SRT Marine Systems plc - Programme Increase - November 2021
LGB Capital Markets has arranged an increase to the Medium Term Note (MTN) programme of SRT Marine Systems plc (“SRT”) from £10 million to £20 million.
SRT (AIM: SRT) is the global leader in the next generation of maritime surveillance. The company provides products and integrated systems that provide enhanced maritime security, safety and management. Its customers include national coast guard and fishery agencies, such as The Bahrain Coast Guard and Philippine Fisheries Ministry, as well as individual commercial and leisure vessel owners and operators worldwide through a growing network of over 1,000 local partners and distributors.
LGB first established SRT’s £10 million MTN programme in December 2017. Since establishment, the programme has provided a vital source of non-dilutive funding for the business as it has developed and expanded internationally. Each systems project can vary in terms of specification, size and implementation period. The flexibility of the MTN programme has enabled SRT to match its funding requirements even as these have changed in the current uncertain business environment.
The benefit of this flexibility was demonstrated at the initial outbreak of Covid-19. Like most companies at that time, SRT experienced temporary delays to existing projects and the signing of new contracts. SRT’s management team discussed options with LGB and decided to raise £1 million under its MTN programme. This financing improved SRT's liquidity in an uncertain period. Subsequently, SRT secured a CBILS loan from its senior lender, which the structure of the programme allowed for. Nevertheless, having an existing programme and mechanism to tap the private credit markets remained a vital part of the company's financing strategy.
During the pandemic, the company’s transceiver business, which sells to individual vessel owners via a global network of dealers and OEM’s, has continued to grow. The systems division, which provides integrated surveillance systems primarily in Asia and Middle East countries, experienced the temporary delays mentioned above. However, with the global vaccine rollout now well underway, discussions with multiple prospective system customers who have long term strategies to acquire maritime surveillance systems have restarted. Management has received particularly clear guidance in respect of four new contracts in Asia and the Middle East with an aggregate value of £71 million. These prompted SRT’s management to activate a number of workstreams, including the expansion of its programme from £10 million to £20 million in readiness for when projects start in earnest. Once projects commence, management's time can be focused on the projects implementation, rather than trying to source appropriate funding.
This is a prime example of an MTN programme being an effective treasury management tool that enables the issuer to manage funding requirements without incurring interest or commitment fees until the funding is actually required.
SRT’s programme represents the fifth LGB MTN programme to reach the £20 million mark. Since establishing the first £10 million programme in 2017, SRT has issued £10 million of notes, of which £5 million has been repaid, leaving £5 million outstanding across four series with staggered maturities. More information on our MTN programmes can be found here.
Quote from CEO, Simon Tucker
“As an ambitious business tackling very significant contract opportunities that will create transformational growth, the MTN programme has been a very flexible and valuable contributor to our working capital requirements. With the level of business we see coming, I am very pleased that we have been able to increase our MTM programme by £10 million to £20 million. As we grow, we will continue to need this flexible non-dilutive funding provided by the programme, and hence increasing the MTN programme limit is an important event for us.”