Fundraising to support new strategic decisions
K3 recently announced a Placing and Open Offer at 140p to raise £8.5 million before expenses. The Placing is subject to shareholder approval. The proceeds will be used to strengthen the Group’s balance sheet and provide additional working capital to give the management team flexibility as it makes strategic decisions (a further review of Group resources and operations was announced in May). The fundraising is also key to securing certain amendments to the terms of the Group’s existing facility agreement with K3’s lenders. Several Board changes have been announced and K3 will recruit a new Chairman. The trading comment in the announcement anticipates an operating loss of between £0.4 million and £2.4 million. We reintroduce estimates for FY 2017E (a 17 month period) and 2018E which reflect the change to a November year end. Meanwhile, management again underlines the positive momentum in the profitable business units.