TIDMKMK
RNS Number : 6336Y
Kromek Group PLC
05 May 2023
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
The Market Abuse Regulation (EU 596/2014) pursuant to the Market
Abuse (Amendment) (EU Exit) Regulations 2018. Upon the publication
of this announcement via a Regulatory Information Service ("RIS"),
this inside information is now considered to be in the public
domain.
Not for publication, distribution or release directly or
indirectly, in whole or in part, in or into the United States of
America, Canada, Russia, Australia, Japan, the Republic of Ireland,
the Republic of South Africa, New Zealand, Cayman Islands,
Barbados, Switzerland, the State of Kuwait or Singapore in or into
any other jurisdiction where offers or sales would be prohibited by
applicable law. This announcement is for information purposes only
and is not an offer to sell or a solicitation to buy securities in
Kromek Group plc or any other entity in any jurisdiction, including
the United States of America, Canada, Russia, Australia, Japan, the
Republic of Ireland, the Republic of South Africa, New Zealand,
Cayman Islands, Barbados, Switzerland, the State of Kuwait or
Singapore.
Kromek Group plc
("Kromek", the "Company" or the "Group")
Placing, Subscription and Open Offer to raise up to GBP 8
million
and
Notice of General Meeting
Kromek (AIM: KMK), a leading developer of radiation and
bio-detection technology solutions for the advanced imaging and
CBRN detection segments, is pleased to announce a conditional
Placing, Subscription and Open Offer to raise up to GBP 8 million
before expenses. The Placing has been undertaken with new and
existing institutional investors in the Company. Kromek Directors
are participating in the Placing and Directors' Subscription.
Highlights
-- Proposed Placing and Subscription to raise GBP 7 million
through the issue of 140,000,000 Placing Shares to new and existing
investors at 5 pence per Placing Share
-- Proposed Open Offer to raise up to approximately GBP 1
million through the issue of up to 20,564,372 Open Offer Shares to
Qualifying Shareholders at 5 pence per Open Offer Share
-- The net proceeds of the Transaction will be used for
development and working capital for computed tomography ("CT"), to
invest in productivity and efficiency of CZT manufacturing, to
expand sales and marketing for the Group's medical imaging and
nuclear security activities including biological-threat detection
and to strengthen the balance sheet to facilitate the restructuring
of the Group's debt
Rakesh Sharma OBE, Chairman of Kromek, said:
"We are currently experiencing the highest ever levels of
customer engagement in both advanced imaging and CBRN detection,
and there have been notable developments in recent months that have
represented the commercial realisation of our strategy. In
particular, our seven-year agreement with a Tier 1 OEM has
solidified our market leadership position in medical imaging as a
leading independent supplier of CZT.
"This fundraising will help us to capitalise on the substantial
opportunities with which we are presented thereby accelerating the
commercialisation of our biological-threat detection technology as
well as delivery of our advanced imaging and CBRN pipeline.
Accordingly, the Board recommends all shareholders to vote in
favour of the proposals."
General Meeting
The Transaction is conditional, inter alia, upon Shareholder
approval at the General Meeting of the Company that is scheduled to
be held at Kromek, NETPark, Thomas Wright Way, Sedgefield, TS21
3FD, at 1.00 p.m. on 25 May 2023.
A Circular containing the Notice of the General Meeting to
approve, amongst other things, resolutions relating to the
allotment of the New Ordinary Shares, is expected to be published
by the Company and sent to Shareholders on 9 May 2023, together
with a Form of Proxy and, in the case of Qualifying Shareholders,
the Application Form. A copy of the Circular and Form of Proxy will
be available on the Company's website at
www.kromek.com/investor-relations. Your attention is drawn to the
letter from the Chairman of the Company that is set out in the
Circular and which contains, amongst other things, the Directors'
unanimous recommendation that Shareholders vote in favour of the
Resolutions to be proposed at the General Meeting.
Capitalised terms used in this announcement have the meanings
given to them in the Circular.
For further information, please contact:
Kromek Group plc
Arnab Basu, CEO
Paul Farquhar, CFO +44 (0)1740 626 060
finnCap Ltd (Nominated Adviser and Broker)
Geoff Nash/Emily Watts/Seamus Fricker/ George
Dollemore - Corporate Finance
Tim Redfern/Charlotte Sutcliffe - ECM +44 (0)20 7220 0500
Gracechurch Group (Financial PR)
Harry Chathli/Claire Norbury +44 (0)20 4582 3500
Important Notices
finnCap, which is authorised and regulated in the United Kingdom
by the FCA, is acting as broker and bookrunner exclusively for the
Company and no one else in connection with the contents of this
document and the Fundraising and will not regard any other person
(whether or not a recipient of this document) as its client in
relation to Fundraising or the contents of this Announcement nor
will it be responsible to anyone other than the Company for
providing the protections afforded to its clients or for providing
advice in relation to the contents of this document. Apart from the
responsibilities and liabilities, if any, which may be imposed on
finnCap by the Financial Services and Markets Act 2000 (as amended)
(the "FSMA") or the regulatory regime established thereunder,
finnCap accepts no responsibility whatsoever, and makes no
representation or warranty, express or implied, for the contents of
this Announcement including its accuracy, completeness or
verification or for any other statement made or purported to be
made by it, or on behalf of it, the Company or any other person, in
connection with the Company and the contents of this document,
whether as to the past or the future. finnCap accordingly disclaims
all and any liability whatsoever, whether arising in tort, contract
or otherwise (save as referred to above), which it might otherwise
have in respect of the contents of this document or any such
statement.
Forward-looking statements
This announcement includes "forward-looking statements" which
include all statements other than statements of historical facts,
including, without limitation, those regarding the Group's
financial position, business strategy, plans and objectives of
management for future operations, or any statements preceded by,
followed by or that include the words "targets", "believes",
"expects", "aims", "intends", "will", "may", "anticipates",
"would", "could" or "similar" expressions or negatives thereof.
Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond the Company's
control that could cause the actual results, performance or
achievements of the Group to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are
based on numerous assumptions regarding the Group's present and
future business strategies and the environment in which the Group
will operate in the future. These forward-looking statements speak
only as at the date of this announcement. The Company expressly
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statements are based unless required to do so by
applicable law or the AIM Rules.
1. Introduction
The Company has today announced a conditional Placing to raise
GBP7 million by the issue and allotment by the Company of
140,000,000 Ordinary Shares at the Offer Price of 5 pence per
Ordinary Share.
In addition, in order to provide all Shareholders with an
opportunity to participate in the proposed issue of new Ordinary
Shares, the Company is providing all Qualifying Shareholders with
the opportunity to subscribe at the Offer Price for an aggregate of
up to 20,564,372 Open Offer Shares, to raise up to approximately
GBP1 million, on the basis of 1 new Ordinary Share for every 21
Existing Ordinary Shares held by each Qualifying Shareholder.
The Open Offer provides Qualifying Shareholders with an
opportunity to participate in the proposed issue of new Ordinary
Shares whilst providing the Company with additional capital to
invest in the business of the Group.
The Offer Price is at a discount of 25.4 per cent. to the
closing middle market price of 6.7 pence per Existing Ordinary
Share on 4 May 2023 (being the last practicable date before
publication of this announcement).
The Placing and Open Offer are conditional, inter alia, upon
Shareholders approving the Resolutions at the General Meeting that
will grant to the Directors the authority to allot the New Ordinary
Shares and the power to disapply statutory pre-emption rights in
respect of the New Ordinary Shares. The Resolutions are contained
in the Notice of General Meeting at the end of the Circular.
Admission is expected to occur no later than 8.00 a.m. on 26 May
2023 or such later time and/or date as finnCap and the Company may
agree. The Placing and Open Offer are not underwritten.
The purpose of this announcement is to explain the background to
and reasons for the Placing and Open Offer, the use of proceeds,
the details of the Placing and Open Offer and to recommend that
Shareholders vote in favour of the Resolutions.
2. Summary of Kromek Group plc
Kromek is a UK technology company that develops high-performance
radiation detection and bio-detection technology solutions for the
global advanced imaging and CBRN detection segments.
The advanced imaging segment comprises medical, industrial and
security markets. Kromek provides its OEM customers with detector
components, based on its core CZT platform, to enable better
detection of diseases such as cancer and Alzheimer's, contamination
in industrial manufacture and explosives in aviation settings.
Kromek designs, develops and produces CZT detectors and solutions
along with specialist electronics, which, when incorporated into
its customers' systems, significantly enhance imaging quality to
provide high resolution information on material composition and
structure, which enables more effective identification and
analysis.
In CBRN detection, Kromek provides nuclear radiation detection
solutions to the global homeland defence and security market as
well as for civil nuclear applications, mainly in nuclear power
plants and research facilities. In this segment, the Group provides
primarily end-user products via distributors, such as Smiths
Detection. Kromek's compact, easily-deployed, high-performance
radiation detectors, based on advanced scintillation technology,
are predominantly used to protect critical infrastructure and urban
environments from the threat of 'dirty bombs'.
The Group is also developing bio-security solutions in the CBRN
detection segment, which consist of fully automated and autonomous
systems to detect a wide range of airborne pathogens. The Directors
believe bio-security could emerge as another contributor to
revenues in the short to medium term with the biosecurity
strategies of the UK and US governments being aligned with the need
for a national network of automated genomic sequencing systems for
the early warning of pathogens.
The Group has operations in the UK (County Durham and West
Yorkshire) and the US (California and Pennsylvania), including
state-of-the-art CZT manufacturing facilities in both geographies
housing processes and production equipment, with significant
intellectual property across the entire operations.
As announced in the Group's interim results on 31 January 2023,
Kromek is making excellent progress in both the advanced imaging
and CBRN detection segments of the business. The Group delivered on
its existing contracts and development programmes, won new and
repeat orders and experienced significantly increased customer
engagement regarding future projects. Revenue for H1 2023 was 44%
higher than the same period in the prior year, representing
significant growth in both the advanced imaging and CBRN detection
segments.
3. Background to and reasons for the Placing and Open Offer
Over the last 18 months, the Group's engagement with customers
and potential customers in advanced imaging and CBRN detection has
grown significantly and is at its highest ever level. In the
Group's key target market of single photon emission computed
tomography ("SPECT")/photon counting computed tomography ("CT"), in
addition to its existing commercial supply agreement with Spectrum
Dynamics, it is now working with eight OEMs to get qualified and
designed into next-generation medical imaging products - which
includes the recently-announced collaboration agreements signed
with a Tier 1 medical imaging OEM and Analogic Corporation
("Analogic"). In addition, the Group also has a further seven OEM
customers in other niche medical imaging markets such as molecular
breast imaging ("MBI"), bone mineral densitometry ("BMD") and gamma
probes that provide a stable revenue stream in this segment. This
reflects the product roadmaps of those OEMs, as described further
below, as well as Kromek having become the only commercial,
large-scale, independent provider of CZT. In CBRN detection, the
current geopolitical conflict continues to drive strong demand for
the Group's nuclear security products as governments increase their
defence and security spending - which is supported by Kromek having
expanded its route-to-market through establishing a distribution
partnership with Smiths Detection.
Accordingly, the Directors believe that the commercial
opportunities currently being presented in both the medical and
nuclear markets are significant, as outlined further below.
While the Directors believe that current cash levels, supported
by cash flow forecasts, could see the business trade successfully
through FY24, they consider that there is limited capacity to
capture short-term growth opportunities and that the proceeds from
the Transaction will help the business accelerate revenue growth
and win market share, as outlined below. The proceeds of the
Transaction would also strengthen the balance sheet to facilitate
the Group's restructuring of its bank debt.
Medical Imaging
In recent years, leading OEMs in medical imaging have been
increasingly adopting CZT detector platforms as the enabling
technology for their product roadmaps. The rate of new product
introduction with this class of detector is increasing with both GE
Healthcare and Siemens Healthineers introducing new products in
their clinical SPECT and CT business in 2021 and Spectrum Dynamics
launching the VERITON-CT 400 Series in 2022. CZT detector platforms
enable OEMs to significantly improve the quality of imaging, which
leads to earlier and more reliable diagnosis of disease. SPECT and
CT, as well as MBI and BMD, are key target areas for future growth
as they address diseases particularly associated with an ageing
population such as cancer, Alzheimer's, Parkinson's, cardiovascular
illnesses and osteoporosis - with higher resolution images enabling
earlier diagnosis for better patient outcomes and reduced overall
cost of care.
The Directors believe that Kromek is well-placed to benefit from
this adoption, as the only independent, commercial provider of CZT,
with none of the major OEMs (excluding Canon, GE Healthcare and
Siemens) having in-house capabilities. In addition, the barriers to
entry are high - requiring significant investment, extensive
know-how and undertaking lengthy validation processes (which Kromek
has completed through its engagement with OEMs to date).
Kromek is already the key CZT supplier to Spectrum Dynamics, a
major OEM, and is three years into a seven-year agreement (worth
$58.1m) for SPECT. As noted, the Group recently signed
collaboration agreements with a leading health-tech company and a
recognised Tier 1 OEM, and Analogic to develop CZT-based detectors
with the Tier 1 OEM agreement set to transition into a longer
commercial supply phase following an initial short development
phase. In total, the Group is now working with nine OEMs in SPECT
and CT, and the Board expects some of these engagements to
transition to formal significant contracts for final design and
integration followed by the supply of CZT detectors and modules in
the near term.
In addition, progress has continued to be made on the
development of Kromek's ultra-low dose MBI technology based on its
CZT-based SPECT detectors. This technology can significantly
improve the early detection of breast cancer in women with dense
breast tissue, which, the Directors believe, will positively impact
patient outcomes and potentially reduce cost of treatment. An OEM
partner in the US is now preparing a system for clinical trials
using Kromek's technology. In addition, earlier this year Kromek
received approximately GBP2.5 million in funding from Innovate UK
for two programmes to further develop an MBI system. These projects
are being conducted in collaboration with the Newcastle-upon-Tyne
Hospitals NHS Foundation Trust, the University of
Newcastle-Upon-Tyne and University College London.
The Directors estimate that the Group's addressable market in
SPECT/CT is over $400 million per annum and that the Group is
well-positioned to capture this market. Accordingly, the Directors
intend to invest to further enhance the Group's CZT manufacturing
capabilities and use the proceeds of the Transaction to support the
Group's CT detector development activities as well as to expand
sales and marketing for the Group's medical imaging business.
Nuclear Security
Kromek's nuclear security platforms - D3S and D5 - consist of a
family of products designed to cater for the varying demands of the
homeland security and defence markets. In particular, the D3S
platform is widely deployed as a networked solution to protect
cities, buildings or critical infrastructure against the threat of
use of nuclear 'dirty bombs'.
The Group has experienced a significant increase in demand for
its nuclear security products - with multiple new and repeat orders
being won and delivered in FY23 - as the current geopolitical
instabilities drive an increase in global government defence and
security spending. The Directors believe that Kromek's nuclear
security devices are the smallest, most compact products in the
market with superior performance, and they have received the
validation of key user groups in the UK and US. In addition, the
Group expanded its channels-to-market for its nuclear security
products through the establishment, during the current financial
year, of a distribution partnership with Smiths Detection -
initially for the North and South American markets and subsequently
expanded to markets in Asia and Australasia.
Based on currently visible procurement programmes, the Board
believes that the total addressable market for the Group's nuclear
security product portfolio is in excess of $500 million. The
Directors intend to invest in an expansion of the Group's sales and
marketing activities including the further enhancement and
acceleration of channel development to enable it to leverage what
the Board believes is a significant competitive advantage in this
growing market.
Biological-Threat Detection
The outbreak of COVID-19 has exposed the world to the severity
of biological threats and their potential impact on public health
and the global economy, and has demonstrated the need to rapidly
evolve bio-security systems and associated technologies. As a
result, Kromek has been significantly progressing its activities in
this market.
Under a DARPA-funded programme that was established to combat
bioterrorism, Kromek is developing a biological-threat detection
solution that is intended to form part of a mobile wide-area
bio-surveillance system. Kromek's technology enables the automated
detection and identification of airborne pathogens and virus
mutations using DNA sequencing. Under the DARPA programme, the
system is intended to be deployed in an urban environment via a
vehicle-mounted biological-threat identifier system that is also
capable of being located in high footfall areas such as hospitals
and mass-transportation hubs including airports and entertainment
venues.
The Group may also consider forming strategic or financial
partnerships to further accelerate the time to market for this
technology.
4. Use of proceeds
The Group has conditionally raised GBP7 million before expenses
through the Placing and, subject to take up, may raise up to a
further GBP1 million before expenses under the Open Offer. The
estimate of expenses for the Transaction is expected to be
approximately up to GBP0.5 million assuming the Open Offer is fully
subscribed.
The Group expects to deploy the net proceeds as follows to
accelerate commercial drive and revenue growth:
-- 10-15 per cent. for development and working capital for CT;
-- 15-20 per cent. to invest in productivity and efficiency of CZT manufacturing;
-- 10-15 per cent. to expand sales and marketing for the Group's
medical imaging and nuclear security activities, including
biological-threat detection ; and
-- 50-60 per cent. to strengthen the balance sheet to facilitate
the restructuring of the Group's debt.
5. Current Trading and Prospects
As announced in its interim results and the trading update on 18
April 2023, Kromek started the second half of the financial year
2023 with increasing commercial momentum whilst delivering on
multi-year contracts. As a result, revenue in Q3 was approximately
50% higher than the corresponding period and Kromek continues to
expect substantial revenue growth for FY23 compared with FY22. The
Group is also experiencing improvements in its gross margin due to
the product mix sold and expects to report gross margin in its
traditional high-40s percentile and be EBITDA positive for H2 2023.
As noted in the trading update, the Group continues to trade in
line with market expectations, was broadly cash neutral in Q3 and
expected to remain so through Q4 2023.
6. The Placing and Open Offer
Details of the Placing
The Company has conditionally raised GBP7 million before
expenses through the Placing of 140,000,000 Placing Shares at the
Offer Price to the Placees.
The Placing is conditional, inter alia, upon:
(i) the passing of all of the Resolutions;
(ii) the Placing and Open Offer Agreement becoming or being
declared unconditional in all respects and not having been
terminated in accordance with its terms prior to Admission;
(iii) the Subscription Agreement becomes unconditional in all
respects and not having been terminated in accordance with its
terms prior to Admission; and
(iv) Admission becoming effective by no later than 8.00 a.m. on
26 May 2023 or such later time and/or date (being no later than
8.00 a.m. on 9 June 2023) as finnCap and the Company may agree.
If any of the conditions are not satisfied, the New Ordinary
Shares will not be issued and all monies received from the Placees
and Qualifying Shareholders will be returned to them (at the
Placees' and Qualifying Shareholders' risk and without interest) as
soon as possible thereafter.
The Placing Shares are not subject to clawback.
The Placing Shares (and the Open Offer Shares) will be issued
free of all liens, charges and encumbrances and will, when issued
and fully paid, rank pari passu in all respects with the Existing
Ordinary Shares, including the right to receive all dividends and
other distributions declared, made or paid after the date of their
issue.
Application will be made to the London Stock Exchange for the
Admission of the New Ordinary Shares to trading on AIM. On the
assumption that, inter alia, the Resolutions are passed, it is
expected that Admission will occur and that dealings will commence
at 8.00 a.m. on 26 May 2023 at which time it is also expected that
the Placing Shares will be enabled for settlement in CREST.
Details of the Open Offer
The Company is proposing to raise up to approximately GBP1
million before expenses pursuant to the Open Offer. A total of
20,564,372 new Ordinary Shares are available to Qualifying
Shareholders pursuant to the Open Offer at the Offer Price, payable
in full on acceptance. Any Open Offer Shares not subscribed for by
Qualifying Shareholders will be available to Qualifying
Shareholders under the Excess Application Facility. The balance of
any Open Offer Shares not subscribed for under the Excess
Application Facility will not be available to Placees under the
Placing.
Qualifying Shareholders may apply for Open Offer Shares under
the Open Offer at the Offer Price on the following basis:
1 Offer Share for every 21 Existing Ordinary Shares
and in such proportion for any number of Existing Ordinary
Shares held on the Record Date.
Entitlements of Qualifying Shareholders will be rounded down to
the nearest whole number of Open Offer Shares. Fractional
entitlements which would otherwise arise will not be issued to the
Qualifying Shareholders but will be aggregated and made available
under the Excess Application Facility. The Excess Application
Facility enables Qualifying Shareholders to apply for Excess Shares
in excess of their Open Offer Entitlement. Not all Shareholders
will be Qualifying Shareholders. Shareholders who are located in,
or are citizens of, or have a registered office in certain overseas
jurisdictions will not qualify to participate in the Open Offer.
The attention of Overseas Shareholders is drawn to paragraph 6 of
Part 3 of the Circular.
Valid applications by Qualifying Non-CREST Shareholders will be
satisfied in full up to their Open Offer Entitlements as shown on
the Application Form. Applicants can apply for less or more than
their entitlements under the Open Offer but the Company cannot
guarantee that any application for Excess Shares under the Excess
Application Facility will be satisfied as this will depend in part
on the extent to which other Qualifying Shareholders apply for less
than or more than their own Open Offer Entitlements. The Company
may satisfy valid applications for Excess Shares of applicants in
whole or in part but reserves the right not to satisfy any excess
above any Open Offer Entitlement. The Board may scale back
applications made in excess of Open Offer Entitlements pro rata to
the number of excess shares applied for by Qualifying Shareholders
under the Excess Application Facility.
Application has been made for the Open Offer Entitlements to be
admitted to CREST. It is expected that such Open Offer Entitlements
will be credited to CREST on 10 May 2023. The Open Offer
Entitlements will be enabled for settlement in CREST until 11.00
a.m. on 23 May 2023. Applications through the CREST system may only
be made by the Qualifying CREST Shareholder originally entitled or
by a person entitled by virtue of bona fide market claims. The Open
Offer Shares must be paid in full on application. The latest time
and date for receipt of completed Application Forms or CREST
applications and payment in respect of the Open Offer is 11.00 a.m.
on 23 May 2023.
Qualifying Shareholders should note that the Open Offer is not a
rights issue and therefore the Open Offer Shares which are not
applied for by Qualifying Shareholders will not be sold in the
market for the benefit of the Qualifying Shareholders who do not
apply under the Open Offer. The Application Form is not a document
of title and cannot be traded or otherwise transferred.
Further details of the Open Offer and the terms and conditions
on which it is being made, including the procedure for application
and payment, are contained in Part 3 of the Circular and on the
accompanying Application Form.
The Open Offer is conditional on the Placing becoming or being
declared unconditional in all respects and not being terminated
before Admission (as the case may be). The principal conditions to
the Placing are:
(a) the passing of all of the Resolutions at the General Meeting;
(b) the Placing and Open Offer Agreement having become unconditional;
(c) the Subscription Agreement becomes unconditional in all
respects and not having been terminated in accordance with its
terms prior to Admission; and
(d) Admission becoming effective by no later than 8.00 a.m. on
26 May 2023 or such later time and/or date (being no later than
8.00 a.m. on 9 June 2023) as finnCap and the Company may agree.
Accordingly, if these conditions are not satisfied or waived
(where capable of waiver), the Open Offer will not proceed and the
Open Offer Shares will not be issued and all monies received by
Link Group will be returned to the applicants (at the applicants'
risk and without interest) as soon as possible thereafter. Any Open
Offer Entitlements admitted to CREST will thereafter be
disabled.
The Open Offer Shares (and the Placing Shares) will be issued
free of all liens, charges and encumbrances and will, when issued
and fully paid, rank pari passu in all respects with the Existing
Ordinary Shares, including the right to receive all dividends and
other distributions declared, made or paid after the date of their
issue.
The Existing Ordinary Shares are admitted to trading on AIM.
Application will be made to the London Stock Exchange for the
admission of the Open Offer Shares to trading on AIM. It is
expected that Admission will occur and that dealings will commence
at 8.00 a.m. on 26 May 2023 at which time it is also expected that
the Open Offer Shares will be enabled for settlement in CREST.
Placing and Open Offer Agreement
Pursuant to the Placing and Open Offer Agreement, finnCap has
agreed to use its reasonable endeavours as agent of the Company to
procure subscribers for the Placing Shares at the Offer Price.
The Placing and Open Offer Agreement provides, inter alia, for
payment by the Company to finnCap of a corporate finance fee and
commissions based on funds raised pursuant to the Placing and Open
Offer.
The Company will bear all other expenses of and incidental to
the Placing and Open Offer, including printing costs, registrar's
and Receiving Agent's fees, all legal and accounting fees of the
Company and of finnCap, all stamp duty and other taxes and duties
where payable.
The Placing and Open Offer Agreement contains certain warranties
and indemnities from the Company in favour of finnCap and is
conditional, inter alia, upon:
(a) Shareholder approval of the Resolutions at the General Meeting;
(b) the Placing and Open Offer Agreement having become
unconditional in all respects (save for the condition relating to
Admission) and not having been terminated in accordance with its
terms;
(c) the Subscription Agreement becomes unconditional in all
respects and not having been terminated in accordance with its
terms prior to Admission; and
(d) Admission becoming effective not later than 8.00 a.m. on 26
May 2023 or such later time and/or date as the Company and finnCap
may agree, being not later than 9 June 2023.
finnCap may terminate the Placing and Open Offer Agreement in
certain circumstances, if, inter alia, there is a material adverse
change in the condition, earnings, business, operations or solvency
of the Company; or if there is a material adverse change in the
financial, political, economic or stock market conditions, which in
its reasonable opinion makes it impractical or inadvisable to
proceed with the Placing and Open Offer.
7. Directors' and related parties' participation in the Transaction
All Directors, save for Berry Beumer, are participating in the
Transaction. Paul Farquhar is participating through the Placing
while Rakesh Sharma, Arnab Basu, Lawrence Kinet, Jerel Whittingham
and Christopher Wilks have agreed to conditionally subscribe for
1,300,000 Directors' Subscription Shares in aggregate at the Offer
Price. Berry Beumer, being the independent director for this
purpose, considers, having consulted with the Company's nominated
adviser, finnCap, that the terms of the participation with such
related parties is fair and reasonable insofar as the Company's
Shareholders are concerned. Details of the Director intentions are
set out below:
Number Percentage
of Ordinary of Ordinary
Shares Shares
held as Number held following
Current a percentage of Directors' the Placing,
Number of the Subscription Number Directors'
of Ordinary Existing Shares of Shares Subscription
Shares Ordinary to be subscribed under the and Open
Director Position held Share Capital for Placing Offer**
Rakesh Sharma* Chairman 807,539 0.19% 400,000 - 0.20%
Chief
Executive
Arnab Basu Officer 2,988,750 0.69% 100,000 - 0.52%
Chief
Financial
Paul Farquhar Officer 66,500 0.02% - 100,000 0.03%
Lawrence Non-Executive
Kinet Director 350,000 0.08% 400,000 - 0.13%
Non-Executive
Jerel Whittingham Director 364,890 0.08% 300,000 - 0.11%
Christopher Non-Executive
Wilks Director 177,941 0.04% 100,000 - 0.05%
* subscribed by his connected person, Kathleen Elizabeth
Sharma
**assuming full take-up of the Open Offer Shares under the Open
Offer
Transaction Considerations
As set out in the Recommendation section of the Circular, the
Directors believe the Transaction to be in the best interests of
the Company and its Shareholders as a whole. In making this
statement the Directors have spent time, and have taken appropriate
advice, in considering the Transaction and the method by which to
raise the net proceeds. The Directors concluded that a Placing
accompanied by an Open Offer was the most appropriate structure to
raise funding for the following reasons:
- the Placing enables the Company to attract a number of new
investors to its shareholder register, which the Directors expect
will improve liquidity going forward, and also to provide an
element of funding certainty within the Transaction; and
- the Open Offer of up to approximately GBP1 million enables all
Qualifying Shareholders to participate in the Transaction on the
same terms as institutional and new investors but without the time
and costs associated with a full pre-emptive offer. A full
pre-emptive offer, either via a rights issue or open offer, of
greater than EUR8.0 million would have required the Company to have
produced a prospectus which would have taken significant time and
cost.
The Offer Price represents a discount of 25.4 per cent. to the
closing mid-market price of the Ordinary Shares on 4 May 2023,
being the latest practicable date prior to the publication of this
announcement. The Directors can confirm the Offer Price, and
therefore potential dilution for Shareholders, has been a key
consideration in setting the amount raised as part of the
Transaction and the decision to undertake an Open Offer. The Offer
Price was established as part of a book building process undertaken
by the Company's advisors and also following consultation with
certain substantial Shareholders and incoming investors.
8. Overseas Shareholders
The attention of Qualifying Shareholders who have registered
addresses outside the United Kingdom, or who are citizens or
residents of countries other than the United Kingdom, or who are
holding Existing Ordinary Shares for the benefit of such persons,
(including, without limitation, custodians, nominees, trustees and
agents) or who have a contractual or other legal obligation to
forward the Circular or the Application Form to such persons, is
drawn to the information which appears in paragraph 6 of Part 3 of
the Circular.
In particular, Qualifying Shareholders who have registered
addresses in or who are resident in, or who are citizens of,
countries other than the UK (including without limitation the
United States of America), should consult their professional
advisers as to whether they require any governmental or other
consents or need to observe any other formalities to enable them to
take up their entitlements under the Open Offer.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2023
Record Date for entitlements under the Open 6.00 p.m. on 4 May
Offer
Announcement of the Firm Placing and Open 5 May
Offer
Publication and posting of this document, 9 May
the Application Form and Form of Proxy
Ex-entitlement Date 8.00 a.m. on 9 May
Open Offer Entitlements and Excess CREST 10 May
Open Offer Entitlements credited to stock
accounts of Qualifying CREST Shareholders
Recommended latest time and date for requesting 4.30 p.m. on 17 May
withdrawal of Open Offer Entitlements from
CREST
Recommended latest time for depositing Open 3.00 p.m. on 18 May
Offer Entitlements into CREST
Latest time and date for splitting Application 3.00 p.m. on 19 May
Forms (to satisfy bona fide market claims
only)
Latest time and date for receipt of completed 1.00 p.m. on 23 May
Forms of Proxy to be valid at the General
Meeting
Latest time and date for acceptance of the 11.00 a.m. on 23 May
Open Offer and receipt of completed Application
Forms and payment in full under the Open
Offer or settlement of relevant CREST instruction
(if appropriate)
General Meeting 1.00 p.m. on 25 May
Announcement of result of General Meeting 25 May
and Open Offer
Admission and commencement of dealings in 8.00 a.m. on 26 May
the New Ordinary Shares on AIM
New Ordinary Shares credited to CREST members' As soon as possible
accounts after 8.00 a.m. on 26
May
Despatch of definitive share certificates Within 5 business days
in certificated form of Admission
If any of the details contained in the timetable above should
change, the revised times and dates will be notified by means of an
announcement through a Regulatory Information Service.
Certain of the events in the above timetable are conditional
upon, amongst other things, the approval of the Resolutions to be
proposed at the General Meeting.
All references are to London time unless stated otherwise.
KEY STATISTICS
FIRM PLACING STATISTICS
Number of Existing Ordinary Shares 431,851,820
Number of Placing Shares 140,000,000
Offer Price 5p
Number of Ordinary Shares in issue immediately
following the Placing 571,851,820
Placing Shares as a percentage of the Ordinary
Shares in issue immediately following the Placing* 24.5%
Gross Proceeds of the Placing Approximately GBP7
million
OPEN OFFER STATISTICS
Number of Open Offer Shares 20,564,372
Offer Price 5p
Basis of Open Offer 1 Offer Share for
every
21 Existing Ordinary
Shares
Gross proceeds from the Open Offer** Up to approximately
GBP1 million
Enlarged Share Capital following the Placing Up to 592,416,192
and Open Offer**
Open Offer Shares as a percentage of the Enlarged Up to 3.5%
Share Capital**
*prior to the issue of the Open Offer Shares
**on the assumption that the Open Offer is fully subscribed
DEFINITIONS
The following definitions apply throughout this announcement,
unless the context requires otherwise:
"Act" Companies Act 2006 (as amended)
"Admission" the admission of the New Ordinary
Shares to trading on AIM in accordance
with the AIM Rules for Companies
"AIM" the AIM market operated by London
Stock Exchange
"AIM Rules for Companies" the AIM Rules for Companies and
guidance notes as published by
the London Stock Exchange from
time to time
"Application Form" the non-CREST Application Form
"Basic Entitlement" the number of Open Offer Shares
which Qualifying Holders are entitled
to subscribe for at the Offer
Price pro rata to their holding
of Existing Ordinary Shares pursuant
to the Open Offer as described
in Part 3 of the Circular
"Board" or "Directors" the directors of the Company as
at the date of this announcement
"Business Day" a day (other than a Saturday or
Sunday) on which commercial banks
are open for general business
in London, England
"CT" Computed Tomography
"CZT" Cadmium Zinc Telluride, a room
temperature semiconductor radiation
detector
"CBRN" Chemical, Biological, Radiological
and Nuclear
"Company" or "Kromek" Kromek Group plc
"CREST" the relevant system (as defined
in the CREST Regulations) in respect
of which Euroclear is the operator
(as defined in the CREST Regulations)
"CREST Manual" the rules governing the operation
of CREST, consisting of the CREST
Reference Manual, CREST International
Manual, CREST Central Counterparty
Service Manual, CREST Rules, Registrars
Service Standards, Settlement
Discipline Rules, CREST Courier
and Sorting Services Manual, Daily
Timetable, CREST Application Procedures
and CREST Glossary of Terms (all
as defined in the CREST Glossary
of Terms promulgated by Euroclear
on 15 July 1996 and as amended
since) as published by Euroclear
"CREST member" a person who has been admitted
to CREST as a system-member (as
defined in the CREST Manual)
"CREST member account ID" the identification code or number
attached to a member account in
CREST
"CREST participant" a person who is, in relation to
CREST, a system-participant (as
defined in the CREST regulations)
"CREST participant ID" shall have the meaning given in
the CREST Manual issued by Euroclear
"CREST payment" shall have the meaning given in
the CREST Manual issued by Euroclear
"CREST Regulations" the Uncertificated Securities
Regulations 2001 (SI 2001/3755)
(as amended)
"CREST sponsor" a CREST participant admitted to
CREST as a CREST sponsor
"CREST sponsored member" a CREST member admitted to CREST
as a sponsored member
"Directors' Subscription" the subscription for the Directors'
Subscription Shares by Rakesh
Sharma, Arnab Basu, Lawrence Kinet,
Jerel Whittingham and Christopher
Wilks, at the Offer Price pursuant
to the Subscription Agreements
"Directors' Subscription Shares" 1,300,000 new Ordinary Shares
that are the subject of the Directors'
Subscription
"Enlarged Share Capital" the entire issued share capital
of the Company on Admission following
the issue of the New Ordinary
Shares
"EU" the European Union
"Euroclear" Euroclear UK & International Limited
"Excess Application Facility" the arrangement pursuant to which
Qualifying Shareholders may apply
for additional Open Offer Shares
in excess of their Open Offer
Entitlement in accordance with
the terms and conditions of the
Open Offer
"Excess CREST Open Offer" in respect of each Qualifying
CREST Shareholder, their entitlement
(in addition to their Open Offer
Entitlement) to apply for Open
Offer Shares pursuant to the Excess
Application Facility, which is
conditional on them taking up
their Open Offer Entitlement in
full
"Excess CREST Open Offer Entitlement" In respect of each Qualifying
CREST Shareholder who has taken
up their Basic Entitlement in
full, the entitlement to apply
for Open Offer Shares in addition
to their Basic Entitlement credited
to their stock account in CREST,
pursuant to the Excess Application
Facility, which may be subject
to scaling back in accordance
with the provisions of the Circular
"Excess Shares" Open Offer Shares applied for
by Qualifying Shareholders under
the Excess Application Facility
"Ex-entitlement Date" the date on which the Existing
Ordinary Shares are marked "ex"
for entitlement under the Open
Offer, being 9 May 2023
"Existing Ordinary Shares" the 431,851,820 Ordinary Shares
in issue on the date of this announcement
"FCA" the Financial Conduct Authority
of the UK
"finnCap" finnCap Ltd, the Company's Nominated
Adviser and Broker
"Form of Proxy" the form of proxy for use in relation
to the General Meeting enclosed
with the Circular
"FSMA" Financial Services and Markets
Act 2000 (as amended)
"General Meeting" the General Meeting of the Company,
convened for 1.00 p.m. on 25 May
2023 or at any adjournment thereof,
pursuant to the Notice of General
Meeting
"Group" the Company and its subsidiaries
"HMRC" His Majesty's Revenue and Customs
"ISIN" International Securities Identification
Number
"ITA 2007" Income Taxes Act 2007
"Link Group" or "Link" a trading name of Link Market
Services Limited
"London Stock Exchange" London Stock Exchange plc
"Long Stop Date" 9 June 2023
"Money Laundering Regulations" Money Laundering Regulations 2007,
the money laundering provisions
of the Criminal Justice Act 1993
and the Proceeds of Crime Act
2002
"New Ordinary Shares" the Placing Shares, the Open Offer
Shares and the Subscription Shares
"Notice of General Meeting" the notice convening the General
Meeting as set out at the end
of the Circular
"OEM" original equipment manufacturer
"Offer Price" 5 pence per New Ordinary Share
"Open Offer" the conditional invitation made
to Qualifying Shareholders to
apply to subscribe for the Open
Offer Shares at the Offer Price
on the terms and subject to the
conditions set out in Part 3 of
the Circular and, where relevant,
in the Application Form
"Open Offer Entitlement" the entitlement of Qualifying
Shareholders to subscribe for
Open Offer Shares pursuant to
the Open Offer
"Open Offer Shares " the 20,564,372 new Ordinary Shares
being made available to Qualifying
Shareholders pursuant to the Open
Offer and Excess Application Facility
"Ordinary Shares" ordinary shares of one penny each
in the capital of the Company
"Overseas Shareholders" a Shareholder with a registered
address outside the United Kingdom
" Placees " subscribers for Placing Shares
" Placing " the placing by the Company of
the Placing Shares with certain
institutional investors and Shareholders
(or their associated investment
vehicles) and Subscription Shares,
otherwise than on a pre-emptive
basis, at the Offer Price
" Placing and Open Offer Agreement the agreement entered into between
" the Company and finnCap Ltd in
respect of the Placing and Open
Offer dated 5 May 2023, as described
in the Circular
" Placing Shares " the 140,000,000 new Ordinary Shares
that are the subject of the Placing
and Subscription
"Prospectus Rules" the Prospectus Regulation Rules
made in accordance with the EU
Prospects Directive 2003/71/EC
as it forms part of domestic law
by virtue of the European Union
(Withdrawal) Act 2018 in relation
to offers of securities to the
public an admission of securities
to trading on a regulated market
"Qualifying CREST Shareholders" Qualifying Shareholders holding
Existing Ordinary Shares in a
CREST account
"Qualifying Non-CREST Shareholders" Qualifying Shareholders holding
Existing Ordinary Shares in certificated
form
"Qualifying Shareholders" holders of Existing Ordinary Shares
on the register of members of
the Company at the Record Date
(but excluding any Overseas Shareholder
who has a registered address in
the United States of America or
any other Restricted Jurisdiction)
"Receiving Agents" Link Group, Corporate Actions
"Record Date" 6.00 p.m. on 4 May 2023 in respect
of the entitlements of Qualifying
Shareholders under the Open Offer
"Regulatory Information Service" has the meaning given in the AIM
Rules for Companies
"Resolutions" the resolutions to be proposed
at the General Meeting as set
out in the Notice of General Meeting
"Restricted Jurisdiction" United States of America, Canada,
Russia, Australia, Japan, New
Zealand, the Republic of South
Africa, the Republic of Ireland,
Cayman Islands, Singapore, Barbados,
Switzerland, Russia, or the State
of Kuwait and any other jurisdiction
where the extension or availability
of the Placing and Open Offer
would breach any applicable law
"Securities Act" US Securities Act of 1933 (as
amended)
"Shareholders" the holders of Existing Ordinary
Shares
"SPECT" single photon emission computed
tomography
"Subscribers" Rakesh Sharma (subscribed for
by his connected person, Kathleen
Elizabeth Sharma), Arnab Basu,
Lawrence Kinet, Jerel Whittingham,
Christopher Wilks, Polymer N2
Limited and Graeme Speirs
"Subscription" the conditional direct subscription
by the Subscribers for the Subscription
Shares at the Offer Price in accordance
with the Subscription Agreement
"Subscription Agreement" the agreements between (i) the
Company and Rakesh Sharma (subscribed
by his connected person, Kathleen
Elizabeth Sharma), (ii) the Company
and Arnab Basu, (iii) the Company
and Lawrence Kinet, (iv) the Company
and Jerel Whittingham, (v) the
Company and Christopher Wilks,
(vi) the Company and Polymer N2
Limited, and (vii) the Company
and Graeme Speirs
"Subscription Shares" the 21,300,000 new Ordinary Shares
to be issued pursuant to the Subscription
"Transaction" the Placing, Open Offer and the
Directors' Subscription
"United Kingdom" or "UK" the United Kingdom of Great Britain
and Northern Ireland
"United States", "United States the United States of America,
of America" or "US" its territories and possessions,
any state of the United States
of America and the District of
Columbia and all areas subject
to its jurisdiction
"Uncertificated" or "Uncertificated recorded on the relevant register
form" or other record of the Ordinary
Shares or other security concerned
as being held in uncertificated
form in CREST, and title to which,
by virtue of the CREST Regulations,
may be transferred by means of
CREST
"USE" has the meaning given in paragraph
3.2 of Part 3 of the Circular
"USE Instruction" has the meaning given in paragraph
3.2 of Part 3 of the Circular
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END
MSCBSGDUXSGDGXU
(END) Dow Jones Newswires
May 05, 2023 10:46 ET (14:46 GMT)
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