Tinybuild Inc shares rose on Thursday after announcing a plan to raise funds through the issue of new shares.

Tinybuild’s shares were up 58% at 3.95 pence each in London on Thursday morning.

The Washington, US-based indie video game developer and publisher plans to raise gross proceeds of $14.0 million through the issue of new shares at 5.00p each.

The issue price of 5.00p equates to nearly double the company’s share price of 2.60p at close on Wednesday.

This will be achieved largely through a placing to raise at least $10.0 million.

The group also said French videogame firm Atari SA has agreed to buy $2.0 million shares via placing at the same issue price of 5.00p each.

Following the placing and private placement, the company intends to launch an open offer to stockholders for up to $2.2 million. The offer will entitle every qualifying stockholder to one open offer share for every six shares held at the record date of December 19.

Chief Executive Officer Alex Nichiporchik has agreed to underwrite the placing and open offer by way of a subscription for shares not taken up for a maximum of $10.0 million. Nichiporchik has also agreed to subscribe for such number of shares up to a maximum of 38% raised in the private placement, equal to his current shareholding.

Tinybuild said that the funds raised by these offers will be used to ‘strengthen its balance sheet’, after disappointing cash inflows from October sales.

The company said its outlook for 2024 ‘remains cautious’.

‘The market has deteriorated further and negotiations of certain large contracts have extended into the final month of the year. These remain under negotiation and may not be signed by year end, or at all,’ the group said.

With continued underperformance of certain titles and delays to a number of releases, Tinybuild expects revenues for full-year 2023 to be in the range of $40.0 million to $50.0 million. This would equal a falloff of around 29% from its $63.3 million revenue in 2022.

As a result of these predictions, the company has ‘promptly accelerated its cost reduction plan’.

These efforts included a reduction of ‘studio cash burn’, a refocus on low risk and higher-than-expected return projects and the optimisation of its publishing units. Tinybuild expects this to contribute to a cash outflow reduction of $5.0 to $10.0 million per year beginning in 2024.

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