TIDMKMK
RNS Number : 9523O
Kromek Group PLC
12 February 2021
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
The Market Abuse Regulation (EU 596/2014) pursuant to the Market
Abuse (Amendment) (EU Exit) Regulations 2018. Upon the publication
of this announcement via a Regulatory Information Service ("RIS"),
this inside information is now considered to be in the public
domain.
Not for publication, distribution or release directly or
indirectly, in whole or in part, in or into the United States of
America, Canada, Australia, Japan, the Republic of Ireland, the
Republic of South Africa, New Zealand, Cayman Islands, Barbados,
Switzerland, the State of Kuwait or Singapore in or into any other
jurisdiction where offers or sales would be prohibited by
applicable law. This announcement is for information purposes only
and is not an offer to sell or a solicitation to buy securities in
Kromek Group plc or any other entity in any jurisdiction, including
the United States of America, Canada, Australia, Japan, the
Republic of Ireland, the Republic of South Africa, New Zealand,
Cayman Islands, Barbados, Switzerland, the State of Kuwait or
Singapore.
Kromek Group plc
("Kromek", the "Company" or the "Group")
Firm Placing, Directors' Subscription and Open Offer to raise up
to GBP13 million
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, Directors'
Subscription and Open Offer to raise up to GBP13.0 million before
expenses. The Firm Placing has been undertaken with new and
existing institutional investors in the Company.
Highlights
-- Proposed conditional Firm Placing and Directors' Subscription
to raise GBP10.0 million through the issue of 66,666,667 Placing
Shares to new and existing institutional and other investors at 15
pence per Placing Share
-- Proposed Open Offer to raise up to approximately GBP3.0
million through the issue of up to 20,288,064 Open Offer Shares to
Qualifying Shareholders at 15 pence per Open Offer Share
-- The net proceeds of the Transaction will be used to de-risk
and commercialise bio-security/pathogen detectors and increase the
rate of commercialisation, to expand sales and marketing for the
Group's nuclear detection and medical imaging activities and to
strengthen the balance sheet and provide the Group with flexibility
to address and capitalise on the current and emerging
opportunities
Rakesh Sharma OBE, Chairman of Kromek, said: "We thank our
current and potential new shareholders for their commitment and
interest in supporting Kromek. This investment will help us with
our next phase of growth and to become cash flow positive and
achieve operational profitability. These funds in the short term
will enable us to accelerate the commercialisation of our
biological threat detection technology as well as the delivery of
our nuclear detection and medical imaging pipeline. As such, the
Board recommends all shareholders to vote in favour of the
proposals, which will allow us to capitalise on the substantial
opportunities with which we are presented."
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 NETPark, Thomas Wright Way, Sedgefield, TS21 3FD, at
12.00 p.m. on 1 March 2021.
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:
Kromek Group plc
Arnab Basu, CEO
Paul Farquhar, CFO +44 (0)1740 626 060
Cenkos Securities plc (Nominated Adviser
and Broker)
Max Hartley/Camilla Hume (NOMAD)
Julian Morse (Sales) +44 (0)20 7397 8900
Luther Pendragon Ltd (PR)
Harry Chathli
Claire Norbury
Alexis Gore
Joe Quinlan +44 (0)20 7618 9100
Important Notices
Cenkos Securities, which is authorised and regulated in the
United Kingdom by the FCA, is acting as nominated adviser and
broker to the Company and no-one else in connection with the
Placing, the Open Offer and Admission. Cenkos Securities will not
be responsible to anyone other than the Company for providing the
regulatory and legal protections afforded to customers (as defined
in the rules of the FCA) of Cenkos Securities nor for providing
advice in relation to the contents of this announcement or any
matter, transaction or arrangement referred to in it. The
responsibilities of Cenkos Securities, as nominated adviser under
the AIM Rules for Nominated Advisers, are owed solely to London
Stock Exchange and are not owed to the Company or any director of
the Company or to any other person in respect of their decision to
subscribe for or purchase Placing Shares or Open Offer Shares.
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 GBP10.0 million by the issue and allotment by the Company of
66,666,667 Ordinary Shares at the Offer Price of 15 pence per
Ordinary Share.
In addition, in order to provide Shareholders 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
up to 20,288,064 Offer Shares, to raise up to approximately GBP3.0
million, on the basis of 1 new Ordinary Share for every 17 Existing
Ordinary Shares held by each Qualifying Shareholder.
The Open Offer provides Qualifying Shareholders with an
opportunity to participate in the proposed issue of new Ordinary
Shares whilst providing the Company with additional capital to
invest in the business of the Group.
The Offer Price is at a discount of 23.7 per cent. to the
closing middle market price of 19.65 pence per Existing Ordinary
Share on 11 February 2021 (being the last practicable date before
publication of this announcement).
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 8.00 a.m. on
2 March 2021 or such later time and/or dates as Cenkos Securities
and the Company may agree. The Firm Placing and Open Offer are not
underwritten.
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 Group plc
Kromek is a UK technology company that provides high-performance
radiation detection products into three high-value global markets:
medical imaging, nuclear detection and security screening. These
radiation detection products are primarily based on Kromek's
proprietary CZT technology that significantly enhances imaging
quality. In addition, the Group is developing technology and
products in a new market segment of bio-security for the detection
of airborne bacteria and viruses including COVID-19.
The Group designs, develops and produces x-ray and gamma ray
imaging and radiation detection products that provide high
resolution information on material composition and structure. These
products are used for multiple applications in the medical, nuclear
and security screening markets, 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.
The Group has operations in the UK (Durham and Huddersfield) and
the US (California and Pennsylvania) and sells to 50 countries
across the world through a combination of distributors and direct
to OEMs. The Group's facility in Pennsylvania has been recently
purpose built and designed to be a world-class manufacturing base
to produce medical imaging products.
As announced in the Group's interim results on 13 January 2021,
Kromek delivered a resilient performance for the first half of the
financial year against the backdrop of halted deliveries and
reduced manufacturing capacity, as a result of the COVID-19
pandemic. The Board was also pleased to announce that orders and
shipments are resuming after the pandemic related disruption and,
as such, management expects there to be a significant increase in
H2 2020/21 revenue over H1 2020/21. Kromek has visibility over
approximately GBP10.2 million and GBP14.9 million revenue for the
financial year ended 30 April 2021 and 30 April 2022
respectively.
Background to and reasons for the Firm Placing and Open
Offer
The Group has entered the second half of the year with an
extensive commercial pipeline and is experiencing a rebound in
commercial activity.
The Group has invested significantly in capacity over the past
two years and the Directors believe that the commercial
opportunities presented in both the medical and nuclear markets
remain significant. In addition, the Group has made substantial
progress in the development of an automated bio-detection system
capable of detecting airborne pathogens. In situ trials are
expected to commence during the second half of the year and the
Directors believe that this new market segment could present a
significant commercial opportunity in the short to medium term.
While the Directors believe that current cash levels could see
the business trade successfully into FY22, they consider that there
is limited capacity to exploit new opportunities and that the
proceeds from the Transaction will help the business scale up and
accelerate new commercial opportunities across all markets, as
outlined below, as well as providing strength to the balance
sheet.
Medical Imaging
Kromek has established itself as a key supplier of CZT-based
detector modules for medical imaging and the Board believes that
this area represents a significant market opportunity for the
Group, supported by fundamental long-term drivers. By adopting
Kromek's CZT detector platforms, OEMs are able to significantly
improve the quality of medical imaging with lower radiation doses
and at reduced cost. In particular, the Group's detector solutions
are increasingly being adopted for single photon emission computed
tomography ("SPECT") and, more specifically, molecular breast
imaging ("MBI") applications, which are key target areas for future
growth.
With GE Healthcare bringing CZT-based fully body SPECT imaging
equipment to the market in 2019, the Directors believe the other
tier 1 OEMs will soon follow suit. The Directors believe that
Kromek is well-placed to benefit from this adoption, as one of only
two independent providers of CZT, with none of the major OEMs
(excluding GE Healthcare) having in-house capabilities. In
addition, Kromek is already the exclusive CZT supplier to a major
(tier 2) OEM under an approximately seven-year $58m contract signed
in 2019.
Progress has continued to be made on the development of Kromek's
ultra-low dose MBI technology based on its CZT-based SPECT
detectors, with a product now entering the prototype validation
phase. This technology can significantly improve the early
detection of breast cancer in women with dense breast tissue,
which, the Directors believe, will positively impact patient
outcomes and potentially reduce cost of treatment. Kromek is
working alongside partners in the Newcastle-upon-Tyne Hospitals NHS
Foundation Trust in the UK and an OEM partner.
Last year the Group entered a new area of medical application
for its CZT-based detectors: improving patient outcomes from cancer
surgery. The Group has commenced development, in partnership with
Adaptix Ltd and the University of Manchester, of a new system that
will distinguish between healthy and non-healthy tissue, enabling
surgeons to confidently remove the minimum amount of healthy tissue
and reducing the risks of multiple surgeries and of the cancer
spreading.
Additionally, the Directors believe that computed tomography
("CT") will become a key segment for the Group in the coming years
as this market transitions to CZT-based technology.
The Directors estimate that the addressable market in the
Group's medical imaging segments of gamma probes (radio guided
surgery), bone mineral densitometry (osteoporosis detection), SPECT
(cancer detection) are USD 1.6 million, USD 20 million, USD 110
million. Additionally, the Directors estimate the CT (heart disease
detection) market to be significant and larger than the SPECT
market. Accordingly, the Directors intend to invest to expand sales
and marketing for the Group's medical imaging division.
Nuclear Detection
Nuclear Security
Kromek's D3S platform is widely deployed as a networked solution
to protect cities, buildings or critical infrastructure against the
security threat of 'dirty bombs'. This family of high-performance
handheld nuclear detectors was originally developed through a
programme of the Defense Advanced Research Projects Agency
("DARPA"), an agency of the US Department of Defense. The D3S has
now been fully commercialised and continues to attract orders from
businesses and government agencies around the world - and has now
been sold in more than 25 countries.
The Group has continued to build out the functionality of the
D3S range and expand its commercial footprint. To date, over 10,000
detectors have been shipped with in excess of 2.5 billion recorded
data points being acquired. Based on currently visible procurement
programmes between 2021 and 2025, the Board believes that the total
addressable market for the Group's product portfolio is in excess
of USD 500 million. The Group's nuclear detection products have a
wide addressable market with typically shorter development cycles
enabling commercial opportunities to rapidly emerge.
Civil Nuclear
Kromek provides a range of high-resolution detectors and
measurement systems used for civil nuclear applications, primarily
in nuclear power plants and research, to customers across Europe,
the US and Asia. The Group has continued to win repeat business
from its current customers and the Board is pleased that the
pipeline of enquiries and orders in this segment has remained
robust into the second half of this year. In particular, following
a successful online product demonstration of its drone-based
radiation mapping system, the Group has seen widening interest for
this product from a range of new sectors, including mining and
waste management.
The Directors intend to utilise certain of the proceeds of the
Transaction to expand the sales and marketing capability for the
Group's nuclear detection business.
Biological-Threat Detection
The outbreak of COVID-19 has exposed the world to the severity
of biological threats and their potential impact on public health
and the global economy, and has demonstrated the need to rapidly
evolve bio-security systems and associated technologies. As a
result, Kromek has been significantly progressing its activities in
this market.
Under a DARPA-funded programme that was established to combat
bioterrorism, Kromek is developing a biological-threat detection
solution that is intended to form part of a mobile wide-area
bio-surveillance system. This was accelerated during the first half
of 2020/21 with the award of a contract extension by DARPA worth up
to $5.2m. Kromek's technology enables the automated detection and
identification of airborne pathogens and virus mutations using DNA
sequencing. Under the DARPA programme, the system is intended to be
deployed in an urban environment via a vehicle-mounted
biological-threat identifier system that is also capable of being
located in high footfall areas such as hospitals,
mass-transportation hubs including airports, and entertainment
venues.
Furthermore, the Group recently announced that it had commenced
a GBP1.25 million programme, funded by Innovate UK, to develop and
pilot a system, based on its bio-detection technology, that is
focused on the detection of COVID-19 and that is designed to
support identified end-use cases. Kromek is currently engaging with
potential customers for the system to develop deployment models and
identify how it can best fit their needs. The Group will provide
customisation of the system ahead of piloting - with airport and
hospital pilots expected to commence by the end of this financial
year. The Group anticipates successful pilots will result in
commercial deployment in 2021/22.
The Directors intend to use some of the net proceeds of the
Transaction to de-risk and finalise the best commercialisation
route for its bio-security technology. The Group may also consider
forming strategic or financial partnerships to further accelerate
the time to market for this technology.
Security Screening
In security screening, the Group provides OEM and government
customers with components and systems for the scanning of cabin
baggage, hold baggage and cargo. Kromek's bottle scanner product,
for the detection of dangerous materials in liquids, is also
installed in 55 airports in 12 countries. While there has been a
slowdown in security screening activity as a result of the impact
of COVID-19 on the travel industry, Kromek has continued to receive
new orders as well as advance its development programmes that it
expects to result in commercial adoption and integration of its
technology in multiple baggage screening products. In addition, it
has been awarded multiple contracts in recent years with delivery
timetables extending into next year and beyond. The Group continues
to pursue opportunities in this market, where its technologies can
meet the high-performance standards demanded by customers, to
ensure passenger safety while increasing the convenience and
efficiency of the security screening process.
Use of proceeds
The Group has conditionally raised GBP10.0 million before
expenses through the Firm Placing and, subject to take up, may
raise up to a further GBP3.0 million before expenses under the Open
Offer. The estimate of expenses for the Transaction is expected to
be approximately GBP795,000 assuming the Open Offer is fully
subscribed.
The Group expects to deploy the net proceeds as follows:
-- 20-25 per cent. to de-risk and commercialise
bio-security/pathogen detectors and increase the rate of
commercialisation;
-- 15-20 per cent. to expand sales and marketing for the Group's
nuclear detection and medical imaging activities; and
-- 55-65 per cent. to strengthen the balance sheet and provide
the Group with flexibility to address and capitalise on the current
and emerging opportunities.
Current Trading and Prospects
The Group announced its Interim Results for the 6 month period
ended 31 October 2020 on 13 January 2021. Since that date the Group
has traded in line with management's expectations.
The Firm Placing and Open Offer
Details of the Firm Placing
The Company has conditionally raised GBP10.0 million before
expenses through the Firm Placing of 66,666,667 Firm Placing Shares
at the Offer Price to the Firm Placees.
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 8.00 a.m. on
2 March 2021 or such later time and/or date (being no later than
8.00 a.m. on 16 March 2021) as Cenkos Securities and the Company
may agree.
If any of the conditions are not satisfied, the New Ordinary
Shares will not be issued and all monies received from the Firm
Placees and Qualifying Shareholders will be returned to them (at
the Firm Placees' and Qualifying Shareholders' risk and without
interest) as soon as possible thereafter.
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 New Ordinary Shares to trading on AIM. On the
assumption that, inter alia, the Resolutions are passed, it is
expected that Admission will occur and that dealings will commence
at 8.00 a.m. on 2 March 2021 at which time it is also expected that
the Firm Placing Shares will be enabled for settlement in
CREST.
Details of the Open Offer
The Company is proposing to raise up to approximately GBP3.0
million before expenses pursuant to the Open Offer. A total of
20,288,064 new Ordinary Shares are available to Qualifying
Shareholders pursuant to the Open Offer at the Offer Price, payable
in full on acceptance. Any Offer Shares not subscribed for by
Qualifying Shareholders will be available to Qualifying
Shareholders under the Excess Application Facility. The balance of
any Offer Shares not subscribed for under the Excess Application
Facility will not be available to Firm Placees under the Firm
Placing.
Qualifying Shareholders may apply for Offer Shares under the
Open Offer at the Offer Price on the following basis:
1 Offer Share for every 17 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 Offer Shares. Fractional entitlements
which would otherwise arise will not be issued to the Qualifying
Shareholders but will be aggregated and made available under the
Excess Application Facility. The Excess Application Facility
enables Qualifying Shareholders to apply for Excess Shares in
excess of their Open Offer Entitlement. Not all Shareholders will
be Qualifying Shareholders. Shareholders who are located in, or are
citizens of, or have a registered office in certain overseas
jurisdictions will not qualify to participate in the Open Offer.
The attention of Overseas Shareholders is drawn to paragraph 6 of
Part 3 of the Circular.
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 15 February 2021. The Open Offer
Entitlements will be enabled for settlement in CREST until 11.00
a.m. on 26 February 2021. Applications through the CREST system may
only be made by the Qualifying CREST Shareholder originally
entitled or by a person entitled by virtue of bona fide market
claims. The Offer Shares must be paid in full on application. The
latest time and date for receipt of completed Application Forms or
CREST applications and payment in respect of the Open Offer is
11.00 a.m. on 26 February 2021.
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 8.00 a.m. on 2
March 2021 or such later time and/or date (being no later than 8.00
a.m. on 16 March 2021) as Cenkos Securities and the Company may
agree.
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 Link
Group will be returned to the applicants (at the applicants' risk
and without interest) as soon as possible thereafter. Any Open
Offer Entitlements admitted to CREST will thereafter be
disabled.
The Offer Shares (and the Firm Placing 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.
The Existing Ordinary Shares are admitted to trading on AIM.
Application will be made to the London Stock Exchange for the
admission of the Offer Shares to trading on AIM. It is expected
that Admission will occur and that dealings will commence at 8.00
a.m. on 2 March 2021 at which time it is also expected that the
Offer Shares will be enabled for settlement in CREST.
Firm Placing and Open Offer Agreement
Pursuant to the Firm Placing and Open Offer Agreement, Cenkos
Securities have agreed to use its 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 Offer Shares, multiplied by the Offer Price.
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 8.00 a.m. on 2
March 2021 or such later time and/or date as the Company and Cenkos
Securities may agree, being not later than 16 March 2021.
Cenkos Securities may terminate the Firm Placing and Open Offer
Agreement in certain circumstances, if, inter alia, 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 its reasonable opinion makes it
impractical or inadvisable to proceed with the Firm Placing and
Open Offer.
Directors' and related parties' participation in the
Transaction
Rakesh Sharma, Arnab Basu, Paul Farquhar and Lawrence Kinet are
directors of the Company and are participating in the Transaction
therefore their participation in the Directors' Subscription will
be a related party transaction. The independent Directors, having
consulted with Cenkos Securities as the Company's nominated
adviser, consider the terms of Directors' Subscription to be fair
and reasonable insofar as the Shareholders are concerned. Details
of the Director intentions are set out below:
Percentage
of Ordinary
Shares held
Maximum following
number of the Firm
Number of Value of Ordinary Placing,
Ordinary Placing Number of Number of Shares held Directors'
Shares and Open Placing Directors' following Subscription
held as a Offer Shares to Subscription the Firm and
percentage intended be Shares to be Placing, Open Offer
Number of of the to be applied subscribed Directors' assuming the
Ordinary Existing subscribed for in for in the Subscription Open Offer
Shares Ordinary for the Firm Directors' and Open is fully
Name Role held Shares (GBP) Placing Subscription Offer subscribed
Rakesh
Sharma Chairman 178,454 0.05 19,988 - 133,250 311,704 0.07
Arnab
Basu CEO 2,972,000 0.86 2,513 - 16,750 2,988,750 0.69
Paul
Farquhar CFO - - 9,975 66,500(1) - 66,500 0.02
Lawrence Non-Executive
Kinet Director 300,000 0.09 7,500 - 50,000 350,000 0.08
(1) . Includes subscriptions by family, as defined in the AIM
rules for Companies.
Transaction Considerations
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 approximately GBP3.0 million enables
all Qualifying Shareholders to participate in the Transaction on
the same terms as institutional and new investors but without the
time and costs associated with a full pre-emptive offer. A full
pre-emptive offer, either via a rights issue or open offer, of
greater than EUR8.0 million would have required the Company to have
produced a prospectus which would have taken significant time and
cost.
The Offer Price represents a discount of 23.7 per cent. to the
closing mid-market price of the Ordinary Shares on 11 February
2021, being the latest practicable date prior to the publication of
this announcement. The Directors can confirm the Offer Price, and
therefore potential dilution for Shareholders, has been a key
consideration in setting the amount raised as part of the
Transaction and the decision to undertake an Open Offer. The Offer
Price was established as part of a book building process undertaken
by the Company's advisors and also following consultation with
certain substantial Shareholders and incoming investors.
Overseas Shareholders
The attention of Qualifying Shareholders who have registered
addresses outside the United Kingdom, or who are citizens or
residents of countries other than the United Kingdom, or who are
holding Existing Ordinary Shares for the benefit of such persons
(including, without limitation, custodians, nominees, trustees and
agents), or who have a contractual or other legal obligation to
forward the Circular or the Application Form to such persons, is
drawn to the information which appears in paragraph 6 of Part 3 of
the Circular.
In particular, Qualifying Shareholders who have registered
addresses in or who are resident in, or who are citizens of,
countries other than the United Kingdom (including without
limitation the United States of America), should consult their
professional advisers as to whether they require any governmental
or other consents or need to observe any other formalities to
enable them to take up their entitlements under the Open Offer.
DEFINITIONS
The following definitions apply throughout this announcement,
unless the context requires otherwise:
"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 London
Stock Exchange
"AIM Rules for Companies" the AIM Rules for Companies and
guidance notes as published by
the London Stock Exchange from
time to time
"Application Form" the non-CREST Application Form
"Basic Entitlement" the number of Offer Shares which
Qualifying Holders are entitled
to subscribe for at the Offer
Price pro rata to their holding
of Existing Ordinary Shares pursuant
to the Open Offer as described
in Part 3 of the Circular
"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 London, England
"CZT" Cadmium Zinc Telluride, a room
temperature semiconductor radiation
detector
"Cenkos" or "Cenkos Securities" Cenkos Securities plc
"Circular" the shareholder circular to be
posted to shareholders setting
out the Resolutions
"Company" or "Kromek" Kromek Group plc
"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 Courier
and Sorting Services Manual, Daily
Timetable, CREST Application Procedures
and CREST Glossary of Terms (all
as defined in the CREST Glossary
of Terms promulgated by Euroclear
on 15 July 1996 and as amended
since) as published by Euroclear
"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
"Directors' Subscription" the subscription for the Directors'
Subscription Shares by Rakesh
Sharma, Arnab Basu and Lawrence
Kinet at the Offer Price pursuant
to the Subscription Agreements
"Directors' Subscription Shares" 200,000 new Ordinary Shares the
subject of the Director's Subscription
"Enlarged Share Capital" the entire issued share capital
of the Company on Admission following
the issue of the New Ordinary
Shares
"EU" the European Union
"Euroclear" Euroclear UK & Ireland Limited
"Excess Application Facility" the arrangement pursuant to which
Qualifying Shareholders may apply
for additional Offer Shares in
excess of their Open Offer Entitlement
in accordance with the terms and
conditions of the Open Offer
"Excess CREST Open Offer" in respect of each Qualifying
CREST Shareholder, their entitlement
(in addition to his Open Offer
Entitlement) to apply for Offer
Shares pursuant to the Excess
Application Facility, which is
conditional on him taking up his
Open Offer Entitlement in full
"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
Offer Shares in addition to his
Basic Entitlement credited to
his stock account in CREST, pursuant
to the Excess Application Facility,
which may be subject to scaling
back in accordance with the provisions
of the Circular
"Excess Shares" Offer Shares applied for by Qualifying
Shareholders under the Excess
Application Facility
"Ex-entitlement Date" the date on which the Existing
Ordinary Shares are marked "ex"
for entitlement under the Open
Offer, being 15 February 2021
"Existing Ordinary Shares" the 344,897,089 Ordinary Shares
in issue on the date of this announcement
"FCA" the Financial Conduct Authority
of the UK
"Firm Placees" subscribers for Firm Placing Shares
"Firm Placing" the placing by the Company of
the Firm Placing Shares with certain
institutional investors and 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 12 February
2021, as described in this announcement
"Firm Placing Shares" the 66,666,667 new Ordinary Shares
the subject of the Firm Placing
and Directors' Subscription
"Form of Proxy" the form of proxy for use in relation
to the General Meeting enclosed
with the Circular
"FSMA" Financial Services and Markets
Act 2000 (as amended)
"General Meeting" the General Meeting of the Company,
convened for 12.00 p.m. on 1 March
2021 or at any adjournment thereof,
pursuant to the Notice of General
Meeting
"Group" the Company and its subsidiaries
"HMRC" Her Majesty's Revenue and Customs
"ISIN" International Securities Identification
Number
"ITA 2007" Income Taxes Act 2007
"Link Group" or "Link" a trading name of Link Market
Services Limited
"London Stock Exchange" London Stock Exchange plc
"Long Stop Date" 16 March 2021
"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, the Offer
Shares and the Directors' Subscription
Shares
"Notice of General Meeting" the notice convening the General
Meeting as set out at the end
of the Circular
"OEM" original equipment manufacturer
"Offer Price" 15 pence per New Ordinary Share
"Offer Shares" the 20,288,064 New Ordinary Shares
being made available to Qualifying
Shareholders pursuant to the Open
Offer and Excess Application Facility
"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
Offer Shares pursuant to the Open
Offer
"Ordinary Shares" ordinary shares of one pence each
in the capital of the Company
"Overseas Shareholders" a Shareholder with a registered
address outside the United Kingdom
"Prospectus Rules" the Prospectus Regulation Rules
made in accordance with the EU
Prospects Directive 2003/71/EC
as it forms part of domestic law
by virtue of the European Union
(Withdrawal) Act 2018 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
the United States of America or
any other Restricted Jurisdiction)
"Receiving Agents" Link Group
"Record Date" 6.00 p.m. on 11 February 2021
in respect of the entitlements
of Qualifying Shareholders under
the Open Offer
"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" United States of America, Canada,
Australia, Japan, New Zealand,
the Republic of South Africa,
the Republic of Ireland, Cayman
Islands, Singapore, Barbados,
Switzerland or the State of Kuwait
and any other jurisdiction where
the extension or availability
of the Firm Placing and Open Offer
would breach any applicable law
"Securities Act" US Securities Act of 1933 (as
amended)
"Shareholders" the holders of Existing Ordinary
Shares
"SPECT" single photon emission computed
tomography
"Subscription Agreement" the agreements between (i) the
Company and Rakesh Sharma, (ii)
the Company and Arnab Basu and
(iii) the Company and Lawrence
Kinet relating to the Directors'
Subscription
"Transaction" the Firm Placing, Open Offer and
the Directors' Subscription
"United Kingdom" or "UK" the United Kingdom of Great Britain
and Northern Ireland
"United States", "United States the United States of America,
of America" or "US" its territories and possessions,
any state of the United States
of America and the District of
Columbia and all areas subject
to its jurisdiction
"Uncertificated" or "Uncertificated recorded on the relevant register
form" 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
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END
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February 12, 2021 05:30 ET (10:30 GMT)
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