Gaming platform and services provider Nektan has sold a 57.5% majority stake in its Respin US subsidiary to Alternative Investment Partners Limited (AIP) for an initial cash consideration of £300,000 (€346,350/$391,680).
Nektan has been in talks with a number of provisional buyers for several months, but until now has not revealed the identity of any businesses involved in these discussions.
The deal with AIP also includes the provision of $800,000 in working capital to Respin, as opposed to the agreement comprising a £2m cash fee and £300,000 in working capital that Nektan had previously announced.
Nektan has said the reason behind the change in terms of the deal are the result of the original proposed purchaser not being able to complete the transaction in the required time period and the new buyer renegotiating fresh terms.
“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,” Nektan CEO Lucy Buckley said. “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.”
As a result of the sale, Nektan has said that a number of other inter-conditional transactions have been reconfirmed and are expected to complete no later than April 30. These include a credit-linked note conversion, equity placing and subscriptions.
Should these transactions go through as expected, Nektan says that it will have sufficient working capital for its present operational requirements.
However, Nektan has said that it is still in talks with UK tax authority HMRC in relation to a point of consumption tax bill of around £3.6m that is due at the end of April. Nektan said if the discussions are not successful, this may mean it needs to raise additional funding.
Earlier this month, Nektan reported a 5.9% year-on-year increase in revenue for the third quarter, though noted that performance in the period was impacted by a number of factors.
While revenue for the three months ended March 31 was up from £5.1m in the prior year to £5.4m, this represented a 15.6% decline from the second quarter of the current financial year. Nektan said this was down to factors such as seasonality, tighter UK regulations around player marketing and verifications and a delay in its Swedish operating licence being granted.
The supplier only released figures on revenue, staking and customer numbers in its trading update, meaning there was no update on its bottom-line performance.