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Wellington Drive seeks $5m from shareholders in convertible note offer

Wellington Drive Technologies [NZX:WDT], whose annual accounts were tagged by auditor PwC over forecast cash flows, will raise $5 million selling mandatory convertible notes to shareholders to help fund growth aspirations.

The notes will be sold in a renounceable pro-rata one-for-five rights issue to existing shareholders at 20 cents apiece, a premium to the last trading price of 18 cents. The mandatory convertible preference shares will pay annual interest of 5 percent, and convert at the end of a three-year term. The conversion will be one-for-one if Wellington Drive's share price is more than 24 cents, or at a higher ratio if the price is 24 cents or lower.

The offer is underwritten by SuperLife, which holds about 19.7 percent of Wellington Drive, and other institutional shareholders have committed to take up their entitlements.

"We believe we now have a stable platform on which to win further new customers and deliver growth," Wellington Drive chief executive Greg Allen said in a statement. "The mandatory convertible preference share is a great way to fund Wellington's growth goals and ensure the company can more fully explore new markets and product ideas."

Wellington Drive will seek shareholder approval at the May annual meeting to let SuperLife take up the offer, which could lift its stake in the company above the 20 percent takeover threshold.

The company held cash and equivalents of $2.98 million as at Dec. 31 after an annual net cash outflow of $2.45 million, and had its accounts tagged by auditor PwC, who said Wellington Drive may need additional funding to keep operating as a going concern.

Last year it raised $4.5 million through an institutional placement and share purchase plan.

Wellington Drive narrowed its annual loss to $3.77 million in 2013 on sales of $27.4 million, missing its target revenue of between $30 million and $33 million.

In January the company dropped its goal of breaking even on an earnings before interest, tax, depreciation and amortisation basis in the 2014 financial year, and will instead target revenue of between $30 million and $35 million. It forecasts a 2014 EBITDA loss of less than $2 million and a net loss below $2.7 million.


More by Paul McBeth

Comments and questions

How many times do these guys keep going back for more funds - good luck to those shareholders for any payback

Thank goodness for their underwriter - this stock has been a serial underperformer and has little market following as a result !

What % will Superlife own if the issue is 100% undersubscribed ?

Time to realise the only part of this fantasy that will ever be more than an irritating noise for the folk living anywhere near these scars on the landscape will be in tidal power....which works pretty consistently most days.
How odd the very doomsayers who predict zillions more hurricanes would see our essential energy future in devices that don't work in no and light winds and don't work in what they gleefully expect to be the norm.

Have you got the right company there? This is Wellington Drive, not Windflow Tech. Wellington Drive make mostly fridge motors.