Shareholders in Wellington Drive Technologies [NZX:WDT], whose annual accounts were tagged by auditor PwC over forecast cash flows, will vote next month on a sale of preference shares that could hand control of the company to cornerstone investor SuperLife.
The Auckland-based maker of energy efficient refrigeration motors today said it raised $2.2 million of the $5 million sought in a one-for-five issue of convertible preference shares at 20 cents apiece. SuperLife, which owns 19.7 percent of Wellington Drive and underwrote the sale, will mop up the unsold $2.78 million portion, subject to the shareholder vote, which would lift its holding when the preference shares convert one-to-one to ordinary shares in three years.
Wellington Drive shares last traded at 14 cents. If the price rose to 24 cents at the time of conversion, SuperLife's holding would rise to about 28 percent, company secretary Ron Jackson told BusinessDesk. If the share price collapsed in that time the notes would convert at a higher ratio and SuperLife's stake could rise to as much as 65 percent.
The 20 cent issue price is a premium to the near nine-month low of 11.6 cents the shares were trading at last Thursday. The stock has dropped 42 percent this year.
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, which 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.