NKTN.L Regulatory News (NKTN)

27 December 2018

NEKTAN PLC

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

Proposed placing, debt conversions and partial sale of US subsidiary

Nektan plc (AIM: NKTN), the fast-growing international gaming technology platform and services provider, announces that it has received in principle support to raise, in aggregate, £3.5m in cash comprising a minimum of £1.5m by way of a proposed equity placing and subscriptions for new ordinary shares of 1 pence each in the capital of the Company at a price of 15p per share and the sale of 57.5 per cent. of its US subsidiary, Respin, for £2.0m In addition, the Company has reached agreement to restructure a proportion of both the Series A convertible loan notes and of the loan from Gary Shaw, Executive Director of the Company. 

Proposed placing

The Company announces that it intends to raise a minimum of £1.5 million by way of a proposed placing of new ordinary shares of 1 pence each in the capital of the Company ("New Ordinary Shares") to institutional and other investors at a price of 15 pence per share (the "Placing Price") (the "Proposed Placing"). To date, the Company has secured conditional subscription agreements from Gary Shaw, Executive Director of the Company, certain members of staff and certain shareholders of the Company for, in aggregate, £1.1 million as well as indications of interest for the remaining £0.4 million. Authority to allot the new shares will be sought at the Company's Annual General Meeting ("AGM"), currently scheduled for 7 February 2019.

Debt conversion - convertible loan notes

The Company also announces that it has agreed with loan noteholders representing a majority of the Series A convertible loan notes to amend the terms of the Series A convertible loan notes so that convertible loan noteholders can convert both their underlying principal and their accrued interest at the Placing Price for a period up to the AGM following which the terms of the convertible loan notes will be amended such that the conversion price reverts to 2 times the most recent equity issue price, but can be no lower than 30 pence and no higher than 209 pence, and the coupon reduces from 10 per cent. per annum to 2.5 per cent. per annum.

To date, the Company has reached agreement with certain Series A convertible loan noteholders for the conversion of, in aggregate, approximately £4.3 million of the outstanding balance of the £8.1m principal and £1.2 million of accrued interest which will result in the issue of a total of approximately 36.6 million new ordinary shares. On the basis that no further principal or accrued interest is converted by the AGM, this would leave a total of £3.8 million of the Series A convertible loan notes outstanding, £1.1 million of the Series B convertible loan notes outstanding and £0.8m of the accrued interest outstanding.

Debt conversion - shareholder loan

The Company has also agreed with Gary Shaw to convert £650,000 of his outstanding loan and the accrued interest of £148,252 into New Ordinary Shares at the Placing Price which will result in the issue of, in aggregate, 5,321,680 New Ordinary Shares. Following conversion, this will leave a balance outstanding on the loan of £535,000. Gary Shaw and Sandeep Reddy have also both agreed to defer the redemption date of their respective loans to no earlier than 31 March 2020. This is subject to the Company's nominated adviser, Stockdale Securities Limited, confirming that the amended terms of the shareholder loans are fair and reasonable insofar as the Company's shareholders are concerned.

Proposed sale of majority shareholding of Respin

The Company announces that it is in advanced discussions to sell 57.5 per cent. of the issued share capital of its US subsidiary, Respin, to a third party for total consideration of £2.0 million in cash as well as the provision of £300,000 in working capital to Respin by the investing entity. Of the total consideration payable, £1.0 million would be paid on completion, expected to be early in 2019, and a further £1.0 million during 2019.

Conditionality

Each of the Proposed Placing, debt conversions and sale of a majority stake in Respin are inter-conditional. In addition, as announced in its audited final results for the year ended 30 June 2018 released separately today, the Company has entered into negotiations with HMRC in order to agree a payment schedule for £2.9m of owed UK point of consumption tax. As a result, each of the above are conditional on the successful conclusion of those negotiations.

The Company intends in due course to publish a circular containing details of the Proposed Placing, the debt conversions, sale of a majority stake in Respin and a notice convening a general meeting to approve the issue of the New Ordinary Shares (the "Circular"). Further announcements will be made as appropriate. Further information and details of the sale of a majority stake in Respin will be included in subsequent announcements and the Circular in compliance with Rule 12 and Schedule Four of the AIM Rules for Companies.

Lucy Buckley, Chief Executive Officer of Nektan, said:

"We are very pleased to have received significant support from both existing shareholders and new investors as well as a material proportion of our CLN holders. In addition, finding an investor for our US subsidiary, Respin, is a significant milestone in Nektan's history."

For further information on the Group, please contact:

Further information on Nektan can be found on the Group's website at www.nektan.com.

About Nektan:

Nektan is an international B2B and white label gaming software and services provider, operating in the regulated, interactive real money gaming (RMG) space, delivering original and innovative solutions to commercial organisations that have established online audiences.

Nektan's full end-to-end technology platform, Evolve, simplifies and supports the route to mobile and desktop gaming revenues, managing the full customer experience and back-office operations, allowing commercial partners to focus on marketing the product to their consumers.

Nektan's US operating subsidiary, provides US land-based casinos with in-venue mobile gaming solutions which allow operators to add mobile technology and content to their existing offerings, with products accessible to players across both cabinets and mobile devices inside the casinos. Respin has a strong intellectual property portfolio including game patents for Rapid Games™ (on-property mobile entertainment), and other captivating concepts and brands.

Nektan is headquartered in Gibraltar, regulated by the Gibraltar Licensing Authority and the UK Gambling Commission, as well as in the Irish market and maintains sales and customer support operations in Europe and North America. The proprietary Evolve technology is developed and maintained by a talented and experienced team of employees from Nektan's Indian office.

Nektan plc was admitted to the AIM market of the London Stock Exchange in November 2014.