Nektan PLC (LON:NKTN) announced the completion of the sale of 57.5 per cent of the issued share capital of its US subsidiary Respin to Alternative Investment Partners Limited (AIP), for a consideration of £0.3 million in cash as well as the provision of $0.8 million in working capital to Respin (versus the proposed consideration of £2.0 million cash and £0.3 million in working capital previously announced). The adjustment in purchase price and capital contribution is due to the original proposed purchaser not being able to complete the transaction in the required time period and the new purchaser renegotiating the terms.
Lucy Buckley, Chief Executive Officer of Nektan, said: “We are very excited about this new partnership with AIP who specialise in investing in fast growing technology businesses. The majority sale of our US subsidiary allows Nektan to retain a material stake in the emerging US market without funding it on an ongoing basis. We look forward to continuing to work closely with Respin as we firmly believe in our US mobile casino product. As previously announced, Respin has steadily been gaining traction in the US, signing deals with some of the biggest land-based casinos in the world and we are excited about the macro trends in the market.”
“Removal of the cash burn of the US business will allow Nektan to focus on the profitability of its core European business and continue to grow the Company globally. Achieving EBITDA break-even during the first half of FY19 was a key milestone for the Company and reaching full-year EBITDA break-even remains a key focus and is on track.”
As a result of the sale of the majority stake in Respin, the other inter-conditional transactions, namely the CLN conversion and equity placing and subscriptions, with demand currently at approximately £2.2m (including £0.685m from Gary Shaw, Founder and Executive Officer of the Company) at a placing price of 15 pence per share, both on the same terms as set out in the Company’s circular sent to shareholders on 11 January 2019, have been reconfirmed and are expected to complete no later than 30th April 2019.
Following completion of the inter-conditional transactions, the Company confirms that it has sufficient working capital for its present operational requirements. However, as previously announced the Directors remain in discussions with HMRC in relation to an amount owing of approximately £3.6 million for UK point of consumption tax as at end of April 2019, which if not successful, may give rise to a further funding requirement.