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Deltex Medical unveils placing and open offer to fund US expansion

Published: 17:16 22 May 2014 AEST

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Medical devices group Deltex Medical (LON:DEMG) unveiled details of a placing to raise £4mln in a placing and up to £1.04mln in an open offer.

The proceeds will be used to fund the group's expansion into the US market, the group said.

Deltex said the total cost of expanding in the US is estimated to be £1.7mln, while a further £0.9mln will be used to support a number of operational projects aimed at improving margins.

The increased investment will increase losses in both 2014 and 2015 compared to current expectations, the firm noted, but added that it  will have significantly higher revenue run-rates by the end of 2015. The positive impact will be reflected in 2016.

The placing sees the company issue around 36.36mln shares at 11 pence each with institutional and other shareholders, representing a 20% discount to Wednesday's closing price of 13.75p.

Under the open offer, shareholders can apply for one new share for every 18 already held, also at 11p per share.

Both are subject to the approval of shareholders at a general meeting on Monday, June 9.

The group's chairman Nigel Keen told investors on Thursday: "The successful completion of the fund-raising is a significant step in allowing the company to pursue its strategy in the rapidly developing US market. 

"I am pleased to offer existing shareholders the opportunity to participate in the fund-raising through the open offer to give our shareholders an opportunity to increase their stake in the company and its development on the same terms as the institutional placing. This additional funding will allow the company to pursue a number of other operational improvements and expand more aggressively in the USA."

The group said it had received approaches from ten new US hospitals since the beginning of 2014 and proceeds will be used to expand the sales and clinical education team.

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