A large proportion of the cash will be used to bolster the company’s balance sheet, although a small tranche, £3mln, has been set aside for “general working capital requirements”.
The move will allow the company to fully benefit from a step change in the market for detectors, which is adopting CZT technology pioneered by Kromek.
The company believes it could tap into a “significant” market with its products, which can be used in homeland security, medicine and industry.
However it admitted there have been times during negotiations with potential customers where questions over its ability to deliver product in large quantities has delayed or even scuppered significant supply contracts.
Boosting its balance sheet in this way should help remove roadblocks with manufacturers and government that want to buy Kromek’s products.
“The present fundraising will considerably strengthen our balance sheet, underpinning our plans for the sustained growth of the business and supporting increasing commercial activity through the deployment of our proprietary technology,” said chairman Sir Peter Williams.
The City applauded the move as the shares advanced 10% to 22p in early afternoon trade, valuing the business at £32mln.
Broker Cenkos said: “Kromek is close to cash breakeven but retained losses over recent periods have diminished its balance sheet strength. We believe contract closure rate could have been faster given additional financing.
“The majority of the placing proceeds will be used to strengthen the balance sheet and be ring-fenced for this purpose only.”
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