' partner with KRM22 to optimise risk management systems and processes, improving profitability and expanding opportunities to increase portfolio returns by leveraging risk as alpha.

KRM22 plc is listed on AIM and the Group is headquartered in London, with offices in several of the world's major financial centres.

See more about KRM22 at www.krm22.com.

About 7RIDGE Limited

7RIDGE is an asset manager invested in transformative technology with a focused on B2B companies within the financial services sector. 7RIDGE has deep domain knowledge and strong networks, as well as a proven operating and investment track record distinguish the team and empower the strategy.

About Trading Technologies

Trading Technologies (www.tradingtechnologies.com, @Trading_Tech) creates professional trading software, infrastructure and data solutions for a wide variety of users, including proprietary traders, brokers, money managers, CTAs, hedge funds, commercial hedgers and risk managers. In addition to providing access to the world's major international exchanges and liquidity venues via its TT® trading platform, TT offers domain-specific technology for cryptocurrency trading and machine-learning tools for trade surveillance.