The extra funding will enable Nexion to have greater working capital for future growth as it forecasts a positive EBITDA in FY2022.
Hybrid cloud provider Nexion Group (ASX:NNG) has announced a capital raise of $2.75 million through a share placement to fund further growth opportunities and working capital.
Nexion will issue 17,187,500 fully paid ordinary shares at an issue price of 16 cents per share, ranking equally with the company’s ordinary shares in all respects.
The placement of new fully paid ordinary shares and options has been well supported by existing shareholders and several new investor groups. Stronger demand has resulted in a significantly larger Placement size than originally envisaged.
Nexion directors have committed $100,000 to the placement, subject to shareholder approval comprising of 16,562,500 shares to be issued pursuant to the company’s LR7.1 (15%) capacity. An additional 625,000 shares will be issued to directors or their nominees subject to shareholder approval.
Subscribers will be issued one attaching unlisted option for every two placement shares issued, a total of approximately 8,593,750 options with an exercise price of 30 cents expiring three years from their date of issue, subject to shareholder approval.
Bridge Street Capital Partners is lead manager of the placement with a shareholder meeting to be called as soon as practicable to approve the issue of all options and shares to be issued to directors.
Funds for working capital and future growth
Funds raised will be used for working capital to support Nexion’s ongoing expansion and for general corporate purposes.
Nexion has experienced significant increase in sales in the last three quarters and expects this to continue, requiring replenishment of working capital, particularly following its recent all-cash acquisition of Perth-based telco Blue Sky Telecom for $2 million.
The company is now well capitalised and is striving to achieve a positive EBITDA position by the end of FY2022.
It’s Q1 revenue grew by 130% from the last quarter to $1.25m. Annualized recurring revenue (ARR) was also significantly up by 145% – from $2.4m in Q4FY21 to $5.9m in Q1FY22.
Founder and CEO Paul Glass said the strong support shown for the placement by existing shareholders and new investors was very encouraging.
Glass said the highly accretive acquisition of Blue Sky Telecom while for a “modest cost” with long term benefits meant the company was in need of more working capital.
“Blue Sky Telecom added $3.4 million in annual recurring revenue to the group and provided the additional technicians needed to deliver the growing pipeline of work we had sold in the past three quarters,” he said.
“This represented an extremely attractive acquisition for Nexion but required us to use a material portion of the company’s cash balance raised at the IPO earlier this year.
“Nexion’s growth has been outstanding, posting record quarterly revenue in Q1 of FY22 and increasing the recurring revenue base by almost 300% in just three quarters since IPO.”
Glass said the latest placement will enable Nexion to continue along its strong growth trajectory.