XTEK Ltd (ASX:XTE) has kicked off a A$7.7 million capital raising strongly with an underwritten institutional placement to existing security holders and new investors bringing in A$2.7 million.
The company will follow this up with a pro-rata non-renounceable entitlement offer to all eligible security holders to raise approximately A$5 million.
Use of funds
XTEK, which provides high-quality products to deliver tailored solutions to the government, law enforcement, military, space and commercial sectors, plans to use the funds in four areas:
- UAVs - Development of Australian-made small VTOL Unmanned Aerial Vehicles for upcoming sales opportunities with the Australian Defence Force;
- Software - Development of the next XTatlasTM actionable intelligence software applications;
- Ballistics - Expand the range of hard armour plates and helmets made using XTEK’s patented XTclave process; and
- Working capital - Provide working capital required to grow the company’s business and meet its ongoing financial obligations for factory stock, corporate and transaction costs.
Institutional placement
The A$2.7 million placement comprises the issue of new ordinary fully paid XTEK shares at A$0.26 per new share, which represents a discount of:
- 28.8% to the last close price of A$0.365 on, Wednesday, September 29, 2021; and
- 31.7% to the 15-day VWAP of A$0.380 up to and including Wednesday, September 29, 2021.
The placement will be undertaken in a single tranche within the company’s existing placement capacity under ASX Listing Rule 7.1.
Settlement of the placement is scheduled to occur on Friday, October 8, 2021, with the placement shares scheduled to be allotted and to commence trading on Monday, October 11, 2021.
MST Financial Services Pty Ltd acted as underwriter and lead manager to the placement.
Entitlement offer
The pro-rata non-renounceable entitlement offer, which is partially underwritten to $3 million, is targeting to raise up to approximately A$5 million at A$0.26 per share.
This offer will be made to all eligible security holders as recorded on the Security Register as at 7.00pm (Sydney time) on Thursday, October 7, 2021.
It will be on a pro-rata basis of one 1 new security for every 3.7 securities held and is open to eligible security holders with a registered address in Australia and/or New Zealand.
Shortfall facility
In addition to being able to apply for new securities, subscribing security holders will also have the opportunity to apply for new securities that are not fully subscribed under the offer.
Shortfall securities will be at the same price and on the same terms as the new securities and the company reserves the right to accept or not accept such applications and will accept or reject applications (in part or whole) at its absolute discretion.
Shortfall securities may be issued to the extent necessary to make up any shortfall in subscriptions. XTE may also present potential shortfall opportunities to exempt investors under section 708 of the Corporations Act 2001.
If the company receives applications for shortfall securities that result in the rights issue being oversubscribed then it reserves the right to accept or not accept such oversubscriptions and will accept or reject applications (in part or whole) at its absolute discretion.
The amount raised through the offer remains subject to the company's absolute discretion to accept oversubscriptions and to scale back applications.
Show of confidence
In a show of confidence in the company, XTEK’s board and management have confirmed their intention to participate as eligible shareholders in the offer.
The offer will be partially sub-underwritten by two of XTEK's major security holders, Altor Capital Management Pty Ltd and UDB Pty Ltd, a company controlled by XTEK’s chairman.
In a statement. The company said: “The continued support from Altor and UDB Pty Ltd is greatly appreciated and provides a lead for all other security holders.”