07:00 Thu 07 Feb 2019
Kromek Group PLC - Firm Placing and Open Offer and Notice of GM
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via a
Not for publication, distribution or release directly or indirectly, in whole or in part, in or into
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the EU Market Abuse Regulation (596/2014). Upon the publication of the announcement via a regulatory information service, this information is considered to be in the public domain.
("Kromek" the "Company" or the "Group")
Firm Placing and Open Offer to raise up to
and
Notice of General Meeting
Kromek (AIM: KMK), a worldwide supplier of detection technology focusing on the medical, security screening and nuclear markets, is pleased to announce a conditional Firm Placing and Open Offer to raise up to
Highlights
- Proposed conditional Firm Placing to raise
£20.0 million through the issue of 80,000,000 Placing Shares to new and existing institutional and other investors at25 pence per Placing Share
- Proposed Open Offer to raise up to approximately
£1.0 million through the issue of up to 4,008,471 OpenOffer Shares to Qualifying Shareholders at25 pence per Open Offer Share
- The net proceeds of the Transaction will be used to significantly increase future manufacturing capacity and associated working capital to support the growth of the medical imaging business; to expand sales and marketing of the D3S for nuclear radiation detection; and to further strengthen balance sheet to provide the Company with flexibility to address and capitalise on opportunities as they emerge
Sir
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
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 later today, 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:
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+44 (0)1740 626 060 |
Cenkos Securities plc (Nominated Adviser and Joint Broker) |
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+44 (0)20 7397 8900 |
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Harry Chathli |
+44 (0)20 7618 9100 |
Important Notices
Cenkos Securities, which is authorised and regulated in the
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.
Introduction
The Company has today announced a conditional Firm Placing to raise
In addition, in order to provide Shareholders who have not taken part in the Firm Placing 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 4,008,471
The Open Offer provides Qualifying Shareholders with an opportunity to participate in the proposed issue of the New Ordinary Shares whilst providing the Company with additional capital to invest in the business of the Group.
The
The Firm 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
The purpose of this announcement is to explain the background to and reasons for the Firm Placing and Open Offer, the use of proceeds, the details of the Firm Placing and Open Offer and to recommend that Shareholders vote in favour of the Resolutions.
Summary of
Kromek is a
The Group's products provide high resolution information on material composition and structure and are used in multiple applications, ranging from the identification of cancerous tissues to hazardous materials, such as explosives, and the analysis of radioactive materials.
The Group's business model provides a vertically integrated technology offering to customers, from radiation detector materials to finished products or detectors, including software, electronics and application specific integrated circuits ("ASICs").
The Group has operations in the
As announced in the Group's interim results on
Background to and reasons for the Firm Placing and Open Offer
The Company anticipates significant growth opportunities for its flagship medical imaging products and D3S in the nuclear detection division. This has been evidenced by the new medical imaging contract announced on
Medical Imaging
Kromek has developed a range of CZT medical imaging detectors for use by OEMs in CT scanners. CZT is a room-temperature semiconductor radiation detector that has numerous uses in medical imaging, especially in single photon emission computed tomography ("SPECT") and bone mineral densitometry ("BMD"). CZT detects photons emitted from radio-pharmaceuticals injected into patients, which concentrate at sites for identification of diseases including: cancer, Alzheimer's, Parkinson's, dementia and osteoporosis.
CZT-based detectors are smaller and weigh less than existing scintillator detectors. CZT-based detectors have higher resolution, superior specificity and reduce scan time, resulting in improved and earlier diagnoses, better patient outcomes and a lower overall cost of healthcare. The Directors believe that CZT-based detectors are set to replace the prevalent scintillator-based detectors. Kromek is well positioned as one of only four companies that can manufacture and supply CZT worldwide, resulting in high barriers to entry. The Directors believe that Kromek is therefore strategically placed to benefit from its customers commercially adopting and launching next-generation CZT-based products.
As referenced above, the Company has recently signed a new contract expected to be worth a minimum of
Nuclear Detection - D3S
The nuclear division's flagship product, the D3S, is an advanced, portable, nuclear detection device used by counter-terrorist agencies to protect civilians and key infrastructure in cities including ports, borders and transport hubs. The D3S can be worn by frontline security workers and offers an extensive and effective safeguard against the threat of nuclear terrorism.
The Group has successfully delivered over 10,000 D3S units as a sole supplier to the
In order to capitalise on increased traction that the D3S family of products is experiencing worldwide, with a shift from R&D to product sales, the Company intends to invest to expand its sales and marketing capability.
Balance Sheet
Looking further ahead, Kromek continues to benefit from customers commercially launching next-generation CZT-based products and from increasing adoption of CZT-based technology across its target markets. A further strengthened balance sheet is expected to provide flexibility to address and capitalise on opportunities as they emerge.
Use of proceeds
The Company has conditionally raised
The Company expects to use the net proceeds for the following purposes:
£10.0 million - Capital expenditure (manufacturing capacity expansion) and working capital for medical imaging, providing a significant capacity increase for the next 15 years
£3.0 to£4.0 million - Sales and marketing expansion to develop and drive D3S global market opportunity
- The balance will be used to further strengthen balance sheet to provide the business with flexibility to address and capitalise opportunities as they emerge
Current Trading and Prospects
The Company announced its Interim Results for the 6 month period ended
The Firm Placing and Open Offer
Details of the Firm Placing
The Company has conditionally raised
The Firm Placing is conditional, inter alia, upon:
(i) the passing of all of the Resolutions;
(ii) the Firm 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; and
(iii) Admission becoming effective by no later than
If any of the conditions are not satisfied, the Firm Placing Shares and the Open
The Firm Placing Shares are not subject to clawback.
The Firm Placing Shares (and the 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 Firm Placing Shares and
Details of the Open Offer
The Company is proposing to raise up to
Qualifying Shareholders may apply for
1 Offer Share for every 65 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
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
Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore the 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 Firm 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 Firm Placing are:
(a) the passing of all of the Resolutions at the General Meeting;
(b) the Firm Placing and Open Offer Agreement having become unconditional; and
(c) Admission becoming effective by no later than
Accordingly, if these conditions are not satisfied or waived (where capable of waiver), the Open Offer will not proceed and the Offer Shares will not be issued and all monies received by
The
The Existing Ordinary Shares are admitted to trading on AIM. Application will be made to the
Firm Placing and Open Offer Agreement
Pursuant to the Firm Placing and Open Offer Agreement, Cenkos Securities has agreed to use their reasonable endeavours as agent of the Company to procure subscribers for the Firm Placing Shares at the Offer Price.
The Firm Placing and Open Offer Agreement provides, inter alia, for payment by the Company to Cenkos Securities of a corporate finance fee and commissions based on certain percentages related to the number of Firm Placing Shares placed by Cenkos Securities and issued
The Company will bear all other expenses of and incidental to the Firm Placing and Open Offer, including printing costs, Registrar's and Receiving Agent's fees, all legal and accounting fees of the Company and of Cenkos Securities, all stamp duty and other taxes and duties where payable.
The Firm Placing and Open Offer Agreement contains certain warranties and indemnities from the Company in favour of Cenkos Securities and is conditional, inter alia, upon:
(a) Shareholder approval of the Resolutions at the General Meeting;
(b) the Firm 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; and
(c) Admission becoming effective not later than
Cenkos Securities may terminate the Firm Placing and Open Offer Agreement in certain circumstances, if, inter alia, the Company is in material breach of any of its obligations under the Firm Placing and Open Offer Agreement; if 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 their respective reasonable opinion makes it impractical or inadvisable to proceed with the Firm Placing and Open Offer.
Directors' and related parties' participation in the Transaction
Certain Directors have either committed or indicated their intentions to subscribe for New Ordinary Shares in the Firm Placing or to subscribe for
|
Role |
Number of Ordinary Shares held |
Number of Ordinary Shares held as a percentage of the Existing Ordinary Shares |
Value of Placing and Open Offer committed or intended to be subscribed for |
Number of |
Number of Placing Shares applied for in the Firm Placing |
Maximum number of Ordinary Shares held following the Firm Placing and Open Offer |
Percentage of Ordinary Shares held following the Firm Placing and Open Offer assuming the Open Offer is fully subscribed |
Sir |
Chairman |
100,000 |
0.04% |
|
- |
50,000 |
150,000 |
0.04% |
|
Chief Financial Officer |
100,000 |
0.04% |
|
50,000 |
- |
150,000 |
0.04% |
|
Non-Executive Director |
250,000 |
0.10% |
|
- |
50,000 |
300,000 |
0.09% |
|
Non-Executive Director |
75,000 |
0.03% |
|
- |
50,000 |
125,000 |
0.04% |
Related party participation in the Transaction
The following substantial Shareholder (being a Shareholder holding 10 per cent. or more of the Company's Ordinary Shares as at
|
Number of Ordinary Shares held |
Number of Ordinary Shares held as a percentage of the Existing Ordinary Shares |
Number of Firm Placing Shares |
Amount Subscribed |
Number of Ordinary Shares held including the Placing Shares |
Percentage of Ordinary Shares held following the Firm Placing and Open Offer assuming the Open Offer is fully subscribed |
Miton Asset Management |
49,201,886 |
18.9% |
20,000,000 |
|
69,201,886 |
20.1% |
The participation by the Shareholder referred to above in the Placing is classified as a related party transaction for the purposes of the AIM Rules by virtue of such Shareholder being a substantial shareholder (as defined in the AIM Rules for Companies) in the Company. The Directors, having consulted with Cenkos, the Company's nominated adviser, consider that the terms of the transaction are fair and reasonable insofar as the Company's Shareholders are concerned.
Transaction Considerations
As set out in the Recommendation section below, 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 Firm Placing accompanied by an Open Offer was the most appropriate structure to raise funding for the following reasons:
- the Firm 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
The
Overseas Shareholders
The attention of Qualifying Shareholders who have registered addresses outside the
In particular, Qualifying Shareholders who have registered addresses in or who are resident in, or who are citizens of, countries other than the
DEFINITIONS
"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 |
"AIM Rules for Companies" |
the AIM Rules for Companies and guidance notes as published by the |
"Application Form" |
the non-CREST Application Form |
"Basic Entitlement" |
the number of |
"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 |
"CZT" |
Cadmium Zinc Telluride, a room temperature semiconductor radiation detector |
"Cantor" |
|
"Cenkos" or "Cenkos Securities" |
Cenkos Securities plc |
"Company" or "Kromek" |
|
"Circular" |
the circular to be posted to Shareholders on |
"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 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 |
"Enlarged Share Capital" |
the entire issued share capital of the Company following completion of the Firm Placing and Open Offer on Admission |
"EU" |
the |
"Euroclear" |
|
"Excess Application Facility" |
the arrangement pursuant to which Qualifying Shareholders may apply for additional |
"Excess CREST Open Offer" |
in respect of each Qualifying CREST Shareholder, their entitlement (in addition to his Open Offer Entitlement) to apply for |
"Excess CREST Open Offer Entitlement" |
in respect of each Qualifying CREST Shareholder who has taken up his Basic Entitlement in full, the entitlement to apply for Open |
"Excess Shares" |
|
"Ex-entitlement Date" |
the date on which the Existing Ordinary Shares are marked "ex" for entitlement under the Open Offer, being |
"Existing Ordinary Shares" |
the 260,550,618 Ordinary Shares in issue on the date of this announcement |
" |
the |
"Firm Placees" |
subscribers for Firm Placing Shares |
"Firm Placing" |
the placing by the Company of the Firm Placing Shares with certain institutional investors and existing Shareholders (or their associated investment vehicles), otherwise than on a pre-emptive basis, at the Offer Price |
"Firm Placing and Open Offer Agreement" |
the agreement entered into between the Company and Cenkos Securities in respect of the Firm Placing and Open Offer dated |
"Firm Placing Shares" |
the 80,000,000 Ordinary Shares the subject of the Firm Placing |
"Form of Proxy" |
the form of proxy for use in relation to the General Meeting |
"FSMA" |
Financial Services and Markets Act 2000 (as amended) |
"General Meeting" |
the General Meeting of the Company, convened for |
"Group" |
the Company and its subsidiaries |
"HMRC" |
|
"ISIN" |
International Securities Identification Number |
"ITA 2007" |
Income Taxes Act 2007 |
" |
a trading name of |
" |
|
"Long Stop Date" |
|
"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 Firm Placing Shares and the Offer Shares |
"Notice of General Meeting" |
the notice convening the General Meeting as set out at the end of the Circular |
"OEM" |
original equipment manufacturer |
" |
|
" |
the 4,008,471 Ordinary Shares being made available to Qualifying Shareholders pursuant to the Open Offer |
"Open Offer" |
the conditional invitation made to Qualifying Shareholders to apply to subscribe for the 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 |
"Ordinary Shares" |
ordinary shares of |
"Overseas Shareholders" |
a Shareholder with a registered address outside the |
"Prospectus Rules" |
the Prospectus Rules made in accordance with the EU Prospects Directive 2003/71/EC 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 |
"Receiving Agents" |
|
"Record Date" |
|
"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" |
|
"Securities Act" |
US Securities Act of 1933 (as amended) |
"Shareholders" |
the holders of Existing Ordinary Shares |
"SPECT" |
single photon emission computed tomography |
"Transaction" |
the Firm Placing and Open Offer |
"United Kingdom" or " |
the |
" |
|
"Uncertificated" or "Uncertificated form" |
recorded on the relevant register 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 |
FIRM PLACING STATISTICS
Number of Existing Ordinary Shares |
260,550,618 |
Number of Firm Placing Shares |
80,000,000 |
|
25p |
Number of Ordinary Shares in issue immediately following the Firm Placing |
340,550,618 |
Firm Placing Shares as a percentage of the Ordinary Shares in issue immediately following the Firm Placing* |
23.5% |
Gross Proceeds of the Firm Placing |
Approximately |
OPEN OFFER STATISTICS
Number of |
4,008,471 |
|
25p |
Basis of Open Offer |
1 Offer Share for every |
Gross proceeds from the Open Offer** |
up to |
Enlarged Share Capital following the Firm Placing and Open Offer** |
up to 344,559,089 |
|
up to 1.2% |
*prior to the issue of the Offer Shares
**on the assumption that the Open Offer is fully subscribed
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Record Date for the Open Offer |
|
Announcement of the Firm Placing and Open Offer, publication and posting of the Circular, the Application Form and Form of Proxy |
|
Ex-entitlement Date |
|
Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders |
|
Recommended latest time and date for requesting withdrawal of Open Offer Entitlements from CREST |
|
Recommended latest time for depositing Open Offer Entitlements into CREST |
|
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only) |
|
Latest time and date for receipt of completed Forms of Proxy to be valid at the General Meeting |
|
Latest time and date for acceptance of the 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 |
|
Announcement of result of General Meeting and Open Offer |
|
Admission and commencement of dealings in the New Ordinary Shares on AIM |
|
New Ordinary Shares credited to CREST members' accounts |
|
Despatch of definitive share certificates in certificated form |
|
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
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
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