Subsea engineering firm Tekmar aims to raise £25m through existing shareholders and a partnership with US energy sector investor SCF Partners.
The Darlington-based operator has been on the hunt for a potential buyer since last year in a bid to turn around losses and inject investment. Now, a deal has been struck with Houston-based SCF that will see the private equity house provide £4.27m through a share subscription and £18m in convertible loan notes that are earmarked as a "war chest" for acquisitions once profitability has been reestablished.
The deal also sees SCF partners Steve Lockard and Colin Welsh installed on Tekmar's board , which is hoping to make the business profitable. A further £3m is hoped to be raised through existing shareholders and Tekmar plans to use £5m of the funding to strengthen its balance sheet amid concerns that working capital could come under pressure if there are delays in customer payments.
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In an update to the London Stock Exchange, Tekmar said SCF would help it undertake a transformation plan. The company said: "SCF has completed its due diligence process on the group and shares the board's confidence in the company's organic growth strategy, the size of the market opportunity and the valuation upside potential of scaling Tekmar's market leading position through complementary M&A.
"In developing this shared vision, SCF and the board have an ambition (the "Value Creation Strategy") to transform Tekmar as a wind services platform business with a global footprint, through both accelerated organic growth and acquisitions. The significant investment capacity from SCF of £18m in convertible loan notes is intended to be invested in support of the growth ambition, both organically and to fund the buy and build strategy. "
Despite pre-tax losses of £5.2m last year, Tekmar has insisted it sees growth prospects for its subsea cable protection systems and services. The firm, which has been successful in securing new contracts, says 2023 will be another transitional year in which its market recovers from a slowdown in new projects and tender activity over the past few years.
It says there has been an improved level of customer enquiries and its order book has grown to £22.9m, up from £10m in both 2020 and 2021. The firm expects revenue this year to be about £40m and has signalled it hopes to break even at adjusted Ebitda level.
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