NKTN.L Regulatory News (NKTN)

7 January 2020

NEKTAN PLC

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

Update on Restructuring

Nektan plc (AIM: NKTN), the fast growing, award-winning international gaming technology platform and services provider, announces an update on the proposed Group restructuring and the potential sale of its UK B2C business, as announced on 23 December 2019 (the "Announcement").

As part of its restructuring plan, the Group's main trading subsidiary, Nektan (Gibraltar) Limited ("NGL"), has sought the protection afforded through an administration process, in order to deliver the restructuring plan to the benefit of all shareholders and creditors. The Board, therefore, confirms that Mark Phillips and Julie Swan of PCR London LLP were appointed joint administrators ("Administrators") to NGL today by court order in the High Court of Justice. This will have no operational impact on Nektan or any of its other subsidiaries, which will continue to trade as normal, as detailed below.

Following discussions with the Administrators, the Board understands that it is likely the UK B2C business, currently held within NGL, will be sold to Grace Media Limited (the "prospective buyer"), part of the Active Win Group. The sale of the UK B2C business out of administration allows the prospective buyer to be unencumbered by any legacy issues within NGL. If the sale of the UK B2C business proceeds, the Company will seek to enter into a B2B partnership with the prospective buyer to facilitate continued, uninterrupted delivery of services to the full complement of Nektan's existing UK B2C white label partners. In this instance, as per the normal business model for a B2B partnership, Nektan would receive ongoing monthly royalties from the prospective buyer. The proceeds from any sale would remain within NGL and be utilised by the Administrators in the course of the administration. The Group will continue to support the operations of its UK B2C business through NGL's administration or until the potential sale of the business completes.

In addition, the restructuring of the Group, executed via the administration of NGL, allowed for all other assets of NGL, excluding the UK B2C business for reasons detailed above, to be transferred for value into other Nektan subsidiaries, as required, taking all regulatory obligations into account and in order to facilitate continued, uninterrupted trading, within the remaining businesses of the Group.

The Directors confirm that details of the Group's restructuring plan, including the potential sale of the UK B2C business to the prospective buyer by the Administrators, has today been advised to the UK Gaming Commission ("UKGC"). The Company will continue discussions with the UKGC, should it have any further inquiries in relation to the restructuring of the Group or the potential sale of the UK B2C business.

As announced by the Company on 18 September 2019, NGL had an outstanding debt to HMRC in relation to Remote Gaming Duty ("RGD") of £4.6 million. The liability has increased to £5.6 million as at 30 November 2019. The RGD debt relates to the Group's activities in the UK B2C business. Following the appointment of the Administrators, this liability has been ringfenced, protecting the Company from any claim by HMRC. However, the Company has been working with its advisors and the Administrators to develop a repayment plan acceptable to HMRC to allow the RGD liability to be repaid in full over time. With NGL in administration, the repayment of this debt will be negotiated between HMRC and the Administrators.

The Directors believe that the Group restructuring will re-position the Company to target new emerging markets with a strengthened balance sheet and cash position. Ongoing trading will not be affected during this period and the Directors believe that this will facilitate all suppliers being paid in full over time.

The Group will provide further updates as required.

Gary Shaw, Interim Chief Executive Officer of Nektan, said:

"I wish to place on record Nektan's appreciation of the continued support from all of its employees, partners, suppliers and shareholders.

The Group restructuring reaffirms the Directors' decision to focus on emerging opportunities in international markets both directly and through our established reseller relationships. The completion of our recent fundraising has provided the Company with the financial strength to complete this restructuring, and with the support afforded by all stakeholders, the Directors are confident of the future.

The potential sale of the UK B2C business to a group of the calibre of Active Win Group demonstrates the significance of the white label operation which the Group has built over recent years. If the sale of the UK B2C business proceeds, and the Company secures a B2B partnership with the prospective buyer, we look forward to a bright future working in partnership with the prospective buyer as they take this business onto the next stage of its journey. The completion of the Group restructuring allows Nektan to focus on its expanding international B2C and B2B business."

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 a fast growing, international gaming technology and services provider, specialising in mobile casino. It licenses its proprietary technology to leading operators, including BetVictor, and provides end-to-end technology and white label casino services for leading brands, including News International's The Sun Play.

Nektan's full end-to-end technology platform, Evolve, enables the management of the full customer experience and back-office operations, allowing partners to focus on marketing the product to their consumers.

The E-Lite platform is Nektan's B2B gaming content aggregator and bonusing platform that delivers a wide range of premium content from the world's leading game studios. It is an easily-integrated add on module for operators, giving them an array of options and flexibility on how they manage and distribute a breadth of premium gaming content across their networks.

Nektan has a material stake in US-based interactive gaming operator Rapid Games, which provides US land-based casinos with an in-venue mobile gaming solution. It allows operators to add mobile technology and content making products accessible to players across both cabinets and mobile devices inside casinos.

Headquartered in Gibraltar, Nektan is regulated by the Gibraltar Licensing Authority, the UK Gambling Commission and the Information Commissioners Office. As a socially responsible license holder, Nektan endeavours to deliver a safe, secure and robust player gaming experience.

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