Offshore cabling group Tekmar has hailed a "big step forward" having secured £22m investment to support its future.
Last month the North East firm indicated it would raise up to £25m through a shares subscription, placing and retail offer, and £18m of convertible loan notes - including commitments from US-based private equity firm SCF Partners. The move follows the launch of a 'strategic review' last year in which Tekmar appointed North East advisors Bamburgh Capital and effectively put itself up for sale.
The £30m turnover business - which specialises in systems that protect the subsea cables that connect offshore wind farms - has been loss making in recent years owing to challenges posed by the pandemic, cost pressures and inefficiencies driven by lower volumes, supply chain and logistics challenges. Speaking to BusinessLive, Tekmar CEO Alasdair MacDonald said the investment would mainly be used to support growth but that a small proportion - previously indicated as £5m - would be used as working capital.
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Mr MacDonald said: "We've got a clear line of sight as to growth and what we want to invest in. We want to grow and create jobs around the North East where we're predominantly based. This is a great news story for the North East.
"Really, this is about investing the offshore wind market - a global market that is growing. It allows us to invest in new territories, new technologies, new regions and new businesses. It'll allow us to bring new business on board, which we've demonstrated a capability to successfully integrate business having completed the acquisitions of Subsea Innovation, Pipeshield and Ryder Geotechnical over the past few years."
As part of the package, SCF is installing two of its partners - Steve Lockard and Colin Welsh - on Tekmar's board. Mr MacDonald said the Houston-based investors had recognised an opportunity in the global offshore wind market where Tekmar is concentrating its efforts.
And while Tekmar has hailed a record enquiry book, it has also warned it remains cautious in the short term. Mr MacDonald added: "It's not all a rosy picture. There are still some challenges posed by the pandemic including supply chain pressures, supply chain capacity, financial support, timing of projects etc etc.
"There's still a lot to be cautious about but overall I think directionally - over the next five to 10 years - we see significant opportunity that we want to strengthen the balance sheet with and we're looking for a better risk/reward balance in the market to allow us to convert these projects into cash that we can reinvest in the business and continue to grow."
Murdo Montgomery, who led the transaction for Bamburgh Capital, said: "Through this transaction, Tekmar remains a listed company with a significantly strengthened balance sheet and an ambitious strategy for future growth supporting a very significant opportunity for value creation for the benefit of all investors. In this context, it is notable how this transaction bucks the trend for small-cap and mid-market businesses being taken private and leaving the public market."
Since Tekmar announced its deal with SCF, its share price has risen from £8.50 to around £10.20.
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