Blur Group PLC (LON:BLUR) has raised a much-needed £1.75mln from investors today which will give its proposed new-look board the financial muscle to take it forward and “optimise the business”.
Major backer Robert Keith, a former director at software group Eidos (the ‘Championship Manager’ people) and big stakeholder in drug developer Silence Therapeutics plc (LON:SLN), used the placing to increase his stake in the e-commerce enabler.
He subscribed for 30mln shares to take his overall stake in blur to approximately 25%, the company revealed on Friday afternoon.
blur had been in discussions with potential investors for a few weeks now in a bid to shore up its balance sheet.
Strengthened balance sheet
So far in 2017, cash burn has been running at about £0.8mln (US$1mln) per quarter but, as of the end of May, the firm only had cash balances of £0.9mln (US$1.14mln).
Because of this, blur and its auditors weren’t able to sign off on its full-year report until its cash position had been strengthened, leading to the suspension of its shares last week.
That issue will be put to bed soon though, with the AIM-quoted business raising £1.75mln (more than the £1.5mln it originally set out to raise) through the issue of 100mln new shares at 1.75p apiece – a 44% discount to Thursday’s closing price.
Those taking part also received one warrant for every 3.43 shares purchased to subscribe for another share at 3.5p which is exercisable any time after the first year of admission.
The cash raised will be used to provide blur with “sufficient working capital” to put into place the proposed new-look board’s plans, which are primarily focused on generating new enterprise customers from the current pipeline over the next year or so.
Out with old, in with the new…
Speaking of the board, now that the bookbuilding process has been completed, current chairman David Sheriff, non-executives Roger de Peyrecave and Rob Wirszyc, and chief delivery officer Kara Cardinale will all step down, probably on Monday (10 July).
They’ll still have an interest in the company though, given that they invested £30,000 of their own money in the fundraise.
Taking over as blur’s new chair will be David Rowe, with Preeti Mardia, Richard Rae and Richard Croft also being brought in as non-execs. Between them, they’ve agreed to stump up £300,000 as part of the placing, with Rowe accounting for half of that (£150,000).
Those proposed changes still need to be approved by shareholders at a general meeting at the end of the month, although blur warned that failure to do so would mean the placing wouldn’t proceed as that is conditional on the new members being voted in.
Assuming all goes as the company expects, current finance director Tim Allen will make way shortly after that meeting with existing financial controller James Porter temporarily taking over whilst a permanent successor is found.
Cash will allow new board to implement its turnaround plans
The cash influx will allow the new management team to put into place their plans to turn the business around.
Part of the new strategy is to maximise efficiencies within the group and the company is targeting a reduction in management team and board salaries, as well as exploring the possibility of better value office spaces.
Should everything go as set out in today’s announcement, the company expects to have the board restructuring approved by shareholders by 31 July, with the resumption of trading on 1 August.
‘Promised a lot but delivered very little’
“blur has promised a lot but is yet to deliver to shareholders,” said proposed chairman Rowe in a statement this morning.
“Its core proposition of applying automation to the enterprise procurement process has a number of strong prospects in the pipeline.
“The task of the restructured board is to ensure that the company has the right approach and support to convert these prospects into reference customers in the next 12 months and build on its A.I. capabilities.
“The restructured board will be carrying out a review in the coming weeks and months with a view to making recommendations on improvements to the business plan in order to optimise the business.”
--Updates for completion of placing--