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Corero raises fresh capital to support SmartWall sales push

Corero will issue 69.6mln new shares at 5.75p each, with three directors subscribing for 17.2mln of those shares
Cyber-security
The £4mln fund-raising will pave the way for a new £3mln debt facility

Hot on the heels of its announcement of contract wins earlier this week, Corero Network Security PLC (LON:CNS) has raised fresh capital.

The network security specialist has conditionally raised around £4mln through a placing of shares and a share subscription while it also revealed it is in the final discussions in respect of a new debt facility to provide additional funds of up to £3.0mln.

READ: Corero Network Security secures new orders for computer security systems

In all, the company intends to issue 69.57mln new shares at 5.75p. The funds raised will support the development of the company’s SmartWall sales and marketing activities in the US and Europe and will also be invested in the development of the product.

The debt facility, if agreed, is conditional on the company raising no less than £3mln through a share issue. It is currently expected to run for a four-year term with a one-year repayment holiday, with interest payable quarterly at 7.5 percentage points per annum above the three-month London interbank offered rate (LIBOR).

The placing is not conditional on the debt facility but those who have committed to take shares have the option of withdrawing their commitment to take shares should the facility not be agreed by April 25.

Corero directors Jen Montanana, Andrew Lloyd and Richard Last intend to subscribe for 17.17mln new shares (in aggregate), with Montanana taking the lion’s share, subscribing for 16.4mln shares, which will take his stake in the company just above 40%.

In a separate announcement, the company revealed results for 2017 that showed revenue from the flagship SmartWall product was up 43%.

Reflecting the discontinuation of a legacy product, group revenue eased to US$8.5mln from US$8.8mln in 2016.

The underlying loss (LBITDA) narrowed to US$5.1mln from US$6.4mln the year before.

Revenue and earnings were both affected by delays in the worldwide implementation schedules for a large digital enterprise customer that came on board in the third quarter of 2017 and delays in an existing customer’s ongoing deployment.

The majority of the revenues from these two customers is now expected in the first half of 2018.

Net cash at the end of 2017 stood at US$1.4mln, down from US$2.9mln a year earlier.

"2017 proved to be a year of progress across our business highlighted by the strong revenue growth in our SmartWall product, which secured multiple US$1.0 million plus customers, in addition to several disruptive contract wins against key competitors. We also introduced an enhanced product portfolio alongside expanding our ecosystem of world class partners, which we believe will bolster our sales footprint in the current year,” said Ashley Stephenson, the chief executive officer of Corero.

“Corero enters 2018 with renewed confidence for the prospects of the business,” he added.

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Corero Network Security PLC Timeline

Newswire
April 11 2019

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