Manchester tech group K3 to strengthen balance sheet with £7.5m fundraising

SME software company K3 Business Technology Group plc has announced a multi-million pound fundraising to mitigate a dent in its forecast revenues.

The Manchester-headquartered firm has this morning (June 12) revealed plans for a placing and open offer through which it hopes to raise up to £7.5m before expenses.

K3 said the move will strengthen its balance sheet, which was down after it failed to secure a number of major contracts. This is despite £3m in annual cost savings made from management and operational restructuring in the last year.

Company bosses highlighted a number of external factors as potential contributors to the shortfall, including a softening in end market conditions, particularly in the retail sector; longer sales cycles in securing larger deals; the industry’s rapid shift to cloud-based consumption; and several other customer trends.

The chief exec of K3, Adalsteinn Valdimarsson, said: “This proposed placing and open offer to qualifying shareholders will strengthen the group’s balance sheet and provide additional working capital during this review and enables us to operate with full flexibility as we make strategic decisions.

“The group is undergoing transition but we believe the strategic steps we are taking create a solid platform for future growth.”

He added: “We remain encouraged by the underlying strength and performance of K3’s profitable business units which generate significant recurring revenues and cash flows from our large SME customer base.”

Speaking further, Mr Valdimarsson announced a series of changes made to the company’s board, including the retirement of chairman David Bolton and the appointment of Rob Price in the role of chief financial officer.

He explained: “We would like to thank David Bolton for his significant contribution and counsel to K3 over almost 20 years.

“He has shown a high level of commitment and dedication to the company during this time and we wish him well in his retirement. Non-executive director, Stuart Darling, will hold the role of chairman on an interim basis, while the board undertakes a recruitment process.”

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