SerVison secures $2m from US investment fund

Shares in SerVison climbed on Wednesday as the company announced that US investment fund Cascade will invest $2m in the mobile video provider.

Cascade agreed to subscribe for 14.08m shares of 1p each in SerVision in two tranches at a price of about 11.4p per share, which is a premium to the closing mid-market price on Tuesday and which values the company at about £14.4m.

The tranches will consist of equal 7.04m shares each, $1m will be transferred in in five business days on receipt of the shares and the remaining $1m will transferred in 90-days time on receipt of the second tranche shares.

The AIM-listed SerVision said that the new capital will “place the company in its strongest financial position for several years” and that funds, together with internally generated cash flow, will be used to finance the increasing number of global opportunities for selling its IVG40-N video product, particularly to bus and coach companies,

The funds will also be used to reduce its debt, including the scheduled repayment of its facility with CSS Alpha and YA II PN.

Following receipt of the first $1m the first 7.04m shares will be admitted to trade on AIM and on admission the Cascade will hold 5.3% of SerVison’s share capital and following the second tranche it will hold 10%.

Cascade will also have the option to invest up to a further $4m, in two equal tranches, at the same valuation.

The first option period runs until 20 October, with an option price per share of about 10.2p and the second option period runs until 29 September 2018, with an option price about 9.3p, subject to shareholder approval.

SerVision chairman and chief executive Gidon Tahan said: "The company has been under capitalised in recent years and this significant boost to our financial strength will allow us to pursue a number of opportunities around the world that, if converted into new customers, will help the company to become cashflow positive."

Craig Flashner, a director of Cascade, added: "The worldwide mobile digital video recorder market is growing dramatically and we believe that SerVision has superior technology in this market. In addition, we believe there is significant potential in their relationship with Mobileye, which opens access to their customers worldwide."

Shares in SerVision were up 114.55% to 5.90p at 0940 GMT.