- Defence product maker XTEK (XTE) has frozen its shares until after the weekend as it prepares to launch a capital raise
- The details of the plan will be revealed on Monday morning
- Just last month, XTEK released strong FY20 revenue guidance in which it said it expects to pull in more than $42 million for the 2020 financial year
- This is more than 10 per cent higher than XTEK’s 2019 revenue
- However, the company had just $4.1 million cash on hand at the end of December after posting a $2.3 million half-yearly loss
- Shares in XTEK last closed for 82 cents each yesterday afternoon
Defence product maker XTEK (XTE) has frozen its shares until after the weekend as it prepares to launch a capital raise.
The details of the plan and where the new funds might be headed have not yet been announced, but XTEK shares will be in lock-up until Monday morning.
Interestingly, news of the capital raise comes just a month after XTEK released some solid revenue predictions for the 2020 financial year.
The company said it was expecting more than $42 million in total revenue for the 2020 financial year, which represents more than 10 per cent growth compared to the year before. XTEK booked $37.9 million in revenue over the 2019 financial year.
In early July, XTEK Managing Director Philippe Odouard said the company has the key internal pillars in place to become a $100 million business in the medium-term.
“The multiple ballistics opportunities on the horizon in the near medium term are further underpinned by the global market trend towards soldier survivability and expected increase in defence spend in key markets,” Philippe said.
This came a week after the Morrison Government revealed it would boost Australia’s military spending to $270 billion over the next decade.
Of course, at the end of December XTEK had just $4.1 million cash on hand after posting a half-yearly loss of around $2.3 million.
Thus, though the company is expecting stronger revenue for the second half of the year, at its current rate of cash burn, the capital raise might be necessary to steady the XTEK ship as it builds to its $100-million-a-year goal.
Whether the new money will be used for a purchase, expansion, or just some breathing room will be revealed after the weekend. Until then, shareholders can’t do much other than speculate.
Shares in XTEK last traded for 82 cents yesterday afternoon. The company has a $43.6 million market cap.